At the beginning of the XVII century, widely issuing bonds and shares for an unlimited number of people, the Dutch East India Company became the first officially registered public JSC. According to some influential historians and economists, the company's institutional innovations and business practices have laid the foundations for the growth of giant global corporations in the following centuries.
For almost 200 years of its existence, the company has actually transformed into a state endowed with great power. Below is the history of the Dutch East India Company, whose activities are widely covered in scientific research and fiction.
Company Background
In the first two-thirds of the 16th century, the city of Antwerp played an important role as an international trading hub. Since 1591, its importance gradually began to decline, but the role of Amsterdam in trade increased. At the same time, the Portuguese trading system could not satisfy the growing demand for certain types of goods, in particular for spices. These factors prompted Dutch merchants to enter the intercontinental spice trade. In addition, the Dutch, Jan Huygen van Linschoten and Cornelis de Hautman, received first-hand information about the "secret" Portuguese trade routes, which increased the chances of Dutch merchants to succeed.
In 1595, an expedition was organized, led by the famous explorer Frederic de Houtman. In June 1596, Dutch ships reached Bantam, which subsequently became an important trading port of the East India Company. Then the Hautman expedition sailed east along the northern coast of Java. Half of the crew died during the expedition, but nevertheless it was recognized as successful, since it was possible to make a big profit for the delivered spices.
In 1598, an increasing number of fleets were sent out by competing trading groups from all over Holland. Some of them were unable to reach their final destination and were lost along the way, but most were successful and brought high profits. In March 1599, for the first time in the history of the Dutch fleet, an expedition led by Jacob Cornelis van Nek reached the Moluccas (Spice Islands). The ships returned to Europe in 1599 and 1600, their holds were loaded with pepper, cloves, nutmeg and cinnamon. The expedition was a huge success, the profit from it was 400%.
Johan van Aldenbarnevelt Initiative
The success of the first trading expeditions stimulated the development of Dutch trade and contributed to the establishment of new trading companies. Their number was constantly growing, and disagreements began to arise, threatening to develop into a serious conflict. A compromise solution to this difficult situation was proposed by the Dutch statesman and diplomat Johan van Oldenbarnevelt. To eliminate competition in the market and increase profits from trade, he invited merchants to unite and direct joint efforts to develop Dutch trade at the international level.
The conclusion of a mutually beneficial agreement was preceded by lengthy negotiations, as a result of which in the spring of 1602 it was decided to establish a Dutch East India Company, endowed with broad powers. She had the right to conclude agreements with other countries, maintain her own army, mint a coin and independently conduct military operations. By its authority, the company resembled a state in a state. At the time of its highest development, some researchers even used the term "empire." But the founder of the Dutch East India Company could not witness the triumph of his brainchild. In 1619, he was executed on charges of treason.
The company traded in textiles, cotton, spices, silk, ceramics, opium, etc. By pursuing a tough policy, it maintained a monopoly on many products in order to get rid of competition in the face of the British and Portuguese. Subsequently, such a policy will be harshly criticized by economists and historians who rightly accused the company of colonialism.
The main headquarters of the East India Company was located in Amsterdam, which became the center of world trade in the 17th century. Enormous wealth flocked to this city. Peter Bot was appointed the first governor general of the East Indies (we are talking about a company, not a colony). During his tenure, he managed to establish trade relations with the Molluk Islands, famous for their spices.
Symbolics: logo and flag
The name of the East India Company in Dutch is Vereenigde Oostindische Compagnie or Verenigde Oost-Indische Compagnie, the abbreviation is VOC (in Russian - VOC). Her logo may have become the first internationally recognized corporate logo. It consisted of a capital V in the center, the letter O on the left and the letter C on the right. The inherent versatility, timelessness, laconicism, simplicity and symmetry are considered the main characteristics of a well-designed logo designed to ensure the success of the company.
The flag of the Dutch East India Company is a rectangular panel of three equal horizontal stripes of red, white and blue. In the center of the flag is the logo.
Throughout the world, and especially in English-speaking countries, VOC is widely known as the Dutch East India Company. This name is used to distinguish it from the British East India Company and other East Indian related organizations such as the Danish East India Company, the French East India Company and others.
