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Amsterdam has a long and eventful history. The origins of the city lie in the 12th century, when fishermen living along the banks of the River Amstel built a bridge across the waterway near the IJ, then a large saltwater inlet. Wooden locks under the bridge served as a dam, protecting the village from the rising IJ-waters, which often flooded the early settlement. The mouth of the river Amstel, where the Damrak is now, formed a natural harbor, which became important for trading-exchange from the larger koggeships into the smaller ships that sailed the merchandise deeper into the hinterland.
The 17th century was Amsterdam's Golden Age. Ships from the city sailed to North America, Indonesia, Brazil and Africa and formed the basis of a worldwide trading network. Amsterdam's merchants financed expeditions to the four corners of the world and they acquired the overseas possessions that formed the seeds of the later Dutch colonies. Rembrandt painted in this century, and the city expanded greatly around its canals during this time. Amsterdam was the most important point for the transshipment of goods in Europe and it was the leading financial centre of the world.
The 18th and early 19th centuries saw a decline in Amsterdam's prosperity. The Dutch Republic's wars with the United Kingdom and France took their toll on Amsterdam. During the Napoleonic wars, Amsterdam's fortunes reached their lowest point; with the establishment of the Kingdom of the Netherlands in 1815, however, things slowly began to improve.
At the end of the 19th century the Industrial Revolution reached Amsterdam. The Amsterdam-Rijn canal was dug to give Amsterdam a direct connection to the Rhine and the Noordzee canal was dug to
give the port a connection with the North Sea. Both projects improved communication with the rest of Europe and the world dramatically. They gave the economy a big boost and Amsterdam's
population grew significantly during this period. From 1875, Amsterdam expanded quickly; the first neighborhoods outside the 17th century canal ring were built.
The end of the 19th century is sometimes called Amsterdam's second Golden Age. New museums, the Centraal Station and the Concertgebouw were built.