Dutch East India Company
Overview
 
The Dutch East India Company (Dutch
Dutch language
Dutch is a West Germanic language and the native language of the majority of the population of the Netherlands, Belgium, and Suriname, the three member states of the Dutch Language Union. Most speakers live in the European Union, where it is a first language for about 23 million and a second...

: , VOC, "United East India Company") was a chartered company
Chartered company
A chartered company is an association formed by investors or shareholders for the purpose of trade, exploration and colonization.- History :...

 established in 1602, when the States-General of the Netherlands
States-General of the Netherlands
The States-General of the Netherlands is the bicameral legislature of the Netherlands, consisting of the Senate and the House of Representatives. The parliament meets in at the Binnenhof in The Hague. The archaic Dutch word "staten" originally related to the feudal classes in which medieval...

 granted it a 21-year monopoly
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...

 to carry out colonial activities in Asia. It was the second multinational corporation
Multinational corporation
A multi national corporation or enterprise , is a corporation or an enterprise that manages production or delivers services in more than one country. It can also be referred to as an international corporation...

 in the world (the British East India Company
British East India Company
The East India Company was an early English joint-stock company that was formed initially for pursuing trade with the East Indies, but that ended up trading mainly with the Indian subcontinent and China...

 was founded two years earlier) and the first company to issue stock
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...

. It was also arguably the first megacorporation, possessing quasi-governmental powers, including the ability to wage war, imprison and execute convicts, negotiate treaties, coin money, and establish colonies.

Statistically, the VOC eclipsed all of its rivals in the Asia trade.
Encyclopedia
The Dutch East India Company (Dutch
Dutch language
Dutch is a West Germanic language and the native language of the majority of the population of the Netherlands, Belgium, and Suriname, the three member states of the Dutch Language Union. Most speakers live in the European Union, where it is a first language for about 23 million and a second...

: , VOC, "United East India Company") was a chartered company
Chartered company
A chartered company is an association formed by investors or shareholders for the purpose of trade, exploration and colonization.- History :...

 established in 1602, when the States-General of the Netherlands
States-General of the Netherlands
The States-General of the Netherlands is the bicameral legislature of the Netherlands, consisting of the Senate and the House of Representatives. The parliament meets in at the Binnenhof in The Hague. The archaic Dutch word "staten" originally related to the feudal classes in which medieval...

 granted it a 21-year monopoly
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...

 to carry out colonial activities in Asia. It was the second multinational corporation
Multinational corporation
A multi national corporation or enterprise , is a corporation or an enterprise that manages production or delivers services in more than one country. It can also be referred to as an international corporation...

 in the world (the British East India Company
British East India Company
The East India Company was an early English joint-stock company that was formed initially for pursuing trade with the East Indies, but that ended up trading mainly with the Indian subcontinent and China...

 was founded two years earlier) and the first company to issue stock
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...

. It was also arguably the first megacorporation, possessing quasi-governmental powers, including the ability to wage war, imprison and execute convicts, negotiate treaties, coin money, and establish colonies.

Statistically, the VOC eclipsed all of its rivals in the Asia trade. Between 1602 and 1796 the VOC sent almost a million Europeans to work in the Asia trade on 4,785 ships, and netted for their efforts more than 2.5 million tons of Asian trade goods. By contrast, the rest of Europe combined sent only 882,412 people from 1500 to 1795, and the fleet of the English (later British) East India Company
British East India Company
The East India Company was an early English joint-stock company that was formed initially for pursuing trade with the East Indies, but that ended up trading mainly with the Indian subcontinent and China...

, the VOC’s nearest competitor, was a distant second to its total traffic with 2,690 ships and a mere one-fifth the tonnage of goods carried by the VOC. The VOC enjoyed huge profits from its spice monopoly through most of the 17th century.

Having been set up in 1602, to profit from the Malukan
Maluku Islands
The Maluku Islands are an archipelago that is part of Indonesia, and part of the larger Maritime Southeast Asia region. Tectonically they are located on the Halmahera Plate within the Molucca Sea Collision Zone...

 spice trade, in 1619 the VOC established a capital in the port city of Batavia (now Jakarta
Jakarta
Jakarta is the capital and largest city of Indonesia. Officially known as the Special Capital Territory of Jakarta, it is located on the northwest coast of Java, has an area of , and a population of 9,580,000. Jakarta is the country's economic, cultural and political centre...

). Over the next two centuries the Company acquired additional ports as trading bases and safeguarded their interests by taking over surrounding territory. It remained an important trading concern and paid an 18% annual dividend
Dividend
Dividends are payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders. When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business , or it can be distributed to...

 for almost 200 years. Weighed down by corruption in the late 18th century, the Company went bankrupt and was formally dissolved in 1800, its possessions and the debt being taken over by the government of the Dutch Batavian Republic
Batavian Republic
The Batavian Republic was the successor of the Republic of the United Netherlands. It was proclaimed on January 19, 1795, and ended on June 5, 1806, with the accession of Louis Bonaparte to the throne of the Kingdom of Holland....

. The VOC's territories became the Dutch East Indies
Dutch East Indies
The Dutch East Indies was a Dutch colony that became modern Indonesia following World War II. It was formed from the nationalised colonies of the Dutch East India Company, which came under the administration of the Netherlands government in 1800....

 and were expanded over the course of the 19th century to include the whole of the Indonesian archipelago, and in the 20th century would form Indonesia
Indonesia
Indonesia , officially the Republic of Indonesia , is a country in Southeast Asia and Oceania. Indonesia is an archipelago comprising approximately 13,000 islands. It has 33 provinces with over 238 million people, and is the world's fourth most populous country. Indonesia is a republic, with an...

.

History

Background

During the 16th century, the Spice trade
Spice trade
Civilizations of Asia were involved in spice trade from the ancient times, and the Greco-Roman world soon followed by trading along the Incense route and the Roman-India routes...

 was dominated by the Portuguese who used Lisbon as a staple port. Before the Dutch Revolt
Dutch Revolt
The Dutch Revolt or the Revolt of the Netherlands This article adopts 1568 as the starting date of the war, as this was the year of the first battles between armies. However, since there is a long period of Protestant vs...

, Antwerp had played an important role as a distribution center in northern Europe
Northern Europe
Northern Europe is the northern part or region of Europe. Northern Europe typically refers to the seven countries in the northern part of the European subcontinent which includes Denmark, Estonia, Latvia, Lithuania, Norway, Finland and Sweden...

, but after 1591 the Portuguese used an international syndicate of the German Fugger
Fugger
The Fugger family was a historically prominent group of European bankers, members of the fifteenth and sixteenth-century mercantile patriciate of Augsburg, international mercantile bankers, and venture capitalists like the Welser and the Höchstetter families. This banking family replaced the de'...

s and Welser
Welser
Welser is the surname of an important German banking and merchant family, originally from Augsburg. Along with the Fugger family, the Welser family controlled various sectors of the European economy, and accumulated enormous wealth through trade and the German colonization of the...

s, and Spanish and Italian firms that used Hamburg as its northern staple, to distribute their goods, thereby cutting out Dutch merchants. At the same time, the Portuguese trade system was unable to supply growing demand, in particular the demand for pepper. The demand for spices was relatively inelastic
Price elasticity of demand
Price elasticity of demand is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price. More precisely, it gives the percentage change in quantity demanded in response to a one percent change in price...

, and the lagging supply of pepper therefore caused a sharp rise in pepper prices at the time.

Likewise, as Portugal had been "united" with the Spanish crown, with which the Dutch Republic
Dutch Republic
The Dutch Republic — officially known as the Republic of the Seven United Netherlands , the Republic of the United Netherlands, or the Republic of the Seven United Provinces — was a republic in Europe existing from 1581 to 1795, preceding the Batavian Republic and ultimately...

 was at war, in 1580, the Portuguese Empire
Portuguese Empire
The Portuguese Empire , also known as the Portuguese Overseas Empire or the Portuguese Colonial Empire , was the first global empire in history...

 became an appropriate target for military incursions. These three factors formed motive for Dutch merchants to enter the intercontinental spice trade themselves at this time. Finally, a number of Dutchmen like Jan Huyghen van Linschoten
Jan Huyghen van Linschoten
Jan Huyghen van Linschoten was a Dutch Protestant merchant, traveller and historian. An alternate spelling of second name is Huijgen....

 and Cornelis de Houtman
Cornelis de Houtman
Cornelis de Houtman , brother of Frederick de Houtman, was a Dutch explorer who discovered a new sea route from Europe to Indonesia and managed to begin the Dutch spice trade...

 obtained first hand knowledge of the "secret" Portuguese trade routes and practices, thereby providing opportunity. The stage was thus set for Houtman's four-ship exploratory expedition to Banten
Bantam (city)
Bantam in Banten province near the western end of Java was a strategically important site and formerly a major trading city, with a secure harbor on the Sunda Strait through which all ocean-going traffic passed, at the mouth of Banten River that provided a navigable passage for light craft into...

