The business of war untangled: Cities as fiscal-military hubs in Europe (1530s–1860s)

I. Debating the state

The scale, scope, and impact of European warfare increased rapidly from the later fifteenth century, not least due to the incessant rivalry between the ruling dynasties of Spain and France which both established permanent armies by the 1530s. ¹⁰ Overall, European armies expanded 10-fold in size across 1500-1800, or more than three times the pace of demographic growth. ¹¹ Scholars generally explain this phenomenon by focusing on state’s capacity to mobilize resources and sustain warfare, and adopt one of three explanations.

The first emphasizes institution-building and focuses on the supposed relationship between different forms of resource mobilization and types of states. This approach posits a variety of routes to the modern state. Most common is a dichotomy between commercial/industrial states and largely agrarian ones. The former is generally seen as governed by ‘men of persuasion’ and often ascribed to maritime powers. Navies were used to project power and protect commerce, while relatively small armies of citizens-in-arms or part-time militias were deployed for home defence. Venice, the Dutch Republic, Britain, and the United States are typically cited as examples of this route. Those in the latter type are understood as ‘garrison states’ ruled by ‘men of coercion’ and characterized by authoritarian politics. Generally, garrison states are believed to be less highly developed economically and rely on scale and mass, rather than quality in force, which results in large conscript armies. The typical examples are Prussia, Russia, and Austria. ¹² More recently, scholars have identified a third, middle path: medium to large states with mixed economies. Such states were commercializing, but still relied significantly on inefficient forms of agriculture bordering on subsistence and/or attempted to be both land and sea powers simultaneously. France and Spain are the typical examples for this middle path. In Charles Tilly’s influential version of this typology, the three routes to modernity are labelled respectively ‘capital-intensive’, ‘coercion-intensive’, and ‘capital-coercion’. ¹³

The second approach emerged in response to these ideas and is associated with the concept of a ‘fiscal-military state’ coined by John Brewer. ¹⁴ Brewer drew on the development of the early modern ‘tax state’ from the medieval ‘domain state’ first suggested by Joseph Schumpeter and developed by Erling Petersen. ¹⁵ Brewer’s key point was the shift of attention away from the conventional preoccupation with administrative and military institutions and towards representative and consultative assemblies. What mattered was the ability to raise money efficiently without political opposition, social discontent, or economic disruption. Brewer added ‘military’ to the ‘fiscal state’ in recognition that the overwhelming proportion of revenue was raised to wage war and repay debts contracted on past conflicts. He focused on the case of Britain and more specifically, on the pact of 1688 between the monarchy (William III) and the landed and commercial elites dominating Parliament. Parliamentary approval of taxes lent legitimacy to revenue and credit raising and enabled Britain to raise far more money per capita from its population than France, despite having a much smaller state infrastructure. Brewer, as well as Phillip Hoffman and Kathryn Norberg, argues that the presence of representative institutions reduced friction and assisted resource mobilization. ¹⁶ These states were more effective war-makers than ‘absolute’ monarchies relying on coercion. The publication of Brewer’s book in 1989 coincided with the critique of ‘absolutism’ that noted the role of consultation with elites to reduce the friction of governing, and allow those with regional and local influence to act as conduits between the centre and the localities. ¹⁷ Across the past two decades, the term ‘fiscal-military state’ has partially displaced that of ‘absolutism’ and is increasingly applied to the history of other parts of the world. ¹⁸

The third and most recent approach is that of the ‘contractor state’. ¹⁹ This shares some historiographical roots with the fiscal-military state, a term which it seeks to build upon rather than reject, as well as overlapping with the recent critique of older interpretations of absolutism through its examination of the ‘informal’ within the formal practice of official financial and military policy. The contractor state literature broadly accepts the conclusions of those writing about fiscal-military states that war was the primary purpose of revenue but shifts discussion from how governments obtained money to how they spent it.

Conventionally, historians have followed the money through official channels, examining how states developed administrative institutions, which disbursed funds to raise, equip, clothe, feed, pay, accommodate, and deploy armies and navies. The focus on institutions flowed logically from the custom of writing political history as a story of national development in which states expanded by nationalizing and centralizing previously private and localized activities. Some examples of this were certainly impressive: the Corderie Royale naval rope factory in Rochefort was the largest industrial building in seventeenth-century France, while the Lagerhaus in Berlin that employed 5,500 workers to make army uniforms had a similar status in eighteenth-century Prussia. ²⁰ However, closer examination has revealed a more complex picture in which the lines between public administration and private enterprise were often blurred and frequently crossed, rendering it questionable whether such distinctions make any analytical sense. ²¹ For example, the Lagerhaus was financed by Johann Andreas Krautt who secured the exclusive right to supply cloth to the Prussian army and later used his influence to secure an official government post, which he used in turn to shape state economic policy to his commercial advantage. Perhaps more fundamentally, the contractor state literature has demonstrated the extent to which governments relied on entrepreneurs to supply and often manage their armed forces.