Organizational structure
Dutch VOC is a public company, which became the first multinational corporation to operate on different continents such as Europe, Asia and Africa. Despite the fact that it was a Dutch company, its employees were also people from other countries. In addition to the diverse workforce of northwestern Europe, VOC has widely used local labor markets in Asia.
The staff of the various VOC offices in Asia consisted of European and Asian staff. Workers from Asia and Europe were hired as sailors, soldiers, carpenters, blacksmiths or ordinary unskilled workers. At the height of its power, the Dutch East India Company consisted of 25,000 employees who worked in the field in Asia, and 11,000 people on the move.
In the context of the Dutch-Portuguese war, the company established its headquarters in Batavia, Java (now Jakarta, Indonesia). Other colonial outposts have also been established in the East Indies (East Indies), for example the Moluccas, which include the Banda Islands, where VOC has forcibly supported the nutmeg monopoly.
A distinctive feature of the company, progressive for that time, was that the liability of shareholders was limited by the capital they contributed, so VOCs can be classified as a limited liability company. To preserve the authorized capital of the company, it was decided to ban investors from taking the invested funds, but they had the right to sell them on the stock exchange.
The company consisted of six houses, the delegates of which were appointed from among the holders of shares in the Dutch VOC. The chambers did all the necessary work: they built their own ships and warehouses, and traded in goods. Delegates convened regularly at the meeting of “Seventeen Masters” (Heeren XVII).
Minimum investment in the company amounted to 3,000 guilders. The founders collected a record for that time amount of authorized capital - 6,440,200 guilders. Thus, the total capital of the company was 10 times higher than the capital of its competitor, the British East India Company.
Formation period
In February 1603, off the coast of Singapore, the Dutch, under the leadership of Admiral Jacob van Hemskerkom, captured the Portuguese merchant ship Santa Catarina, on board of which was a valuable cargo of Chinese porcelain, the sale of which brought huge profits to the company. In the same year, the first permanent Dutch trading post in Indonesia was established in Banten, West Java, and in 1611 another in Jakarta.
In 1610, the Dutch East India Company established the post of Governor General to more effectively exercise control over its affairs in Asia. To prevent local arbitrariness, the Council of India (Raad van Indië) was created.
During their tenure as the first three governor-generals (1610-1619), the company’s headquarters were located on the island of Ambon, which occupied an unfavorable geographical position from the point of view of administrative management. Despite the fact that the island was a center for the production of spices, it was located at a remote distance from the Asian trade routes and other areas of VOC activity, from Africa and India to Japan.
Below in the photo is Ambon Island in the 17th century drawing.
Rivalry with the British East India Company
Trade in the East Indies (East India) brought large revenues to the treasury, so large companies sought to monopolize it in order to maximize profits. In this region, the interests of Britain and Holland clashed in the first quarter of the 17th century.
In 1604, the flight of the British East India Company, led by Sir Henry Middleton, reached the islands of Ternate, Tidore, Ambon and Banda. In the Gang, the members of the English expedition were faced with the hostility of the Dutch VOC, which was caused by the competing position between the corporations for the right to sell spices. From 1611 to 1617, British trading ports in Makassar, Jakarta and Jepar in Java, as well as in Pariaman and Jambi on the island of Sumatra, threatened Dutch ambitions seeking to establish a monopoly on trade in the East Indies.
In 1619, King James I and the Netherlands General States initiated the signing of a diplomatic agreement between the British and Dutch East Indian companies. The spice market was divided in certain proportions, which allowed to maintain the monopoly of both companies. The period of cooperation between the Dutch and the British came, although relations between them remained tense.
In 1623, an incident occurred that went down in history as the Ambon massacre. Ten Englishmen were arrested, convicted and beheaded for conspiracy against the Dutch government. The trial in this case did not lead to any definite results. The main result of this event was the consolidation of the Dutch in the Moluccas. The British withdrew from most of their trading activities in Indonesia and concentrated on other areas of the Asian region.