, the main pepper port of West Java, where they clashed with both the Portuguese and indigenous Indonesians. Houtman's expedition then sailed east along the north coast of Java
Java
Java is an island of Indonesia. With a population of 135 million , it is the world's most populous island, and one of the most densely populated regions in the world. It is home to 60% of Indonesia's population. The Indonesian capital city, Jakarta, is in west Java...

, losing twelve crew to a Javanese attack at Sidayu and killing a local ruler in Madura
Madura
Madura is an Indonesian island off the northeastern coast of Java. The island comprises an area of approximately 4,250 km². Madura is administered as part of the East Java province. It is separated from Java by the narrow Strait of Madura.-History:...

. Half the crew were lost before the expedition made it back to the Netherlands the following year, but with enough spices to make a considerable profit.
In 1598, an increasing number of new fleets were sent out by competing merchant groups from around the Netherlands. Some fleets were lost, but most were successful, with some voyages producing high profits. In March 1599, a fleet of eight ships under Jacob van Neck was the first Dutch fleet to reach the ‘Spice Islands’ of Maluku. The ships returned to Europe in 1599 and 1600 and the expedition made a 400 percent profit. In 1600, the Dutch joined forces with the local Hituese (near Ambon
Ambon Island
Ambon Island is part of the Maluku Islands of Indonesia. The island has an area of , and is mountainous, well watered, and fertile. Ambon Island consists of 2 territories: The main city and seaport is Ambon , which is also the capital of Maluku province and Maluku Tengah Ambon Island is part of the...

) in an anti-Portuguese alliance, in return for which the Dutch were given the sole right to purchase spices from Hitu. Dutch control of Ambon was achieved in alliance with Hitu when in February 1605, they prepared to attack a Portuguese fort in Ambon but the Portuguese surrendered. In 1613, the Dutch expelled the Portuguese from their Solor
Solor
Solor is a volcanic island located off the eastern tip of Flores island in the Lesser Sunda Islands of Indonesia, in the Solor Archipelago. The island supports a small population that has been whaling for hundreds of years. They speak the languages of Adonara and Lamaholot. There are at least five...

 fort, but a subsequent Portuguese attack led to a second change of hands; following this second reoccupation, the Dutch once again captured Solor, in 1636.
East of Solor on the island of Timor Dutch advances were halted by an autonomous and powerful group of Portuguese Eurasians called the Topasses
Topasses
Topasses were a group of people in maritime Asia in the early modern period, who claimed Portuguese ancestry or had taken up Portuguese culture and language. Topasses were found in the various places of South Asia and Southeast Asia which were frequented by the Portuguese, such as Goa, Malacca and...

. They remained in control of the Sandalwood
Sandalwood
Sandalwood is the name of a class of fragrant woods from trees in the genus Santalum. The woods are heavy, yellow, and fine-grained, and unlike many other aromatic woods they retain their fragrance for decades. As well as using the harvested and cut wood in-situ, essential oils are also extracted...

 trade and their resistance lasted throughout the 17th and 18th century, causing West Timor to remain under the Portuguese sphere of control.

Formation

At the time, it was customary for a company to be set up only for the duration of a single voyage, and to be liquidated on the return of the fleet. Investment in these expeditions was a very high-risk venture, not only because of the usual dangers of piracy, disease and shipwreck, but also because the interplay of inelastic demand and relatively elastic supply of spices could make prices tumble at just the wrong moment, thereby ruining prospects of profitability. To manage such risk the forming of a cartel
Cartel
A cartel is a formal agreement among competing firms. It is a formal organization of producers and manufacturers that agree to fix prices, marketing, and production. Cartels usually occur in an oligopolistic industry, where there is a small number of sellers and usually involve homogeneous products...

 to control supply would seem logical. This first occurred to the English, who bundled their forces into a monopoly
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...

 enterprise, the East India Company
East India Company
The East India Company was an early English joint-stock company that was formed initially for pursuing trade with the East Indies, but that ended up trading mainly with the Indian subcontinent and China...

 in 1600, thereby threatening their Dutch competitors with ruin. In 1602, the Dutch government followed suit, sponsoring the creation of a single "United East Indies Company" that was also granted a monopoly over the Asian trade. The charter of the new company empowered it to build forts, maintain armies, and conclude treaties with Asian rulers. It provided for a venture that would continue for 21 years, with a financial accounting only at the end of each decade.

In 1603, the first permanent Dutch trading post in Indonesia was established in Banten
Banten
Banten is a province of Indonesia in Java. Formerly part of the Province of West Java, it was made a separate province in 2000.The administrative center is Serang. Preliminary results from the 2010 census counted some 10.6 million people.-Geography:...

, West Java
West Java
West Java , with a population of over 43 million, is the most populous and most densely populated province of Indonesia. Located on the island of Java, it is slightly smaller in area than densely populated Taiwan, but with nearly double the population...

 and in 1611, another was established at Jayakarta (later 'Batavia' and then 'Jakarta'). In 1610, the VOC established the post of Governor General to enable firmer control of their affairs in Asia. To advise and control the risk of despot
Despotism
Despotism is a form of government in which a single entity rules with absolute power. That entity may be an individual, as in an autocracy, or it may be a group, as in an oligarchy...

ic Governors General, a Council of the Indies (Raad van Indië) was created. The Governor General effectively became the main administrator of the VOC's activities in Asia, although the Heeren XVII, a body of 17 shareholders representing different chambers, continued to officially have overall control.

VOC headquarters were in Ambon for the tenures of the first three Governors General (1610–1619), but it was not a satisfactory location. Although it was at the centre of the spice production areas, it was far from the Asian trade routes and other VOC areas of activity ranging from Africa to Japan. A location in the west of the archipelago was thus sought; the Straits of Malacca were strategic, but had become dangerous following the Portuguese conquest and the first permanent VOC settlement in Banten was controlled by a powerful local ruler and subject to stiff competition from Chinese and English traders.

In 1604, a second English East India Company
East India Company
The East India Company was an early English joint-stock company that was formed initially for pursuing trade with the East Indies, but that ended up trading mainly with the Indian subcontinent and China...

 voyage commanded by Sir Henry Middleton reached the islands of Ternate
Ternate
Ternate is an island in the Maluku Islands of eastern Indonesia. It is located off the west coast of the larger island of Halmahera, the center of the powerful former Sultanate of Ternate....

, Tidore
Tidore
Tidore is a city, island, and archipelago in the Maluku Islands of eastern Indonesia, west of the larger island of Halmahera. In the pre-colonial era, the kingdom of Tidore was a major regional political and economic power, and a fierce rival of nearby Ternate, just to the north.-Geography:Tidor...

, Ambon
Ambon Island
Ambon Island is part of the Maluku Islands of Indonesia. The island has an area of , and is mountainous, well watered, and fertile. Ambon Island consists of 2 territories: The main city and seaport is Ambon , which is also the capital of Maluku province and Maluku Tengah Ambon Island is part of the...

 and Banda
Banda Islands
The Banda Islands are a volcanic group of ten small volcanic islands in the Banda Sea, about south of Seram Island and about east of Java, and are part of the Indonesian province of Maluku. The main town and administrative centre is Bandanaira, located on the island of the same name. They rise...

; in Banda, they encountered severe VOC hostility, which saw the beginning of Anglo-Dutch competition for access to spices. From 1611 to 1617, the English established trading posts at Sukadana
Sukadana
Sukadana is the capital city of North Kayong regency , on the island of Borneo. North Kayong regency is one of the regencies of West Kalimantan province in Indonesia...