Proponents of the contractor state approach remain divided as to whether recourse to ‘private’ supply helped or hindered early modern state development, war-making, and economic growth, as well as how far contractors’ practices can be identified as ‘corrupt’. ²² These debates offer valuable insights, but their focus remains on the state, its inhabitants, and resources, and concentrates on individual contractors supplying their ‘own’ states, and thus framing the early modern business of war within histories of national economies.

II. Methodology of the hub: demand, people, and resources

Methodological and empirical differences lie behind the three predominant approaches to the early modern business of war. The idea of tracing different roots to the modern, sovereign state stems from political science discussions of typologies of political organization and their historical development. The concept of the fiscal-military state rests largely on examination of official tax and financial documents, while the contractor state approach draws on the archival record of interactions between state officials and contractors. The glaring absence is the lack of business records which are, indeed, sadly hard to find for this period. The individuals involved in military supply can often be identified, but it is usually challenging to follow the money beyond state institutions and official channels through the chains of contractors and subcontractors to suppliers and consumers. ²³ Three strategies have evolved to address this difficulty.

One investigates states from the perspective of ‘demand’ side as the primary consumers of war-making resources. Much work remains to be done in quantifying demand and in assessing the rationale and criteria used to determine costs and to select contractors. ²⁴ A second approach studies individual agents from the perspective of economic and social history, generally presenting their protagonists as ‘military enterprisers’ acting largely on their own account to raise, equip, and often command troops. Compelling examples are Albrecht von Wallenstein and Ernst von Mansfeld, who raised entire armies in the Thirty Years’ War. ²⁵ There are promising signs that such studies are moving beyond conventional ‘cost-benefit’ material analyses to incorporate cultural perspectives. ²⁶

A third strategy is to determine which fiscal-military resources were involved and how they were transferred. Several distinct categories of resource can be identified. Human resources comprised personnel (manpower) and expertise. The use of foreign manpower increased dramatically during the early sixteenth century and continued to grow as armies and navies became permanent around 1650 and required recruits in peace as well as war. Foreigners constituted one in seven of the 2 million soldiers serving France between 1700 and 1763, while the foreign proportion in the Austrian, Prussian, and Savoyard armies varied between one- and two-thirds during the eighteenth century. ²⁷ Expertise included the knowledge and experience brought by military or naval officers, as well as the know-how associated with new or developing technologies, for example, brought by marine architects and engineers serving Sweden and Russia. ²⁸ Information was itself a valuable resource exchanged in written, printed, and oral form through the developing postal networks, Europe’s burgeoning ‘public spheres’, and through systematic intelligence gathering. ²⁹ Seventeenth-century Europe witnessed the growth of particular cities as information hubs, including Amsterdam and Regensburg. ³⁰ Financial resources were a fourth category including cash, credit, payments, loans, and financial assistance notably subsidies. Studies have moved beyond subsidies’ political and financial significance, and the motives for their use by both payer and recipient, to consider their influence on domestic politics and political culture. ³¹ Material resources comprised weaponry and shipping, and the means to maintain these, as well as food, fodder, clothing, and equipment. ³² The final category encompassed services, such as transit, access, or use of specialist facilities like docks or hospitals. Early modern logistics remain understudied and we still know relatively little about the process of moving troops, material, and supplies to where they were needed. ³³ The need for armies to cross the patchwork of European states and jurisdictions is a neglected factor encouraging ideas of neutrality. ³⁴

Often two or more types of resources might be combined in the same transaction. Transit rights, for instance, might be required to allow auxiliary troops to march from their original provider to where they were intended to serve another power. Thus, individual transactions might involve multiple parties, while individual entrepreneurs might be involved in many related exchanges. The Dutch merchant Louis de Geer supplied Sweden with credit and held the monopoly on the Swedish copper trade in Amsterdam. Another example is the business of Jean Hoeufft, who was involved in both the transfer of subsidies (credit) and weaponry (arms trade) between France and Sweden. ³⁵ Specific contractual forms emerged to facilitate the exchange/transfer of these resources by easing the problems arising from distrust, risk, or distance. ³⁶

The concept of the ‘fiscal-military hub’ addresses the methodological problems by allowing the three elements of demand, people, and resources to be studied together. This combination brings four advantages. First and foremost, it is appropriately transnational and suited to examine a period before the national, sovereign state was fully formed. It broadens the scope beyond the record left in official documents to examine the roles played by non-state and semi-state actors. Such actors included bankers, financiers, agents, merchants, manufacturers, and others who might be involved in supply or facilitating resource transfer. However, they could also be among those seeking resources for their own war-making, such as the English and Dutch East India companies with their own armies and fleets, or semi-sovereign powers like the German and Italian princes, who both supplied forces to the major power and acted on occasion as belligerents themselves.

