Amsterdam has always been a well-known name in world history. During the 17th century Amsterdam was the center of world economics, but nowadays the city is known for its tolerant character.

Holland in the 12th century was barely habitable. The land was very humid and consisted mainly of peat. Various rivers intersected the landscape including the River Amstel, which flows into the River Ij. By the end of the 12th century a small settlement arose near a dam in the Amstel, and the city became known as Amsterdam. This dam is still a significant point in the city, and is now used as a square. Amsterdam became a town at the beginning of the 13th century.

Meanwhile, the town extended slowly from the centre around the Dam. Various ramparts were thrown up and canals were dug. Around 1420 the town was bursting at the seams once again. On the eastern part a new wall was built along the present Geldersekade and Kloveniersburgwal. On the west side a moat canal was dug. The economy at this time was not very developed, being based largely on beer and herrings. It was only after Amsterdam became a part of the Burgundian Empire during the 15th century that the economy began to pick up. Amsterdam's harbor had a stable function: fish from the south and grain from the Baltic countries were traded in the city's markets. Because of its economic prosperity, Amsterdam developed into Holland's largest city, with a population of about 30,000.

During the second half of the 16th century, Europe had to deal with reformation. The Low Countries seceded from Spain after the Eighty Years' War, renouncing Catholicism. For a long period Amsterdam was allied with the Spaniards, but in 1578 the city was finally united with the rest of the Netherlands. Holland was one of the most tolerant regions in Europe during this period. For that reason, many Protestants and Portuguese Jews, who were persecuted elsewhere in Europe, moved to cities throughout Holland. A large number of merchants from Antwerp moved their businesses to Amsterdam, which meant a big boost for the local economy.

The Dutch were forced to find their own route to the Indies because of the annexation of Portugal by Spain in 1580. The first voyages to the Indies started in Amsterdam and were a major success. Stimulated by these results, plans were made everywhere in the country to send more ships to the Indies. Out of all these initiatives the United East Indian Company came into existence, the VOC. Over 50 percent of the capital from the new company was in the hands of Amsterdam. When the VOC was founded, not only merchants were involved, but citizens invested in the project as well.

The 17th century was a period of glory for Amsterdam. Wealth, power, culture and forbearance flourished in the city. The population increased rapidly during this period and because of this, the city extended greatly. Amsterdam built its famous ring of canals, and tall houses were built on the canals, taller than in other city centres in Holland. The government strongly encouraged this development, because it added to Amsterdam's prestige. During the first half of this century two churches were built: Zuiderkerk and Westerkerk. The old gothic town hall was burnt down in 1652 and a new town hall, the present-day Palace on Dam Square was built. The Plaetse or Dam Square was enlarged by a great degree, just like the rest of the city. After the Jordaan was completed, around 1700, approximately 200,000 people were living in Amsterdam.

Culturally these days were roaring as well. Due to Amsterdam's economic prosperity, its citizens could afford to surround themselves with objets d'art. Bredero, Vondel and P.C. Hooft wrote their famous poetry, while painter Rembrandt and his students had their atelier in Amsterdam. Philosophers like Spinoza and Descartes formulated their ideas on paper here.

Often however, in locations where things are going well, mischief lies in wait. In 1672 the powerful Netherlands got involved in a war with France and England. Amsterdam's harbor was inaccessible to the fleets sailing in from the Dutch Indies, and because of this the boisterous prosperity came to a halt by the end of the 17th century. The structure of Amsterdam's economy changed: the city lost its position as a stable market for world trade. However, money transfers became more and more important and Amsterdam soon became the financial heart of the world, the banker for European Monarchs who financed their expensive wars with borrowed money.

Amsterdam moved on quietly until industrialization also took its hold on the Netherlands. After 1850, the population in Amsterdam suddenly increased greatly; people moved to the city from all over the Netherlands in quest for employment. New residential quarters were needed, resulting in town developments like the Pijp and the Vondelpark. After 1920, the large developments with new districts in the west, south and east followed. Plan Zuid, by architect Berlage, is still very popular. North of the River Ij, new quarters also arose.

In 1939 however, one of the darkest pages in world history became a terrible reality: World War II. Amsterdam's population was hit hard. Amsterdam had numerous Jewish inhabitants, who were deported and did not survive. Places like Anne Frank's House and the National Monument on Dam Square, are a reminder of this horrible period. After the war, Amsterdam continued growing. During the 1960s the Bijlmer was built, with its high blocks of flats.

Amsterdam is still the Netherlands' undisputed cultural centre with orchestras, ballet, theaters, museums and galleries and two universities. Soccer plays an important role in the life of many Amsterdammers. In the 1970s Amsterdam was famous once again because of Johan Cruyff and Ajax. Ajax and the Dutch national squad's victories are celebrated like real national feasts in Amsterdam.