The heyday of company power
In 1619, Jan Peterszone Kun was appointed Governor-General of the Dutch East India Company. May 30, 1619 Kun, reinforced by the forces of nineteen ships, stormed Jakarta. From the ashes Batavia was created, which housed the headquarters of VOCs. In 1620, almost the entire indigenous population of the Banda Islands was forcibly evicted, starved to death, or killed. The conquered plantations were used to grow cloves and nutmegs, and migrants from the Netherlands and slaves from Asia worked for them.
Dutch VOCs traded throughout Asia. Ships arriving in Batavia from the Netherlands delivered supplies for VOC settlements in Asia. Silver and copper from Japan were used to trade with China and India, which produced silk, cotton, porcelain and textiles.
In 1658, Gerard Peters Hulft besieged Colombo. In 1659, the Portuguese were expelled from the coastal areas, which were then occupied by the Dutch. As a result, the Dutch company received a monopoly on the sale of cinnamon.
In the 17th century, sales offices of the Dutch East India Company were established in Persia, Bengal, Malacca, Siam and Formosa, as well as on the Malabar and Coromandel Indian shores.
By 1669, VOC was the richest private open company the world had ever seen, with more than 150 merchant ships, 40 warships, a 50,000-strong staff headquarters, and a private army of 10,000 soldiers.
Company Contribution to Science
In the Golden Age of Holland, the republic reached its peak in art, commerce and science. These achievements would not have been possible without the existence of the Dutch East India Company. The Dutch, using their experience in doing business, cartography, shipbuilding, shipping and navigation, organized expeditions to distant corners of the world, about which science of that time had practically no information. Dutch travelers and explorers revealed unknown lands to the world, which contributed to the development of geography and cartography. When the ships of this country reached unknown corners of the globe, cartographers entered their coordinates on the map. The Great Atlas was recognized as a masterpiece of Dutch cartographic art.
Seafarer Hendrik Hamel, serving in the Dutch East India Company, was the first European to record his adventures on the Korean peninsula and give the first accurate description of the everyday life of Koreans in the Western world.
Historical heritage
Locations (including cities, towns, and villages) founded by employees of the Dutch public company:
- The city of Tainan, which is famous for its rich cultural heritage.
- A major port and industrial center is Kaohsiung City.
- The city of Cape Town, which initially developed as a transit point for the company's ships.
- Parle is one of the oldest cities founded by European settlers in South Africa.
This is only a small part of the historical heritage of the powerful Dutch company, which has been operating for almost two centuries.
Bankruptcy of the Dutch East India Company
The first signs of the decline of the company appeared in the first half of the 17th century. The war for the Spanish inheritance of 1701-1714 led to a deterioration in the economic situation in the Netherlands, which negatively affected the activities of the East India Company. In order to protect caravans of goods from enemy attacks, it was decided to convert some merchant ships into military ones. This required large financial costs, therefore, the merchant oligarchy opposed the modernization of the courts, and the government was forced to take its side in this matter, which subsequently led to a significant decrease in income from colonial trade.
To a large extent, the decline of the Dutch trading empire was the result of a deterioration in trade with China. The Dutch VOC could not fully meet the needs of the Chinese market, so merchants from the Middle Kingdom began to prefer other sellers, in particular, they visited the port of Riau.
One of the main reasons for the decline of the company was the policy of mercantilism, which in the early 20s of the XVII century began to pursue the largest states, which included England and France. The essence of the policy was to increase duties on exported raw materials, in particular on wool. Dutch enterprises stopped receiving raw materials in the same volume, which led to a decrease in their productivity.
Holland did not have its own industrial base, therefore, with the beginning of world industrial development, the country could not compete with the states that now independently produced final products from raw materials. The conflict with the British Empire, which led to a series of military clashes between the two countries, aggravated the situation. By 1796, the debt of the Dutch OIC amounted to 110 million florins, which predetermined bankruptcy and the subsequent dissolution of the once powerful corporation in 1799. All assets were transferred to the government, and VOCs became Dutch government colonies.
Despite the great contribution of the Dutch East India Company to the development of the global economy, its activities have long been severely criticized for its monopolistic policies, labor exploitation, slavery and colonialism.