Second, the examination of hubs helps break down anachronistic and unhelpful divisions between ‘public’ and ‘private’, as well as between political, military, economic, social, and cultural history. In addition, all resources involved in the war business can be examined rather than focusing on a particular industry or resource type. Last, this approach expands research to take greater account of peacetime as well as war. The conventional focus on the state tends to draw attention to wartime, because this was when states were most under pressure and the demand for revenue and resources was highest. Coverage of peacetime tends to be limited to the problems of post-war debt management. ³⁷ The shift to hubs offers a different perspective, because they were quasi-neutral cities, like Hamburg during the Thirty Years’ War (1618–1648), which catered to a multitude of states that were fighting at different times. ³⁸ The rhythm of war and peace still matters, but it can be tracked differently than through the state’s balance sheet, since, as we shall see below, the interests of states and entrepreneurs could diverge sharply.

It might be objected that network theory already provides a potential analytical tool to explore fiscal-military transactions. However, while network analyses employ the concept of ‘nodes’, it sees these as links in chains, rather than examining the interactions taking place within and between them. The focus is on the network and does not explain why one location developed as a hub, while another did not. ³⁹ Moreover, network studies concentrate on people, examining the connections between individuals, such as those within the Republic of Letters. ⁴⁰ They generally presuppose one or more key figures as centres for web-like networks. This suits studies where one or a few individuals are the primary subject of interest, but it does not capture the complexities inherent in the transnational business of war which involved relationships operating in several directions simultaneously and involving multiple partners. Networks also pose their own methodological problems and are notoriously difficult to unravel. ⁴¹

By contrast, hubs are relatively easily identifiable and served as the loci for multiple transactions. Focusing on hubs offers a better way to gauge overall the flow of resources, the interaction between the different actors and the pressures under which they operated. Hubs also served as clusters for innovation, investment, and as sites of activity and not just of connections. ⁴² The process of exchange transformed both the character and quality of the resource and impacted on the hub’s own development in what was a more dynamic and complex situation than that suggested by the idea of networks and nodes. The concept of a hub extends rather than replaces network analysis by adding the focus on places as well as people and connections.

This method combines insights from transportation, especially aviation (airport hubs) with aspects of business studies/economics (stock market). ⁴³ The concept of an aviation hub (pioneered by Delta Air from 1955 out of Atlanta) emphasizes transit: the hub as the point of exchange where passengers or air freight transfer from one flight to another. Thus, the hub is a mechanism to connect different points of origin with multiple potential destinations and a means of building a more elaborate route network efficiently without having to create numerous binary point-to-point routes linking every possible point of origin to every destination. Fiscal-military hubs were the gateways to networks of well-connected specialists, allowing those seeking resources to access multiple potential sources of supply more easily and efficiently. The key point behind the model of a stock market is that the location of exchange transforms the value of the goods traded there. Borrowing from these insights, we can see that early modern hubs facilitated the trade in a diversity of military resources in continuous action from one central site, where the dynamics between supply and demand and other determinants like intelligence alters the value of the transacted goods. ⁴⁴ For example, many war-making resources (such as subsides or cannons) were not actually transferred physically through the hub, but their exchange was brokered there using various contractual forms and instruments such as bills of exchange which lowered the transaction costs. This aspect captures an additional side of what we regard as fiscal-military instruments, as well as the broader Fiscal-Military System, neither of which are encompassed by the metaphor of the aviation hub alone.

III. The rise of the Fiscal-Military System

The Fiscal-Military System and its hubs rose and fell in line with the wider pattern of European warfare and changes in how war-making resources were mobilized. The sixteenth century saw the emergence of hubs linked to the growing scale and scope of warfare, as well as the character of European states and their conflicts. A key marker of new developments was the shift to hubs as fixed, permanent centres available at any time for fiscal-military transactions. This was part of the broader change from conducting commerce and exchange in temporary fairs or markets held only on certain days of the year, often in the open, or through individual merchants or agents who travelled to the ruler’s camp or court which itself was often still itinerant into the early sixteenth century. ⁴⁵

Warfare ranged across wide geographical areas and involved numerous belligerents on multiple fronts, such as the Italian Wars (1494–1559) and the long-running sequence of conflicts between France and the Habsburgs from 1477. ⁴⁶ The increased scale and dispersed pattern of warfare was directly related to the composite-dynastic character of European states. Sovereignty and territory were both fragmented, as rulers and subjects held differing powers and rights in the (often) scattered possessions which frequently lacked contiguous frontiers or homogeneous populations. ⁴⁷

European conflicts encompassed both external and internal wars. External wars were fought to demarcate each ruler’s territory and jurisdiction, especially structurally induced wars of succession caused by the role of dynasticism in legitimating authority. In addition, Europe witnessed incessant internal warfare, fought to determine governance within each state. This was fuelled by the resistance of peripheral provinces to central rule and by conflicts among elites for influence. Internal conflicts over governance were exacerbated by questions of religion. The permanence of religious schism after 1517 broke the medieval unity of faith and law, while the assumption by rulers, such as Henry VIII, to determine their subjects’ faith represented a huge expansion of monarchical authority. Confessional solidarity forged new connections with previously geographically and politically distant groups, while violence and persecution displaced refugees whose relocation to cities helped disseminate commercial practices and establish new communication networks.