 (southwest Kalimantan
Kalimantan
In English, the term Kalimantan refers to the Indonesian portion of the island of Borneo, while in Indonesian, the term "Kalimantan" refers to the whole island of Borneo....

), Makassar
Makassar
Makassar, is the provincial capital of South Sulawesi, Indonesia, and the largest city on Sulawesi Island. From 1971 to 1999, the city was named Ujung Pandang, after a precolonial fort in the city, and the two names are often used interchangeably...

, Jayakarta and Jepara
Jepara
Jepara is a small town in the province of Central Java, Indonesia.Jepara is on the north coast of Java, north-east of Semarang, not far from Mount Muria. It is also the main town of the district of Jepara, which has a population of about 1 million. Jepara is famous as the center of Javanese teak...

 in Java
Java
Java is an island of Indonesia. With a population of 135 million , it is the world's most populous island, and one of the most densely populated regions in the world. It is home to 60% of Indonesia's population. The Indonesian capital city, Jakarta, is in west Java...

, and Aceh, Pariaman
Pariaman
Pariaman is a coastal city in West Sumatra, Indonesia. Pariaman has 72,089 inhabitants , an area of and a coastline. "Pariaman" means "safe area".-History:...

 and Jambi in Sumatra
Sumatra
Sumatra is an island in western Indonesia, westernmost of the Sunda Islands. It is the largest island entirely in Indonesia , and the sixth largest island in the world at 473,481 km2 with a population of 50,365,538...

 which threatened Dutch ambitions for a monopoly on East Indies trade. Diplomatic agreements in Europe in 1620 ushered in a period of cooperation between the Dutch and the English over the spice trade.
This ended with a notorious, but disputed incident, known as the 'Amboyna massacre
Amboyna massacre
The Amboyna massacre was the 1623 torture and execution on Ambon Island , of twenty men, ten of whom were in the service of the British East India Company, by agents of the Dutch East India Company, on accusations of treason...

', where ten Englishmen were arrested, tried and beheaded for conspiracy against the Dutch government. Although this caused outrage in Europe and a diplomatic crisis, the English quietly withdrew from most of their Indonesian activities (except trading in Bantam) and focused on other Asian interests.

Growth

In 1619, Jan Pieterszoon Coen
Jan Pieterszoon Coen
Jan Pieterszoon Coen was a officer of the Dutch East India Company in the early seventeenth century, holding two terms as its Governor-General of the Dutch East Indies....

 was appointed Governor-General of the VOC. He saw the possibility of the VOC becoming an Asian power, both political and economic. On 30 May 1619, Coen, backed by a force of nineteen ships, stormed Jayakarta driving out the Banten forces; and from the ashes established Batavia as the VOC headquarters. In the 1620s almost the entire native population of the Banda Islands
Banda Islands
The Banda Islands are a volcanic group of ten small volcanic islands in the Banda Sea, about south of Seram Island and about east of Java, and are part of the Indonesian province of Maluku. The main town and administrative centre is Bandanaira, located on the island of the same name. They rise...

 was driven away, starved to death, or killed in an attempt to replace them with Dutch plantations. These plantations were used to grow cloves and nutmeg for export.
Coen hoped to settle large numbers of Dutch colonists in the East Indies, but this part of his policies never materialized, mainly because very few Dutch were willing to immigrate to Asia.

Another of Coen's ventures was more successful. A major problem in the European trade with Asia at the time was that the Europeans could offer few goods that Asian consumers wanted, except silver and gold. European traders therefore had to pay for spices with the precious metals, and this was in short supply in Europe, except for Spain and Portugal. The Dutch and English had to obtain it by creating a trade surplus with other European countries. Coen discovered the obvious solution for the problem: to start an intra-Asiatic trade system, whose profits could be used to finance the spice trade with Europe. In the long run this obviated the need for exports of precious metals from Europe, though at first it required the formation of a large trading-capital fund in the Indies. The VOC reinvested a large share of its profits to this end in the period up to 1630.
The VOC traded throughout Asia. Ships coming into Batavia from the Netherlands carried supplies for VOC settlements in Asia. Silver and copper from Japan were used to trade with India and China for silk, cotton, porcelain, and textiles. These products were either traded within Asia for the coveted spices or brought back to Europe. The VOC was also instrumental in introducing European ideas and technology to Asia. The Company supported Christian missionaries and traded modern technology with China and Japan. A more peaceful VOC trade post on Dejima
Dejima
was a small fan-shaped artificial island built in the bay of Nagasaki in 1634. This island, which was formed by digging a canal through a small peninsula, remained as the single place of direct trade and exchange between Japan and the outside world during the Edo period. Dejima was built to...

, an artificial island
Artificial island
An artificial island or man-made island is an island or archipelago that has been constructed by people rather than formed by natural means...

 off the coast of Nagasaki, was for more than two hundred years the only place where Europeans were permitted to trade with Japan.

In 1640, the VOC obtained the port of Galle
Galle
Galle is a city situated on the southwestern tip of Sri Lanka, 119 km from Colombo. Galle is the capital city of Southern Province of Sri Lanka and it lies in Galle District....

, Ceylon, from the Portuguese and broke the latter's monopoly of the cinnamon
Cinnamon
Cinnamon is a spice obtained from the inner bark of several trees from the genus Cinnamomum that is used in both sweet and savoury foods...

 trade. In 1658, Gerard Pietersz. Hulft
Gerard Pietersz. Hulft
Gerard Pietersz. Hulft , was a friendly and intelligent Dutch general. In 1655 he was sent with a fleet to Ceylon and died in action.-Life:...

 laid siege to Colombo
Colombo
Colombo is the largest city of Sri Lanka. It is located on the west coast of the island and adjacent to Sri Jayawardenapura Kotte, the capital of Sri Lanka. Colombo is often referred to as the capital of the country, since Sri Jayawardenapura Kotte is a satellite city of Colombo...

, which was captured with the help of King Rajasinghe II of Kandy
Kandy
Kandy is a city in the center of Sri Lanka. It was the last capital of the ancient kings' era of Sri Lanka. The city lies in the midst of hills in the Kandy plateau, which crosses an area of tropical plantations, mainly tea. Kandy is one of the most scenic cities in Sri Lanka; it is both an...

. By 1659, the Portuguese had been expelled from the coastal regions, which were then occupied by the VOC, securing for it the monopoly over cinnamon.
To prevent the Portuguese or the English from ever recapturing Sri Lanka, the VOC went on to conquer the entire Malabar Coast
Dutch Malabar
Malabar, also known by the name of its main settlement Cochin, was a commandment of the Dutch East India Company on the Malabar Coast between 1661 and 1795, and is part of what is today collectively referred to as Dutch India...

 upon the Portuguese, almost entirely driving them from the west coast of India. When news of a peace agreement between Portugal and the Netherlands reached Asia in 1663, Goa was the only remaining Portuguese city on the west coast.

In 1652, Jan van Riebeeck
Jan van Riebeeck
Johan Anthoniszoon "Jan" van Riebeeck was a Dutch colonial administrator and founder of Cape Town.-Biography:...

 established an outpost at the Cape of Good Hope
Cape of Good Hope
The Cape of Good Hope is a rocky headland on the Atlantic coast of the Cape Peninsula, South Africa.There is a misconception that the Cape of Good Hope is the southern tip of Africa, because it was once believed to be the dividing point between the Atlantic and Indian Oceans. In fact, the...

 (the southwestern tip of Africa, currently in South Africa) to re-supply VOC ships on their journey to East Asia. This post later became a full-fledged colony, the Cape Colony
History of Cape Colony
The written history of Cape Colony South Africa began when Bartolomeu Dias, a Portuguese navigator, discovered the Cape of Good Hope in 1488. In 1497, Vasco da Gama sailed along the whole coast of South Africa on his way to India. The Portuguese, attracted by the riches of Asia, made no...

, when more Dutch and other Europeans started to settle there.

VOC trading posts were also established in Persia (now Iran
Iran
Iran , officially the Islamic Republic of Iran , is a country in Southern and Western Asia. The name "Iran" has been in use natively since the Sassanian era and came into use internationally in 1935, before which the country was known to the Western world as Persia...

