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In the sixteenth century, merchants of Antwerp developed the idea of shareholdership, to facilitate the building of larger ships, and to make possible more extensive trade. The northern Netherlands became a Republic in 1581, and when Antwerp fell in 1585, many of these merchants went north to Amsterdam. The new Republic was largely controlled by its merchant class rather than by the nobility, and had an economy based on early capitalist principles rather than feudal ones. Specifically, the Republic was an early proponent of Free Trade ideas (e.g. Grotius). Its model of colonization was characterized by a strong belief in the bottom line and was entirely based on private enterprise rather than state control. Britain and France who applied an approach based on mercantilism were able to outcompete the Republic, because in their model long term, politically motivated investments by the state were possible. One consequence of this failure was a crash in the speculative trade in Tulips (the 'windhandel') in 1637.
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