This resulted in the interweaving of international and civil wars, beginning most clearly in the French Wars of Religion after 1562 and the Dutch Revolt or Eighty Years’ War from 1568. ⁴⁸ With central authority contested, it became much harder to raise troops and resources by conventional means, such as negotiating with lords who might now be in armed opposition. The intermingling of internal and external wars continued well into the following century, exemplified by the Thirty Years’ War (1618–1648) which was simultaneously a civil war in the Holy Roman Empire and an international conflict. ⁴⁹ Thus, the emergence of a transnational system of fiscal-military exchange developed alongside and as part of the much-known process of internal state institution-building. States certainly expanded their capacity to raise resources from their own populations, but these were rarely sufficient quantitatively, and also often fell short qualitatively, for instance, in terms of expertise or weaponry which could not be home-produced. States had to develop methods to secure resources from outside their jurisdictions, and for this, they needed places where this could be arranged speedily, reliably, and effectively.

Economic historians generally regard war as disrupting trade and retarding urban growth, focusing instead on industrialization and global commerce as factors promoting growth. ⁵⁰ This is understandable given the small size of the state as ‘public sector’ in this period relative to that after 1914. No early modern state drew more than 10 per cent of gross domestic product (GDP) in taxes, compared to the norm of 20 to 25 per cent by 1960 and the current proportion of 25 to 35 per cent. ⁵¹ Nonetheless, early modern states were disproportionately significant, because they demanded taxes in cash in what was an under-monetised economy, while the growth of public debt – deriving almost entirely from war – proved central in promoting European banking and exchange systems. British military spending averaged 7 per cent of gross national product (GNP) across the eighteenth century, rising to 9 per cent for both the Spanish Succession conflict (1702–1713) and Revolutionary and Napoleonic Wars (1792–1815), and peaking at 16.3 per cent during the Seven Years’ War (1756–1763). Meanwhile, debt relative to GNP rose from 70 per cent after the Spanish Succession to 185 per cent following the Napoleonic Wars – equivalent to Greece during the 2014 debt crisis and significantly above the 110 per cent in 1918. ⁵²

These figures are important to our story, because government debt represented one of the few attractive investment opportunities prior to the mid-nineteenth century. Usury laws and tight regulation of interest rates restricted the growth of commercial investment, while holding down the cost of government borrowing. The London Stock Exchange listed only 93 joint-stock companies with a combined capital of £2.2m in 1694, and these included the new Bank of England and the East India Company which were increasingly vehicles for servicing government debt which, at that point, hovered around £14m to £16m. The relative stability of British debt attracted foreign investors seeking to place surplus capital, and government bonds remained the primary business of stock exchanges. War similarly dominated investment in the Dutch Republic where foreign loans were raised from 1613. Government bonds dominated foreign securities which totalled around 575m florins by 1790, or twice the republic’s GDP, compared to the annual turnover of the famous Dutch East India Company (VOC) at 35m. ⁵³ Foreigners held nearly 60 per cent of Danish debt by 1800, including the Dutch whose holdings averaged 18.9m florins between 1763 and 1800. ⁵⁴

Initially, several cities emerged as centres trading in specific resources, such as Antwerp, Augsburg, and Genoa which were all renowned for banking and credit. Amsterdam established itself as Europe’s first major hub between about 1580 and 1620 dealing in all categories of war-making resources, and it remained the premier centre until around 1720. ⁵⁵ Meanwhile, many secondary hubs of regional importance emerged, including Genoa, Geneva, Hamburg, Vienna, Danzig, and Riga. The emergence of London as a second primary hub occurred rapidly after 1688 when parts of Amsterdam’s war business followed the Dutch stadholder William of Orange to Britain during the Glorious Revolution.

The Fiscal-Military System matured during the prolonged international warfare between 1662 and 1721 and continued with the mid-eighteenth-century wars between 1733 and 1779. However, governments increasingly sought to nationalize war-making, not necessarily reducing their dependency on contractors, but certainly trying to exclude foreign ones, while simultaneously seeking to prevent their own subjects from engaging in ‘extra-territorial violence’. These efforts were assisted by the new ideologies of the nation, as well as institutional development. The abolition of local and social privileges following 1789 removed many of the legal barriers to the fuller exploitation of what were increasingly now claimed as ‘national’ resources. For instance, what had previously been regarded as the right to choose honourable service abroad, now became treason to the nation and was increasingly curbed during the early nineteenth century. ⁵⁶ The wars between 1792 and 1870 also removed most of Europe’s minor states and semi-sovereign powers like those in the Empire which had provided the bulk of the transnational military personnel during early modernity. States continued to seek external support in wartime, but other than the purchase of selected armaments, they now did this only through formal alliances with partners who were also sovereign powers.