), Bengal
Dutch Bengal
Bengal was a directorate of the Dutch East India Company in Bengal between 1610 until the company's liquidation in 1802. It then became a colony of the Kingdom of the Netherlands until 1825, when it was relinquished to the British according to the Anglo-Dutch Treaty of 1824. Dutch presence in the...

 (now Bangladesh
Bangladesh
Bangladesh , officially the People's Republic of Bangladesh is a sovereign state located in South Asia. It is bordered by India on all sides except for a small border with Burma to the far southeast and by the Bay of Bengal to the south...

, but then part of India), Malacca
Dutch Malacca
Dutch Malacca was the longest period of Malacca under foreign control. The Dutch ruled for almost 183 years with intermittent British occupation during the Napoleonic Wars . This era saw relative peace with little serious interruption from the Malay kingdoms due to the understanding earlier on...

 (Melaka, now in Malaysia), Siam (now Thailand
Thailand
Thailand , officially the Kingdom of Thailand , formerly known as Siam , is a country located at the centre of the Indochina peninsula and Southeast Asia. It is bordered to the north by Burma and Laos, to the east by Laos and Cambodia, to the south by the Gulf of Thailand and Malaysia, and to the...

), mainland China (Canton
Guangzhou
Guangzhou , known historically as Canton or Kwangchow, is the capital and largest city of the Guangdong province in the People's Republic of China. Located in southern China on the Pearl River, about north-northwest of Hong Kong, Guangzhou is a key national transportation hub and trading port...

), Formosa (now Taiwan
Taiwan
Taiwan , also known, especially in the past, as Formosa , is the largest island of the same-named island group of East Asia in the western Pacific Ocean and located off the southeastern coast of mainland China. The island forms over 99% of the current territory of the Republic of China following...

) and the Malabar Coast
Dutch Malabar
Malabar, also known by the name of its main settlement Cochin, was a commandment of the Dutch East India Company on the Malabar Coast between 1661 and 1795, and is part of what is today collectively referred to as Dutch India...

 and Coromandel Coast
Dutch Coromandel
Coromandel was a governorate of the Dutch East India Company on the Coromandel Coast between 1610 until the company's liquidation in 1802. It then became a colony of the Kingdom of the Netherlands until 1825, when it was relinquished to the British according to the Anglo-Dutch Treaty of 1824. Dutch...

 in India. In 1662, however, Koxinga
Koxinga
Koxinga is the customary Western spelling of the popular appellation of Zheng Chenggong , a military leader who was born in 1624 in Hirado, Japan to Zheng Zhilong, a Chinese merchant/pirate, and his Japanese wife and died in 1662 on the island of Formosa .A Ming loyalist and the arch commander of...

 expelled the Dutch from Taiwan (see History of Taiwan
History of Taiwan
Taiwan was first populated by Negrito, and then Austronesian people. It was colonized by the Dutch in the 17th century, followed by an influx of Han Chinese including Hakka immigrants from areas of Fujian and Guangdong of mainland China, across the Taiwan Strait...

).

By 1669, the VOC was the richest private company the world had ever seen, with over 150 merchant ships, 40 warships, 50,000 employees, a private army of 10,000 soldiers, and a dividend
Dividend
Dividends are payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders. When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business , or it can be distributed to...

 payment of 40% on the original investment.

Many of the VOC employees inter-mixed with the indigenous peoples and expanded the Mestizo population of Indos in pre-colonial history
Indos in pre-colonial history
Indo people are a Eurasian people of mixed Indonesian and European descent. Through the 16 and 18th century known by the name Mestiço . To this day they form one of the largest Eurasian communities in the world. The early beginning of this community started with the arrival of Portuguese traders...

 

Reorientation

Around 1670, two events caused the growth of VOC trade to stall. In the first place, the highly profitable trade with Japan started to decline. The loss of the outpost on Formosa to Koxinga
Koxinga
Koxinga is the customary Western spelling of the popular appellation of Zheng Chenggong , a military leader who was born in 1624 in Hirado, Japan to Zheng Zhilong, a Chinese merchant/pirate, and his Japanese wife and died in 1662 on the island of Formosa .A Ming loyalist and the arch commander of...

 and related internal turmoil in China (where the Ming dynasty
Ming Dynasty
The Ming Dynasty, also Empire of the Great Ming, was the ruling dynasty of China from 1368 to 1644, following the collapse of the Mongol-led Yuan Dynasty. The Ming, "one of the greatest eras of orderly government and social stability in human history", was the last dynasty in China ruled by ethnic...

 was being replaced with the Qing dynasty
Qing Dynasty
The Qing Dynasty was the last dynasty of China, ruling from 1644 to 1912 with a brief, abortive restoration in 1917. It was preceded by the Ming Dynasty and followed by the Republic of China....

) brought an end to the silk trade after 1666. Though the VOC substituted Bengali for Chinese silk other forces affected the supply of Japanese silver and gold. The shogunate enacted a number of measures to limit the export of these precious metals, in the process limiting VOC opportunities for trade, and severely worsening the terms of trade. Therefore, Japan ceased to function as the lynchpin of the intra-Asiatic trade of the VOC by 1685.

Even more importantly, the Third Anglo-Dutch War
Third Anglo-Dutch War
The Third Anglo–Dutch War or Third Dutch War was a military conflict between England and the Dutch Republic lasting from 1672 to 1674. It was part of the larger Franco-Dutch War...

 temporarily interrupted VOC trade with Europe. This caused a spike in the price of pepper, which enticed the English East India Company (EIC) to aggressively enter this market in the years after 1672. Previously, one of the tenets of the VOC pricing policy was to slightly over-supply the pepper market, so as to depress prices below the level where interlopers were encouraged to enter the market (instead of striving for short-term profit maximization). The wisdom of such a policy was illustrated when a fierce price war with the EIC ensued, as that company flooded the market with new supplies from India. In this struggle for market share, the VOC (which had much larger financial resources) could wait out the EIC. Indeed by 1683, the latter came close to bankruptcy; its share price plummeted from 600 to 250; and its president Josiah Child
Josiah Child
Sir Josiah Child of Wanstead, 1st Baronet , English merchant, economist proponent of mercantilism and governor of the East India Company, was born in London, the second son of Richard Child, a London merchant of old family.-Family:...

 was temporarily forced from office.

However, the writing was on the wall. Other companies, like the French East India Company
French East India Company
The French East India Company was a commercial enterprise, founded in 1664 to compete with the British and Dutch East India companies in colonial India....

 and the Danish East India Company
Danish East India Company
The Danish East India Company was a Danish chartered company.-History:It was founded in 1616, following a privilege of Danish King Christian IV....

 also started to make inroads on the Dutch system. The VOC therefore closed the heretofore flourishing open pepper emporium of Bantam
Bantam (city)
Bantam in Banten province near the western end of Java was a strategically important site and formerly a major trading city, with a secure harbor on the Sunda Strait through which all ocean-going traffic passed, at the mouth of Banten River that provided a navigable passage for light craft into...

 by a treaty of 1684 with the Sultan. Also, on the Coromandel Coast
Dutch Coromandel
Coromandel was a governorate of the Dutch East India Company on the Coromandel Coast between 1610 until the company's liquidation in 1802. It then became a colony of the Kingdom of the Netherlands until 1825, when it was relinquished to the British according to the Anglo-Dutch Treaty of 1824. Dutch...

, it moved its chief stronghold from Pulicat
Pulicat
Pulicat is a historic seashore town in Thiruvallur District, of Tamil Nadu state, South India. It is about 60 km north of Chennai and 3 km from Elavur, on the barrier island of Sriharikota, which separates Pulicat Lake from the Bay of Bengal. Pulicat lake is a shallow salt water lagoon...

 to Negapatnam, so as to secure a monopoly on the pepper trade at the detriment of the French and the Danes. However, the importance of these traditional commodities in the Asian-European trade was diminishing rapidly at the time. The military outlays that the VOC needed to make to enhance its monopoly were not justified by the increased profits of this declining trade.

Nevertheless, this lesson was slow to sink in and at first the VOC made the strategic decision to improve its military position on the Malabar Coast
Dutch Malabar
Malabar, also known by the name of its main settlement Cochin, was a commandment of the Dutch East India Company on the Malabar Coast between 1661 and 1795, and is part of what is today collectively referred to as Dutch India...