IV. The significance of place

One of the most striking findings of this research is that there was no direct link between the centre of political power and a city’s development as a fiscal-military hub. The preoccupation with states and high politics has focused attention on cities as political capitals where the decisions for war or peace were taken. ⁵⁷ Some capitals did become hubs, such as London and Vienna, but conversely many, like Paris, Lisbon, Stockholm, or Warsaw, did not. The same is true for civic republics, several of which became important fiscal-military hubs like Genoa, Geneva, Danzig, or Hamburg. ⁵⁸ Political history stresses their political autonomy and relative ability to remain neutral, all of which certainly made them attractive for the war business, but there were many more autonomous cities which did not become significant hubs. ⁵⁹ Cities characterized by openness and inclusivity were generally better able to attract business, such as Amsterdam which treated all merchants, regardless of origins, as equal before the law as early as the fifteenth century. ⁶⁰ However, the exchange of fiscal-military resources was always political and subject to more than purely commercial considerations which even more fully autonomous cities like Genoa could not ignore.

These findings are similar to the conclusions about why some cities became financial centres, whereas other did not, with the crucial factors being the concentration of specialist expertise and access to valuable and often sensitive information. ⁶¹ For example, during the War of Spanish Succession, the English had three ports to land supplies to support their armies and allies in Northern Italy: Onegelia, Villa-Franca, and Genoa. They also had two locations where they could raise money (Livorno and Genoa), while all four towns were relatively close together along the Ligurian coast. Although English agents and diplomats continually grumbled about how poorly the Genoese treated them and how they wished they could use other ports, they nonetheless always conducted their fiscal-military business in Genoa because of its larger, expansive informational network and neutral protection for shipping. ⁶²

A city’s general development was an important prerequisite, and all the major hubs had already passed the minimum threshold as viable economic centres before they became known for fiscal-military business. ⁶³ Geography was another factor and all hubs were on existing trade and communication routes. Many fiscal-military resources were bulky, such as grain, or naval stores like timber and hemp. It was not necessary for a potential hub to be a production centre, and thus proximity to natural resources and other factors affecting development as an industrial centre were only of secondary significance. Moreover, the ‘production’ of many fiscal-military resources such as manpower, expertise, and finance was not industrial. Rather, it was the relations between the hub (as a transaction centre) and centres of production that mattered, and a hub’s location was often more significant for those travelling there to conduct business, than for the physical movement of the resources they were exchanging.

Nonetheless, hubs were generally close to sources of fiscal-military assets. These could indeed be production centres, like the arms manufacturing towns of Delft, Gouda, and others connected to Amsterdam. Financial resources were especially important, such as the rich population of Amsterdam’s rural and urban willing to lend money or buy bonds. ⁶⁴ Resources did not always have to ‘move’. The tendency in much of the current literature, including network analyses, is to track movement. For example, the current Atlantic paradigm stresses flows, exchange, and transfer in a physical sense, including unintended consequences like the spread of disease. ⁶⁵ Yet, fiscal-military resources often remained in the hub, like the arms stockpiled in the Amsterdam and Venetian arsenals which could be released to fulfil bulk orders placed by foreign clients, or supplied to the domestic armed forces in wartime. ⁶⁶ Expertise also tended to remain in the hub, and indeed was a major attraction of doing business there, while credit instruments and the presence of stock exchanges removed the need for money to be transported in specie.

The decisive factor in determining why a city became a fiscal-military hub, rather than simply financial centre, was the relative proximity to warfare. To function effectively as a hub, a city needed to be near enough to battlefields to be convenient as a place to transact fiscal-military business, yet sufficiently distant to avoid being disrupted by military action. This is illustrated by the contrast between Antwerp (sacked 1576, then permanently blockaded) and Amsterdam. After Antwerp fell into Spanish hands, most businessmen fled, taking their trade, expertise, and networks with them to Amsterdam. ⁶⁷ Amsterdam maintained its dominance as Europe’s primary hub until it too fell victim to war when the French invaded the Dutch Republic in 1795. Moreover, war was an important factor ‘forcing’ the development of certain cities as hubs. Thus, hubs could not be consciously or deliberately created; they emerged organically from places which already had some economic importance due to their location. Here we see the accumulative effect of interactions between geography, economics, individuals, and political/military events.

An illustrative example of the significance of place is France’s payment of subsidies to Sweden during the Thirty Years’ War. ⁶⁸ The Swedes organized their military campaigns in the Empire from Hamburg, due to its geographical position and importance as an established fiscal-military hub. ⁶⁹ Yet France transferred the subsidies – through bills of exchange – via Amsterdam to Hamburg.

Why Amsterdam? First, the city was Europe’s financial and commercial centre. With its innovative institutions such as the Bank of Exchange (1609), Bank of Credit (1609), and the Stock Exchange (1602), Amsterdam forged an excellent reputation for the business of credit. Most of the bills of exchange drawn in Amsterdam were from other cities rather than from Amsterdam itself, particularly since the city offered interest rates that were both relatively stable and the lowest in Europe. ⁷⁰ The subsidies were transferred and cashed in Amsterdam where the arms trade was a primary business sector and cash was needed for purchasing weaponry and munitions. Moreover, Amsterdam facilitated the Swedish Crown’s sale of grain and copper, which the Swedish agents often used as a collateral for credit to purchase war resources. Above all, Amsterdam housed an elite of merchant-financiers with extensive, transnational networks and extensive expertise in the fiscal-military business. ⁷¹ Given the ambiguous regulation and operation of stock exchanges and market transfers, a lot of it depended on who you knew. ⁷² Together with the close connection between government, commerce, and diplomacy, Amsterdam offered virtually perfect conditions for the war business. ⁷³

In their Treaty of Bärwalde (1631) with Sweden, the French stipulated that the subsidies had to be remitted in Paris or Amsterdam, while later treaties named Amsterdam and Hamburg. France already ran subsidy payments through Amsterdam as early as 1593, and thus had an established social infrastructure to call on when paying Sweden. In this case, France employed Jean Hoeufft who already worked for them and the Dutch and was handling French subsidies to the Dutch Republic. Both sets of payments were remitted by his nephew Mattheus Hoeufft in Amsterdam. ⁷⁴

The importance of local contacts and expertise is exemplified by the fall of Swedish agent Erik Larsson who coordinated the sale of Swedish copper and grain, and managed other financial operations, including the transfer of subsidies in Amsterdam. King Gustavus Adolphus suspected Larsson of misusing his office for personal profit and for being too closely and dangerously connected with Amsterdam’s merchant elite. His dismissal, however, meant the loss of his networks and subsequently the favourable conditions resulting from these. The new agents had to coordinate Sweden’s dealings in Amsterdam as well as to inspect Larsson’s dealings. Their inability to handle both challenges precipitated a dramatic fall in Sweden’s financial credit. ⁷⁵

V. Scales and scopes of hubs

It was, however, the level and diversity of the human capital that really determined whether a city was a major or a minor fiscal-military hub. This can be illustrated with Amsterdam. The status of this city as Europe’s primary entrepot has obscured its centrality for the war business. The growth of the Dutch economy is usually told as a positive story of economic innovation facilitated by republican liberty, religious toleration, and manifest in a cultural ‘golden age’. If there is a ‘dark side’, then it is portrayed as far away in the asymmetrical and often violence encounters with non-Europeans. ⁷⁶ Yet, the Dutch Republic was scarcely a neutral or non-aligned power in Europe, at least prior to 1748, while arms exports contributed as much to the national economy between 1600 and 1650 as the East Indies trade. ⁷⁷ Moreover, rising demands from the army, navy, colonial companies, civic guards, militias, fortifications, private men, and foreign buyers made the arms industry an essential part of the economy within two decades, making up at least 5 per cent of Dutch GNP. ⁷⁸

Major hubs were distinguished by the ability to conduct multiple fiscal-military transactions in different resource categories. Like modern airline hubs, the scope and volume of business created ‘economies of scope arise where two or more products can be produced more cheaply together than separately’. ⁷⁹ For example, Amsterdam arms merchants, like Elias Trip and his sons, could offer foreign buyers a remarkable level of flexibility and velocity by acting as intermediaries between arms producers, the sources of raw materials, and buyers to provide a regiment with all equipment needed. ⁸⁰

One of the most far-reaching innovations was the package deal’s involvement of merchants as intermediaries between arms producers, sources of raw materials, and foreign buyers to provide a regiment with all the equipment needed. ⁸¹ As Sweden prepared to intervene in the Thirty Years’ War, Dietrich von Falkenberg, a senior courtier, signed a contract with Elias Trip in Amsterdam on 17 May 1629. The scale and scope of this deal, together with the tight delivery time, exemplifies the flexibility of Amsterdam’s arms market: 40,602 muskets, 4,602 helmets, 3,456 pieces of armour, 3,456 pikes, 72 drums, 100 halberds, 24 partisans, 500 cuirasses, 4,500 units of gunpowder, 4,500 fuses, 4,500 musket balls, and 8,058 rapiers. Half the material was to be delivered within two weeks, with the rest no later than a month after that. Falkenberg would commission an ‘express man’ in Amsterdam to whom Trip delivered the arms and ammunition. Within nine days after delivery, he would pay Trip 190,000 guilders ‘in banco’, that is, using money drawn on the city’s Bank of Exchange. ⁸² Six days after signing the contract, Sweden placed a request to the Dutch States General to export 8,000 pounds of gunpowder, 8,000 pounds of fuses, and weaponry for 9,000 men. The material was destined for troops in the Holy Roman Empire which was still formally at peace with the Republic. At first, the States granted the request on the condition that Sweden would pay the usual duties. Despite subsequent difficulties with Falkenberg over the Swedish recruitment of soldiers on the Dutch frontiers, the States waived the duties, no doubt because Swedish intervention in the Empire aligned with the Republic’s desire to keep the Austrian Habsburgs preoccupied. ⁸³