 (hoping thereby to curtail English influence in the area, and end the drain on its resources from the cost of the Malabar garrisons) by using force to compel the Zamorin
Saamoothiri
Zamorin is the title used by the Hindu Eradi Samanthan kshatriya rulers of the erstwhile late medieval feudal kingdom of Kozhikode located in the present day state of Kerala, India....

 of Calicut
Kozhikode
Kozhikode During Classical antiquity and the Middle Ages, Kozhikkode was dubbed the "City of Spices" for its role as the major trading point of eastern spices. Kozhikode was once the capital of an independent kingdom of the same name and later of the erstwhile Malabar District...

 to submit to Dutch domination. In 1710, the Zamorin was made to sign a treaty with the VOC undertaking to trade exclusively with the VOC and expel other European traders. For a brief time, this appeared to improve the Company's prospects. However, in 1715, with EIC encouragement, the Zamorin renounced the treaty. Though a Dutch army managed to suppress this insurrection temporarily, the Zamorin continued to trade with the English and the French, which led to an appreciable upsurge in English and French traffic. The VOC decided in 1721 that it was no longer worth the trouble to try to dominate the Malabar pepper and spice trade. A strategic decision was taken to scale down the Dutch military presence and in effect yield the area to EIC influence.

The 1741 Battle of Colachel
Battle of Colachel
The Battle of Colachel was fought on between forces of the Indian kingdom of Travancore and the Dutch East India Company, during the Travancore-Dutch War...

 by Nairs of Travancore
Travancore
Kingdom of Travancore was a former Hindu feudal kingdom and Indian Princely State with its capital at Padmanabhapuram or Trivandrum ruled by the Travancore Royal Family. The Kingdom of Travancore comprised most of modern day southern Kerala, Kanyakumari district, and the southernmost parts of...

 under Raja Marthanda Varma
Marthanda Varma
Marthanda Varma , was the founder of the Indian Hindu feudal kingdom of Travancore from Venad SwaroopamHe ruled from 1729 till his death in 1758, having succeeded his maternal uncle Dharma Raja.King Marthanda Varma is usually credited as the "founder of Kingdom of Travancore" from...

 was therefore a rearguard action. The Dutch commander Captain Eustachius De Lannoy
Eustachius De Lannoy
Eustachius Benedictus de Lannoy was a Flemish naval commander of the Dutch East India Company, who was sent by the company to help establish a trading post at Colachel, Southern India, but was defeated at the Battle of Colachel by...

 was captured. Marthanda Varma agreed to spare the Dutch captain's life on condition that he joined his army and trained his soldiers on modern lines. This defeat in the Travancore-Dutch War
Travancore-Dutch War
The Travancore–Dutch War was a war between the Dutch East India Company and the Indian state of Travancore , culminating in the Battle of Colachel in 1741.-Causes:...

 is considered the earliest example of an organized Asian power overcoming European military technology and tactics; and it signaled the decline of Dutch power in India.

The attempt to continue as before as a low volume-high profit business enterprise with its core business in the spice trade had therefore failed. The Company had however already (reluctantly) followed the example of its European competitors in diversifying into other Asian commodities, like tea, coffee, cotton, textiles, and sugar. These commodities provided a lower profit margin and therefore required a larger sales volume to generate the same amount of revenue. This structural change in the commodity composition of the VOC's trade started in the early 1680s, after the temporary collapse of the EIC around 1683 offered an excellent opportunity to enter these markets. The actual cause for the change lies, however, in two structural features of this new era.

In the first place, there was a revolutionary change in the tastes affecting European demand for Asian textiles, and coffee and tea, around the turn of the 18th century. Secondly, a new era of an abundant supply of capital at low interest rates suddenly opened around this time. The second factor enabled the Company to easily finance its expansion in the new areas of commerce. Between the 1680s and 1720s, the VOC was therefore able to equip and man an appreciable expansion of its fleet, and acquire a large amount of precious metals to finance the purchase of large amounts of Asian commodities, for shipment to Europe. The overall effect was to approximately double the size of the company.

The tonnage of the returning ships rose by 125 percent in this period. However, the Company's revenues from the sale of goods landed in Europe rose by only 78 percent. This reflects the basic change in the VOC's circumstances that had occurred: it now operated in new markets for goods with an elastic demand, in which it had to compete on an equal footing with other suppliers. This made for low profit margins. Unfortunately, the business information systems of the time made this difficult to discern for the managers of the company, which may partly explain the mistakes they made from hindsight. This lack of information might have been counteracted (as in earlier times in the VOC's history) by the business acumen of the directors. Unfortunately by this time these were almost exclusively recruited from the political regent
Regenten
In the 16th, 17th and 18th centuries, the regenten were the rulers of the Dutch Republic, the leaders of the Dutch cities or the heads of organisations . Though not formally a hereditary "class", they were de facto "patricians", comparable to that ancient Roman class...

 class, which had long since lost its close relationship with merchant circles.

Low profit margins in themselves don't explain the deterioration of revenues. To a large extent the costs of the operation of the VOC had a "fixed" character (military establishments; maintenance of the fleet and such). Profit levels might therefore have been maintained if the increase in the scale of trading operations that in fact took place, had resulted in economies of scale
Economies of scale
Economies of scale, in microeconomics, refers to the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit...

. However, though larger ships transported the growing volume of goods, labor productivity did not go up sufficiently to realize these. In general the Company's overhead rose in step with the growth in trade volume; declining gross margins translated directly into a decline in profitability of the invested capital. The era of expansion was one of "profitless growth".

Concretely: "[t]he long-term average annual profit in the VOC's 1630-70 'Golden Age' was 2.1 million guilders, of which just under half was distributed as dividends and the remainder reinvested. The long-term average annual profit in the 'Expansion Age' (1680–1730) was 2.0 million guilders, of which three-quarters was distributed as dividend and one-quarter reinvested. In the earlier period, profits averaged 18 percent of total revenues; in the latter period, 10 percent. The annual return of invested capital in the earlier period stood at approximately 6 percent; in the latter period, 3.4 percent."

Nevertheless, in the eyes of investors the VOC did not do too badly. The share price hovered consistently around the 400 mark from the mid-1680s (excepting a hiccup around the Glorious Revolution
Glorious Revolution
The Glorious Revolution, also called the Revolution of 1688, is the overthrow of King James II of England by a union of English Parliamentarians with the Dutch stadtholder William III of Orange-Nassau...

 in 1688), and they reached an all-time high of around 642 in the 1720s. VOC shares then yielded a return of 3.5 percent, only slightly less than the yield on Dutch government bonds.

Decline

However, from there on the fortunes of the VOC started to decline. Five major problems, not all of equal weight, can be adduced to explain its decline in the next fifty years to 1780.
  • There was a steady erosion of intra-Asiatic trade by changes in the Asiatic political and economic environment that the VOC could do little about. These factors gradually squeezed the company out of Persia, Suratte, the Malabar Coast, and Bengal. The company had to confine its operations to the belt it physically controlled, from Ceylon through the Indonesian archipelago. The volume of this intra-Asiatic trade, and its profitability, therefore had to shrink.
  • The way the company was organized in Asia (centralized on its hub in Batavia) that initially had offered advantages in gathering market information, began to cause disadvantages in the 18th century, because of the inefficiency of first shipping everything to this central point. This disadvantage was most keenly felt in the tea trade, where competitors like the EIC and the Ostend Company
    Ostend Company
    The Imperial Ostend Company was an Austrian private trading company established in 1717 to trade with the East and West Indies. For a few years it provided strong competition to the traditional colonial trading companies...

     shipped directly from China to Europe.
  • The "venality" of the VOC's personnel (in the sense of corruption and non-performance of duties), though a problem for all East-India Companies at the time, seems to have plagued the VOC on a larger scale than its competitors. To be sure, the company was not a "good employer". Salaries were low, and "private-account trading" was officially not allowed. Not surprisingly, it proliferated in the 18th century to the detriment of the company's performance. From about the 1790s onward, the phrase perished by corruption (also abbreviated VOC in Dutch) came to summarize the company's future.
  • A problem that the VOC shared with other companies was the high mortality and morbidity rates among its employees. This decimated the company's ranks and enervated many of the survivors.
  • A self-inflicted wound was the VOC's dividend policy
    Dividend policy
    Dividend policy is concerned with taking a decision regarding paying cash dividend in the present or paying an increased dividend at a later stage. The firm could also pay in the form of stock dividends which unlike cash dividends do not provide liquidity to the investors, however, it ensures...