Lesser hubs had regional significance and could be connected to larger hubs or might be embedded in a subset of the wider Fiscal-Military System, such as Genoa where Spain transacted the credit, transportation, and supply arrangements required to move troops between its various possessions, as well as to fight wars against France, the Ottomans, and the Dutch. Genoese entrepreneurs also transacted other fiscal-military business, but Spain remained their primary client into the 1690s when it was increasingly displaced by France and Austria. ⁸⁴

A hub’s scale and scope were also influenced by the relationship of its entrepreneurs and clients to the city authorities and to any relevant higher authorities, such as a monarch. It is through these relationships that we see the significance of war in shaping the war business. Relations between states and contractors were symbiotic and often monopolistic. Governments and urban magistrates wanted their cities to prosper, but they were also concerned to safeguard their own resource needs and were concerned if valuable know-how or weaponry might pass into the hands of potential enemies. State contracts were often large and represented reliable, steady business, especially with the growth of permanent armies and navies. In addition, the authorities had the legal power to regulate trade and impose sanctions, thereby increasing their leverage over entrepreneurs and agents. For states, peace meant a relaxation of financial pressure, but for entrepreneurs, it could spell disaster as business dried up. The authorities were often mindful of this and recognized that the presence of multiple entrepreneurs could drive prices down and improve quality through competition. Above all, the existence of multiple providers represented spare capacity available to meet sudden wartime needs, and some states deliberately continued to favour a few, trusted contractors in peacetime to keep them in business. ⁸⁵

Such state patronage was rarely sufficient to maintain profitability, while some activities, like arms production which required expensive, specialist plant and expertise, could not switch easily to supplying civilian customers. However, the supply of war materials was not something to which governments were indifferent, since it affected their own security and relations with other states. During the Dutch Revolt, the States General and its regional naval authorities (the ‘admiralties’) issued bans on the export of arms to Spain. However, merchants circumvented these by filing false destinations; making detours through French ports, Hamburg, or other Hanseatic cities; using false passports; or simply hiding contraband weaponry under other cargo. The Twelve Years’ Truce (1609–1621) freed trade with Spain, but the States General nonetheless rejected some export requests, since the Dutch remained at war in the Spanish colonies in Asia and the Americas. ⁸⁶

For example, on 15 January 1619, the States General discussed reports of the Spanish organization of an armada of 150 ships which, despite the Spanish–Dutch truce, was perceived as a threat. They agreed to send letters to the different Admiralty boards to investigate and advise how to prevent the export of naval stores. Several boards reported a Spanish captain was on his way to Amsterdam with 16,000 ducats to purchase ropes and masts for three galleons docked in Havana. The States concluded in March that ‘Since the country could be severely affected by this, the sale and export of these goods should be prohibited in the most appropriate manner’. A month later, Amsterdam tried to soften the ban by only prohibiting such exports to Havana, but the States General held their ground and the general ban of these shipping goods remained in place. ⁸⁷

VI. The human dimension

The presence of what David Parrott calls the ‘fiscal-military elite’ was vital to a hub’s development. ⁸⁸ This group was distinguished by their specialized expertise, experience, connections, and, above all, their reputation as reliable businessmen who could act discretely if required. The presence of reputable individuals raised a city’s profile as a place to transact fiscal-military business, in turn attracting more people to base themselves there or enter this type of work.

The motives and circumstances surrounding entry into the war business shared much with other commercial activities. People were drawn by the possibility of combining material profit with social advancement. ⁸⁹ It was already common for an individual to start out in one sector of business and then diversify into others. Moreover, some categories of fiscal-military resources, like grain, wine, hemp, horses, and even ships were traded generally. The arms merchant Elias Trip collected a fortune worth 1,000,000 florins making him the eighth of the 250 richest individuals of the Dutch Golden Age. ⁹⁰ He came from a family of iron traders in Dordrecht – who also traded in herring, paper, wine, and cheese – and moved together with his brother Jacob to Amsterdam in 1615. The pair set up shop in Amsterdam selling grain, iron, and other resources as cheese and wine to the Dutch Army. Together with his brother-in-law Louis de Geer (fourth on the list with 1,500,000 florins), he entered the arms business. For Elias Trip, it was a relatively easy step to diversify into shipping, war, and politics.

Nonetheless, the urgency of war imposed tight schedules, while fiscal-military transactions were a high risk, especially as war costs virtually always exceeded states’ capacity to pay, increasing the likelihood of default. Spain defaulted or unilaterally renegotiated its debts 13 times between 1500 and 1900, including nine occasions between 1557 and 1652. At the 1571 bankruptcy, Genoese investment in Spanish debt represented 40 per cent of the total wealth of the city’s elite, indicating a dangerous level of exposure. ⁹¹ That this was not simply ‘usual business’ is indicated by the presence of additional risks with death, injuries, or imprisonment just around the corner. Yet, by its very nature, involvement not only provided opportunities for large profits but brought those who engaged in it into the ‘great affairs’ of state. The Genoese banker Ambroglio Spinola rose to become Spain’s senior general after he entered its military service to safeguard the investments he had made in recruiting troops in 1602. ⁹² Many knowingly entered into financially unprofitable agreements, gambling that the social and political connections they brought would bring other rewards. The Spaniard Martin de Arana signed a lossmaking contract with Philip IV in 1625 to build six galleons, but later received the military governorship of Santander and a knighthood in the military Order of Santiago for his son. ⁹³

The character of fiscal-military resources also provided ways to move from civilian into military trading, as well as from dealing in one category to diversifying into others. For example, large-scale arms production required costly, specialized plant, making it a venture for those who had already accumulated capital through other business activities, or continued these alongside their new business. Conversely, the weapons trade often facilitated access into related sectors like mining, steel production, credit, and the trade in high-value raw materials like copper, especially since these activities also often involved long-distance connections. Louis de Geer has been called the father of the Swedish industry by acquiring the biggest ironworks in Sweden and turning these into a highly productive workshop industry. He effectively owned a monopoly on Swedish iron as well as on Swedish copper production, both of which he acquired by exchanging credit to the Swedish Crown. ⁹⁴ Through his industrial conglomerate, de Geer produced weapons in Sweden with Swedish raw materials, and shipped them to Amsterdam to be sold to the Swedish troops fighting in the German lands. Individual experience of course varied, but it is possible to identify a specifically fiscal-military ladder to social advancement: (1) expertise and connections, leading to (2) entry in the arms business, thus (3) expanding expertise, connections, and gaining reputation and credit, opening access to (4) credit and banking, thus (5) expanding the range of clientele – both geographically, but also and especially socially – to dealing with royalty and princes, culminating in (6) elevations in social status, and the purchase or acquisition of landed estates and grand houses.

The business of war provided opportunities for religious minorities to whom other doors were frequently closed at home. The international connection, including to foreign governments of varying religious confession, opened some room to manoeuvre and the chance for special favours. For example, despite being a Calvinist, Hans de Witte was able to live lavishly in Counter-Reformation Catholic Prague in the 1620s while he worked as Wallenstein’s banker. ⁹⁵ Members of minorities often shared common bonds of exile or persecution, in addition to those of kinship and community of faith. These ties substituted for the absence of a legal framework to enforce contractual obligations between business partners operating under different political jurisdictions, since those who proved unreliable could be named and shamed within their community. ⁹⁶ Additional sanctions could be sought by appealing to notaries, involving panels of fellow merchants who could be convened to arbitrate disputes. ⁹⁷

VII. Conclusion

This article has introduced the concept of the ‘fiscal-military hub’ to enhance our understanding of the relation between state formation, warfare, and business in early modern Europe. It builds on insights from the various perspectives on the state, war, and entrepreneurs, but shifts attention from the chancellery, battlefield, or counting house and refocuses it on the location where political, military, and entrepreneurs conducted the business of war. In doing so, it integrates aspects which have generally been studied separately, and allows each to be viewed in its broader context. It also avoids the risk of viewing the war business anachronistically as simply the ‘arms trade’, or as separate sectors, like weapons production. Instead, by tracing transactions through the places where they were made, and by exploring the relationships between those involved, we can see the connections between different areas of activity, as well as the fluidity of the boundaries between what were subsequently labelled ‘public’ or ‘private’.

Nonetheless, fiscal-military transactions were always more than simply ‘just business’. War was central in determining which cities became fiscal-military hubs, as well as profoundly influencing the behaviour of those involved. The early private business of war was conducted in the open instead of hiding in the shadows like the present private military sector. It was a prestigious business since warfare had been one of the essential tasks of the nobility. The mounting demand in resources from the early sixteenth century created new possibilities, not just for profit, but for financier-merchants to be involved in the ‘business’ of kings and aristocrats. The Trip family made no secret of their activities and success. Several of them had their portraits painted by Rembrandt, including Jacob and his wife. Their house – built to order for Jacob’s two sons – was the largest private residence in seventeenth-century Amsterdam and consisted of two houses behind an impressive seven-window-wide facade proudly embellished with cannons, cannonballs, and mortars, as well as olive branches to illustrate the family motto ‘De Bello Pax’. ⁹⁸ The message was clear: the Trips were among the city’s leading merchants engaged in a transnational business that was both honourable and connected them with the affairs of states.

Contemporary private military and security companies (PMSCs) in some respects echo early modern conditions while displaying important differences. New hubs have emerged to facilitate a business which prefers to operate secretly and, many would argue, illegally. ⁹⁹ One example is Panama where Longifolia, a Russian PMSC, is registered, and where the US firm Triple Canopy used a Panamanian shell company to buy a Dubai-based military contractor operating a variety of subsidiaries in the British Virgin Islands. ¹⁰⁰