    . The dividends distributed by the company had exceeded the surplus it garnered in Europe in every decade but one (1710–1720) from 1690 to 1760. However, in the period up to 1730 the directors shipped resources to Asia to build up the trading capital there. Consolidated bookkeeping therefore probably would have shown that total profits exceeded dividends. In addition, between 1700 and 1740 the company retired 5.4 million guilders of long-term debt. The company therefore was still on a secure financial footing in these years. This changed after 1730. While profits plummeted the bewindhebbers only slightly decreased dividends from the earlier level. Distributed dividends were therefore in excess of earnings in every decade but one (1760–1770). To accomplish this, the Asian capital stock had to be drawn down by 4 million guilders between 1730 and 1780, and the liquid capital available in Europe was reduced by 20 million guilders in the same period. The directors were therefore constrained to replenish the company's liquidity by resorting to short-term financing from anticipatory loans, backed by expected revenues from home-bound fleets.


Despite of all this, the VOC in 1780 remained an enormous operation. Its capital in the Republic, consisting of ships and goods in inventory, totaled 28 million guilders; its capital in Asia, consisting of the liquid trading fund and goods en route to Europe, totaled 46 million guilders. Total capital, net of outstanding debt, stood at 62 million guilders. The prospects of the company at this time therefore need not have been hopeless, had one of the many plans to reform it been taken successfully in hand. However, then the Fourth Anglo-Dutch War
Fourth Anglo-Dutch War
The Fourth Anglo–Dutch War was a conflict between the Kingdom of Great Britain and the Dutch Republic. The war, tangentially related to the American Revolutionary War, broke out over British and Dutch disagreements on the legality and conduct of Dutch trade with Britain's enemies in that...

 intervened. British attacks in Europe and Asia reduced the VOC fleet by half; removed valuable cargo from its control; and devastated its remaining power in Asia. The direct losses of the VOC can be calculated at 43 million guilders. Loans to keep the company operating reduced its net assets to zero.

From 1720 on, the market for sugar from Indonesia declined as the competition from cheap sugar from Brazil increased. European markets became saturated. Dozens of Chinese sugar traders went bankrupt which led to massive unemployment, which in turn led to gangs of unemployed coolies. The Dutch government in Batavia did not adequately respond to these problems. In 1740, rumors of deportation of the gangs from the Batavia area led to widespread rioting. The Dutch military searched houses of Chinese in Batavia searching for weapons. When a house accidentally burnt down, military and impoverished citizens started slaughtering and pillaging the Chinese community. This massacre of the Chinese
1740 Batavia massacre
The 1740 Batavia massacre was a pogrom against ethnic Chinese living in the port city of Batavia, the Dutch East Indies , that occurred between 9 and 22 October 1740....

 was deemed sufficiently serious for the board of the VOC to start an official investigation into the Government of the Dutch East Indies for the first time in its history.

After the Fourth Anglo-Dutch War, the VOC was a financial wreck, and after vain attempts by the provincial States of Holland and Zeeland to reorganize it, was nationalised on 1 March 1796 by the new Batavian Republic
Batavian Republic
The Batavian Republic was the successor of the Republic of the United Netherlands. It was proclaimed on January 19, 1795, and ended on June 5, 1806, with the accession of Louis Bonaparte to the throne of the Kingdom of Holland....

. Its charter was renewed several times, but allowed to expire on 31 December 1800. Most of the possessions of the former VOC were subsequently occupied by Great Britain during the Napoleonic wars
Napoleonic Wars
The Napoleonic Wars were a series of wars declared against Napoleon's French Empire by opposing coalitions that ran from 1803 to 1815. As a continuation of the wars sparked by the French Revolution of 1789, they revolutionised European armies and played out on an unprecedented scale, mainly due to...

, but after the new United Kingdom of the Netherlands
United Kingdom of the Netherlands
United Kingdom of the Netherlands is the unofficial name used to refer to Kingdom of the Netherlands during the period after it was first created from part of the First French Empire and before the new kingdom of Belgium split out in 1830...

 was created by the Congress of Vienna
Congress of Vienna
The Congress of Vienna was a conference of ambassadors of European states chaired by Klemens Wenzel von Metternich, and held in Vienna from September, 1814 to June, 1815. The objective of the Congress was to settle the many issues arising from the French Revolutionary Wars, the Napoleonic Wars,...

, some of these were restored to this successor state of the old Dutch Republic
Dutch Republic
The Dutch Republic — officially known as the Republic of the Seven United Netherlands , the Republic of the United Netherlands, or the Republic of the Seven United Provinces — was a republic in Europe existing from 1581 to 1795, preceding the Batavian Republic and ultimately...

 by the Anglo-Dutch Treaty of 1814
Anglo-Dutch Treaty of 1814
The Anglo-Dutch Treaty of 1814 was a treaty signed between Great Britain and the Netherlands in London on August 13, 1814...

.

The Wright family, owners of Voyager Estate in Margaret River Western Australia, acquired the VOC name and trademark in 1995.

Organization

The VOC had two types of shareholders: the participanten, who could be seen as non-managing partners, and the 76 bewindhebbers (later reduced to 60) who acted as managing partners. This was the usual set-up for Dutch joint-stock companies at the time. The innovation in the case of the VOC was, that the liability of not just the participanten, but also of the bewindhebbers was limited to the paid-in capital (usually, bewindhebbers had unlimited liability). The VOC therefore was a limited-liability company. Also, the capital would be permanent during the lifetime of the company. As a consequence, investors that wished to liquidate their interest in the interim could only do this by selling their share to others on the Amsterdam Stock Exchange
Amsterdam Stock Exchange
The Amsterdam Stock Exchange is the former name for the stock exchange based in Amsterdam. It merged on 22 September 2000 with the Brussels Stock Exchange and the Paris Stock Exchange to form Euronext, and is now known as Euronext Amsterdam.-History:...

.

The VOC consisted of six Chambers (Kamers) in port cities: Amsterdam
Amsterdam
Amsterdam is the largest city and the capital of the Netherlands. The current position of Amsterdam as capital city of the Kingdom of the Netherlands is governed by the constitution of August 24, 1815 and its successors. Amsterdam has a population of 783,364 within city limits, an urban population...

, Delft
Delft
Delft is a city and municipality in the province of South Holland , the Netherlands. It is located between Rotterdam and The Hague....

, Rotterdam
Rotterdam
Rotterdam is the second-largest city in the Netherlands and one of the largest ports in the world. Starting as a dam on the Rotte river, Rotterdam has grown into a major international commercial centre...

, Enkhuizen
Enkhuizen
Enkhuizen is a municipality and a town in the Netherlands, in the province of North Holland and the region of West-Frisia.Enkhuizen was one of the harbour-towns of the VOC, just like Hoorn and Amsterdam, from where overseas trade with the East Indies was conducted. It received city rights in 1355...

, Middelburg
Middelburg
Middelburg is a municipality and a city in the south-western Netherlands and the capital of the province of Zeeland. It is situated in the Midden-Zeeland region. It has a population of about 48,000.- History of Middelburg :...

 and Hoorn
Hoorn
-Cities :* Purmerend * Enkhuizen * Alkmaar * Amsterdam * Lelystad * Den Helder * Leeuwarden -Towns :* Edam...

. Delegates of these chambers convened as the Heeren XVII (the Lords Seventeen). They were selected from the bewindhebber-class of shareholders.

Of the Heeren XVII, eight delegates were from the Chamber of Amsterdam (one short of a majority on its own), four from the Chamber of Zeeland, and one from each of the smaller Chambers, while the seventeenth seat was alternatively from the Chamber of Zeeland or rotated among the five small Chambers. Amsterdam had thereby the decisive voice. The Zeelanders in particular had misgivings about this arrangement at the beginning. The fear was not unfounded, because in practice it meant Amsterdam stipulated what happened.
The six chambers raised the start-up capital of the Dutch East India Company:
Chamber Capital (Guilders)
Amsterdam 3,679,915
Middelburg 1,300,405
Enkhuizen 540,000
Delft 469,400
Hoorn 266,868
Rotterdam 173,000
Total: 6,424,588


The raising of capital in Rotterdam did not go so smoothly. A considerable part originated from inhabitants of Dordrecht
Dordrecht
Dordrecht , colloquially Dordt, historically in English named Dort, is a city and municipality in the western Netherlands, located in the province of South Holland. It is the fourth largest city of the province, having a population of 118,601 in 2009...

. Although it did not raise as much capital as Amsterdam or Zeeland, Enkhuizen had the largest input in the share
Share (finance)
A joint stock company divides its capital into units of equal denomination. Each unit is called a share. These units are offered for sale to raise capital. This is termed as issuing shares. A person who buys share/shares of the company is called a shareholder, and by acquiring share or shares in...

 capital of the VOC. Under the first 358 shareholders, there were many small entrepreneurs, who dared to take the risk
Risk
Risk is the potential that a chosen action or activity will lead to a loss . The notion implies that a choice having an influence on the outcome exists . Potential losses themselves may also be called "risks"...

. The minimum investment in the VOC was 3,000 guilders, which priced the Company's stock within the means of many merchants.

Among the early shareholders of the VOC, immigrants played an important role. Under the 1,143 tenderers were 39 Germans and no fewer than 301 from the Southern Netherlands
Southern Netherlands
Southern Netherlands were a part of the Low Countries controlled by Spain , Austria and annexed by France...

 (roughly present Belgium
Belgium
Belgium , officially the Kingdom of Belgium, is a federal state in Western Europe. It is a founding member of the European Union and hosts the EU's headquarters, and those of several other major international organisations such as NATO.Belgium is also a member of, or affiliated to, many...

 and Luxembourg
Luxembourg
Luxembourg , officially the Grand Duchy of Luxembourg , is a landlocked country in western Europe, bordered by Belgium, France, and Germany. It has two principal regions: the Oesling in the North as part of the Ardennes massif, and the Gutland in the south...

, then under Habsburg
Habsburg
The House of Habsburg , also found as Hapsburg, and also known as House of Austria is one of the most important royal houses of Europe and is best known for being an origin of all of the formally elected Holy Roman Emperors between 1438 and 1740, as well as rulers of the Austrian Empire and...

 rule), of whom Isaac le Maire
Isaac Le Maire
Isaac le Maire was a merchant for the Vereenigde Oostindische Compagnie and later for the Austraalse Compagnie. He is best known for his constant strife with the VOC, which ultimately led to the discovery of Cape Horn.Isaac le Maire was born in 1558 or 1559 in Tournai...

 was the largest subscriber with ƒ85,000. VOC's total capitalization
Market capitalization
Market capitalization is a measurement of the value of the ownership interest that shareholders hold in a business enterprise. It is equal to the share price times the number of shares outstanding of a publicly traded company...

 was ten times that of its British rival.

The logo of the VOC consisted of a large capital 'V' with an O on the left and a C on the right leg. It appeared on various corporate items, such as cannon
Cannon
A cannon is any piece of artillery that uses gunpowder or other usually explosive-based propellents to launch a projectile. Cannon vary in caliber, range, mobility, rate of fire, angle of fire, and firepower; different forms of cannon combine and balance these attributes in varying degrees,...

s and the coin illustrated above. The first letter of the hometown of the chamber conducting the operation was placed on top (see figure for example of the Amsterdam chamber logo). The flag of the company was orange, white, blue (see Dutch flag) with the company logo embroidered on it.

The Heeren XVII (Lords Seventeen) met alternately 6 years in Amsterdam and 2 years in Middelburg. They defined the VOC's general policy and divided the tasks among the Chambers. The Chambers carried out all the necessary work, built their own ships and warehouses and traded the merchandise. The Heeren XVII sent the ships' masters off with extensive instructions on the route to be navigated, prevailing winds, currents, shoals and landmarks. The VOC also produced its own charts.

In the context of the Dutch-Portuguese War
Dutch-Portuguese War
The Dutch–Portuguese War was an armed conflict involving Dutch forces, in the form of the Dutch East India Company and the Dutch West India Company, against the Portuguese Empire. Beginning in 1602, the conflict primarily involved the Dutch companies invading Portuguese colonies in the Americas,...

 the company established its headquarters in Batavia, Java (now Jakarta
Jakarta
Jakarta is the capital and largest city of Indonesia. Officially known as the Special Capital Territory of Jakarta, it is located on the northwest coast of Java, has an area of , and a population of 9,580,000. Jakarta is the country's economic, cultural and political centre...

, Indonesia
Indonesia
Indonesia , officially the Republic of Indonesia , is a country in Southeast Asia and Oceania. Indonesia is an archipelago comprising approximately 13,000 islands. It has 33 provinces with over 238 million people, and is the world's fourth most populous country. Indonesia is a republic, with an...

). Other colonial outposts were also established in the East Indies
East Indies
East Indies is a term used by Europeans from the 16th century onwards to identify what is now known as Indian subcontinent or South Asia, Southeastern Asia, and the islands of Oceania, including the Malay Archipelago and the Philippines...

, such as on the Spice Islands
Maluku Islands
The Maluku Islands are an archipelago that is part of Indonesia, and part of the larger Maritime Southeast Asia region. Tectonically they are located on the Halmahera Plate within the Molucca Sea Collision Zone...

 (Moluccas), which include the Banda Islands
Banda Islands
The Banda Islands are a volcanic group of ten small volcanic islands in the Banda Sea, about south of Seram Island and about east of Java, and are part of the Indonesian province of Maluku. The main town and administrative centre is Bandanaira, located on the island of the same name. They rise...

, where the VOC forcibly maintained a monopoly over nutmeg
Nutmeg
The nutmeg tree is any of several species of trees in genus Myristica. The most important commercial species is Myristica fragrans, an evergreen tree indigenous to the Banda Islands in the Moluccas of Indonesia...

 and mace. Methods used to maintain the monopoly included the violent suppression of the native population, not stopping short of extortion
Extortion
Extortion is a criminal offence which occurs when a person unlawfully obtains either money, property or services from a person, entity, or institution, through coercion. Refraining from doing harm is sometimes euphemistically called protection. Extortion is commonly practiced by organized crime...

 and mass murder
Mass murder
Mass murder is the act of murdering a large number of people , typically at the same time or over a relatively short period of time. According to the FBI, mass murder is defined as four or more murders occurring during a particular event with no cooling-off period between the murders...

. In addition, VOC representatives sometimes used the tactic of burning spice trees in order to force indigenous populations to grow other crops, thus artificially cutting the supply of spices like nutmeg and cloves.

VOC outposts

Organization and leadership structures were varied as necessary in the various VOC outposts:

Opperhoofd is a Dutch word (plural Opperhoofden) which literally means 'supreme head[man]'. In this VOC context, the word is a gubernatorial title, comparable to the English Chief factor, for the chief executive officer of a Dutch factory
Factory (trading post)
Factory was the English term for the trading posts system originally established by Europeans in foreign territories, first within different states of medieval Europe, and later in their colonial possessions...

 in the sense of trading post, as led by a Factor, i.e. agent.
See more at VOC Opperhoofden in Japan
VOC Opperhoofden in Japan
VOC Opperhoofden in Japan were the chief traders of the Dutch East India Company in Japan during the period of the Tokugawa shogunate, also known as the Edo period.Opperhoofd is a Dutch word which literally means 'supreme head[man]'...


Council of Justice in Batavia

The Council of Justice in Batavia was the appelate court for all the other VOC Company posts in the VOC empire.

Notable VOC ships

Replicas
Ship replica
A ship replica is a reconstruction of a no longer existing ship. Replicas can range from authentically reconstructed, fully seaworthy ships, to ships of modern construction that give an impression of an historic vessel...

 have been constructed of several VOC ships, marked with an (R)

  • Amsterdam
    VOC ship Amsterdam
    The Amsterdam was an 18th-century cargo ship of the Dutch East India Company. The ship started its maiden voyage from Texel to Batavia on 8 January 1749, but was wrecked in a storm on the English Channel on 26 January 1749. The shipwreck was discovered in 1969 in the bay of Bulverhythe, United...

     (R)
  • Arnhem
    Arnhem (ship)
    The Arnhem, named after the city of Arnhem in the Netherlands, was a Dutch East Indiaman that entered the Gulf of Carpentaria and recorded having sighted Groote Eylandt in 1623. The vessel was shipwrecked off Mauritius on 12 February 1662. Volkert Evertsz and other survivors of the wreck came...

  • Batavia
    Batavia (ship)
    Batavia was a ship of the Dutch East India Company . It was built in Amsterdam in 1628, and armed with 24 cast iron cannons and a number of bronze guns. Batavia was shipwrecked on her maiden voyage, and was made famous by the subsequent mutiny and massacre that took place among the survivors...

     (R)
  • Braek
  • Concordia
  • Duyfken
    Duyfken
    Duyfken was a small Dutch ship built in the Netherlands. She was a fast, lightly armed ship probably intended for shallow water, small valuable cargoes, bringing messages, sending provisions, or privateering...

     ("Little Dove") (R)
  • Eendracht (1615)
    Eendracht (1615 ship)
    The Eendracht was an early 17th Century Dutch wooden-hulled sailing ship, launched in 1615 in the service of the Dutch East India Company...

     ("Unity")
  • Galias
  • Grooten Broeck ("Great Brook")
  • Gulden Zeepaert ("Golden Seahorse")
  • Halve Maen
    Halve Maen
    The Halve Maen was a Dutch East India Company vlieboot which sailed into what is now New York harbor in September 1609. It was commissioned by the Dutch Republic to covertly find an eastern passage to China...

     ("Half moon") (R)
  • Hoogkarspel
    Hoogkarspel
    Hoogkarspel is a village in the municipality Drechterland, located in the north west of the Netherlands, in the province of North Holland and the region of West-Frisia....

  • Heemskerck
  • Hollandia
    VOC ship Hollandia
    Hollandia was a ship of the Dutch East India Company which wrecked on Annet, Isles of Scilly on 13 June 1743 causing 276 fatalities. The wreck was discovered in 1971 by Rex Cowan, a London attorney.-History:...

  • Klein Amsterdam ("Small Amsterdam")
  • Leeuwerik ("Lark")
  • Leyden
  • Limmen
  • Meermin
  • Pera
  • Prins Willem ("Prince William") (R)
  • Ridderschap van Holland ("Knighthood of Holland
    Ridder (title)
    Ridder is a noble title in the Netherlands and Belgium. The collective term for its holders in a certain locality is the Ridderschap . In the Netherlands and Belgium no female equivalent exists...

    ")
  • Rooswijk
  • Sardam
    Sardam
    The Sardam was a 17th century Dutch East India Company yacht . It was a small merchant vessel designed primarily for the inter-island trade in the East Indies....

  • Texel
  • Utrecht
  • Vergulde Draeck
    Vergulde Draeck
    The Vergulde Draeck was a Dutch East India Company ship of the seventeenth century. She sailed from Texel bound for Batavia , under Pieter Albertsz and was carrying trade goods and eight chests of silver worth 78,6000 guilders...

     ("Gilded Dragon")
  • Vianen
    Vianen (ship)
    Vianen, sometimes spelled Vyanen or Viane, was a 17th-century VOC sailing ship, used to transport cargo between Europe and the Indies. It was shipwrecked but refloated on its first voyage, and shipwrecked and sunk on its second...

  • Vliegende Hollander ("Flying Dutchman")
  • Vliegende Swaan ("Flying Swan")
  • Wapen van Hoorn ("Arms of Hoorn")
  • Wezel ("Weasel")
  • Zeehaen ("Sea Cock")
  • Zeemeeuw ("Seagull")
  • Zeewijk
    Zeewijk
    The Zeewijk was an 18th century East Indiaman of the Dutch East India Company that was shipwrecked at the Houtman Abrolhos, off the coast of Western Australia, on 9 June 1727. The survivors built a second ship, the Sloepie, enabling 82 out of the initial crew of 208 to reach their initial...

  • Zuytdorp
    Zuytdorp
    The VOC Zuytdorp also Zuiddorp was a trading ship of the Dutch East India Company in the 18th century. On 1 August 1711 it was dispatched from the Netherlands to the trading port of Batavia bearing a load of freshly minted silver coins.Many trading ships of the time had started to use a "fast...

     ("South Village")

See also

  • Chartered companies
  • Spice wars

Other trade companies of the age of the sail
  • The British East India Company
    British East India Company
    The East India Company was an early English joint-stock company that was formed initially for pursuing trade with the East Indies, but that ended up trading mainly with the Indian subcontinent and China...

    , founded in 1600
  • The Dutch West India Company
    Dutch West India Company
    Dutch West India Company was a chartered company of Dutch merchants. Among its founding fathers was Willem Usselincx...

    , founded in 1621
  • The Swedish East India Company
    Swedish East India Company
    The Swedish East India Company was founded in Gothenburg, Sweden, in 1731 for the purpose of conducting trade with the Far East...

    , founded in 1731
  • The Emden Company
    Emden Company
    The Emden Company was a Prussian trading company which was established in 1752 to trade primarily with the city of Canton in China. Its full name was the Royal Prussian Asiatic Company in Emden to Canton and China , but it was generally known by the shorter name.The Company was made possible by the...

    , founded 1751

Governors General of the Dutch East India Company
  • Governor-General of the Dutch East Indies
    Governor-General of the Dutch East Indies
    The Governor-General of the Dutch East Indies represented the Dutch rule in the Dutch East Indies between 1610 and Dutch recognition of the independence of Indonesia in 1949.The first Governors-General were appointed by the Dutch East India Company...


Further reading

  • Ames, Glenn J. The Globe Encompassed: The Age of European Discovery, 1500-1700. Pearson Prentice Hall, 2008.
  • Blussé, L. et al., eds. The Deshima [sic] Dagregisters: Their Original Tables of Content. Leiden, 1995-2001.
  • Blussé, L. et al., eds. The Deshima Diaries Marginalia 1740-1800. Tokyo, 2004.
  • Boxer, C.R. Jan Compagnie in Japan, 1600-1850: An Essay on the Cultural Aristic and Scientific Influence Exercised by the Hollanders in Japan from the Seventeenth to the Nineteenth Centuries. Den Haag, 1950.
  • Boxer, C.R. The Dutch Seaborne Empire: 1600-1800. London, 1965.
  • Bruijn, J.R.
    Jaap R. Bruijn
    Jacobus Ruurd "Jaap" Bruijn , is one of the best known and respected Dutch maritime historians. He was professor of maritime history at the University of Leiden from 1979 until his retirement in 2003...

    , Femme Gaastra
    Femme Gaastra
    Femme Simon Gaastra was Professor of maritime history at the University of Leiden and a leading expert on the history of the Dutch East India Company.-Early life and education:...

    , and I. Schöffer, eds., Dutch-Asiatic shipping in the 17th and 18th centuries. Rijks geschiedkundige publicatiën. Grote serie, vol. 165-167. (The Hague: Nijhoff, 1979, 1987).(2003), "The Forgotten Gold? The Importance of the Dutch opium trade in the Seventeenth Century", in Eidos. University College Utrecht Academic Magazine. Issue 2/2003 Utrecht University(1991), "The English and Dutch East India Companies and the Glorious Revolution of 1688-9", in: , The Anglo-Dutch moment. Essays on the Glorious Revolution and its world impact, Cambridge U.P, ISBN 0-521-39075-3, pp. 407–438
  • De Lange, William. (2006) Pars Japonica: the first Dutch expedition to reach the shores of Japan, Floating World Editions. ISBN 1891640232 (1997), The First Modern Economy. Success, Failure, and Perseverance of the Dutch Economy, 1500-1815, Cambridge University Press
    Cambridge University Press
    Cambridge University Press is the publishing business of the University of Cambridge. Granted letters patent by Henry VIII in 1534, it is the world's oldest publishing house, and the second largest university press in the world...

    , ISBN 978-0-521-57825-7
  • Furber, Holden, Rival Empires of Trade in the Orient 1600-1800. Minneapolis, 1976
  • Israel, Jonathan I., Dutch Primacy in World Trade 1585-1740. Oxford, 1989
  • Glamann, Kristof., Dutch-Asiatic Trade 1620-1740. The Hague
    The Hague
    The Hague is the capital city of the province of South Holland in the Netherlands. With a population of 500,000 inhabitants , it is the third largest city of the Netherlands, after Amsterdam and Rotterdam...

    , 1958


External links

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