Dutch East India Company
The United East India Company, commonly known as the Dutch East India Company, was a chartered trading company and one of the first joint-stock companies in the world. Established on 20 March 1602 by the States General of the Netherlands amalgamating existing companies, it was granted a 21-year monopoly to carry out trade activities in Asia. Shares in the company could be purchased by any citizen of the Dutch Republic and bought and sold in open-air secondary markets, one of which became the Amsterdam Stock Exchange. The company possessed quasi-governmental powers, including the ability to wage war, imprison and execute convicts, negotiate treaties, strike its own coins, and establish colonies. Because it traded across multiple colonies and countries from both the East and the West, the VOC is sometimes considered to have been the world's first multinational corporation.
Statistically, the VOC eclipsed all of its rivals in the Asian trade. Between 1602 and 1796, the VOC sent nearly 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 and slaves. By contrast, the rest of Europe combined sent 882,412 people from 1500 to 1795. The fleet of the English, later British East India Company, the VOC's nearest competitor, was a distant second to its total traffic, with 2,690 ships and 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 established in 1602 to profit from the Malukan spice trade, the VOC established a capital in the port city of Jayakarta in 1619 and changed its name to Batavia, now Jakarta. 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 annual dividends that averaged to about 18% of the capital for almost 200 years. Weighed down by smuggling, corruption and growing administrative costs in the late 18th century, the company went bankrupt and was formally dissolved in 1799. Its possessions and debt were taken over by the government of the Dutch Batavian Republic.
Company name, logo, and flag
In Dutch, the name of the company was the Vereenigde Nederlandsche Geoctroyeerde Oostindische Compagnie, abbreviated as the VOC, literally the 'United Dutch Chartered East India Company'. The company's monogram logo consisted of a large capital 'V' with an O on the left and a C on the right half and was possibly the first globally recognised corporate logo. It appeared on corporate items, such as flags, cannons, and coins.The first letter of the hometown of the chamber conducting the operation was placed on top. The monogram's versatility, flexibility, clarity, simplicity, symmetry, timelessness, and symbolism are considered notable characteristics of the VOC's professionally designed logo. Those elements ensured its success at a time when the concept of the corporate identity was virtually unknown. An Australian vintner has used the VOC logo since the late 20th century, having re-registered the company's name for the purpose.
Around the world, and especially in English-speaking countries, the VOC is widely known as the 'Dutch East India Company'. The name 'Dutch East India Company' is used to make a distinction from the East India Company and other East Indian companies, such as the Danish East India Company, French East India Company, Portuguese East India Company, and the Swedish East India Company. The company's alternative names that have been used include the 'Dutch East Indies Company', 'United East India Company', 'Jan Company', or 'Jan Compagnie'.
History
Origins
Before the Dutch Revolt, which began in 1566/68, the Brabant city of Antwerp had played an important role as a distribution center in northern Europe. After 1591, the Portuguese used an international syndicate of the German Fugger family and Welser family, as well as Spanish and Italian firms, which operated out of Hamburg as the northern staple port to distribute their goods, thereby cutting Dutch merchants out of the trade. At the same time, the Portuguese trade system was unable to increase supply to satisfy growing demand, in particular the demand for pepper. Demand for spices was relatively inelastic; therefore, each lag in the supply of pepper caused a sharp rise in pepper prices.In 1580, the Portuguese crown was united in a personal union with the Spanish crown, known as the Iberian Union, with which the Dutch Republic was at war. The Portuguese Empire thus became an appropriate target for Dutch military incursions. These factors motivated Dutch merchants to enter the intercontinental spice trade themselves. Further, a number of Dutch merchants and explorers, such as Jan Huyghen van Linschoten and Cornelis de Houtman, obtained firsthand knowledge of the "secret" Portuguese trade routes and practices, providing further opportunity for the Dutch to enter the trade.
The stage was set for Dutch expeditions to the Indonesian islands, beginning with James Lancaster in 1591, Cornelis de Houtman in 1595 and in 1598, Jacob Van Neck in 1598, Lancaster again in 1601, among others. During the four-ship exploratory expedition by Frederick de Houtman in 1595 to Banten, the main pepper port of West Java, the crew clashed with Portuguese and indigenous Javanese. Houtman's expedition then sailed east along the north coast of Java, losing twelve crew members to a Javanese attack at Sidayu and killing a local ruler in Madura. Half the crew were lost before the expedition made it back to the Netherlands in 1596, but with enough spices to make a considerable profit.
File:De terugkomst in Amsterdam van de tweede expeditie naar Oost-Indië, Hendrik Cornelisz Vroom, 1599, Rijksmuseum SK-A-2858.jpg|thumb|260px|The return of the second Asia expedition of Jacob van Neck in 1599 by Cornelis Vroom
In 1598, an increasing number of 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 1598, a fleet of eight ships under Jacob van Neck were the first Dutch fleet to reach the 'Spice Islands' of Maluku, also known as the Moluccas, cutting out the Javanese middlemen. 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 Muslim Hituese on Ambon Island 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 when the Portuguese surrendered their fort in Ambon to the Dutch-Hituese alliance. In 1613, the Dutch expelled the Portuguese from their Solor fort, but a subsequent Portuguese attack led to a second change of hands. Following this second reoccupation, the Dutch 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. They remained in control of the Sandalwood trade. Their resistance lasted throughout the 17th and 18th centuries, causing Portuguese Timor to remain under the Portuguese sphere of control.
Formative years
At the time, it was customary for a company to be funded only for the duration of a single voyage and to be liquidated upon the return of the fleet. Investment in these expeditions was a very high-risk venture, because of the usual dangers of piracy, disease and shipwreck, and because the interplay of inelastic demand and relatively elastic supply of spices could make prices tumble, thereby ruining prospects of profitability. To manage such risk, the forming of a cartel to control supply would seem logical. In 1600, the English were the first to adopt this approach by bundling their resources into a monopoly enterprise, the English East India Company, 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 monopoly over the Asian trade. For a time in the seventeenth century, it was able to monopolise the trade in nutmeg, mace, and cloves and to sell these spices across European kingdoms and Emperor Akbar the Great's Mughal Empire at 14–17 times the price it paid in Indonesia.
While Dutch profits soared, the local economy of the Spice Islands was destroyed, because as a monopoly buyer, the VOC forced the prices paid to the local producers in the Spice Islands down to low levels. With a capital of 6,440,200 guilders, the new company's charter empowered it to build forts, maintain armies, and conclude treaties with Asian rulers. It provided for a venture that continued for 21 years, with a financial accounting only at the end of each decade.
File:Willem Blaeu00.jpg|thumb|Early map of the Maluku Islands made during the Age of Discovery, by Willem Blaeu, 1630. North is on the right, with Ternate as the rightmost followed by Tidore, both were known as the Spice Islands. |left
In February 1603, the company seized the Santa Catarina, a 1,500-ton Portuguese merchant carrack, off the coast of the Malay Peninsula. That same year, a joint Dutch-English force captured another Portuguese carrack off Macau. The proceeds from the sale of the cargo of the two vessels was equivalent to more than 50% of the VOC's original subscription capital.
In 1603, the first permanent Dutch trading post in Indonesia was established in Banten, West Java. In 1611, another was established at Jayakarta. In 1610, the VOC established the post of governor-general to more firmly control their affairs in Asia. To advise and control the risk of despotic governors-general, a Council of the Indies was created. The governor-general effectively became the main administrator of the VOC's activities in Asia. The Heeren XVII, a body of 17 shareholders representing different chambers, continued to officially have overall control.
The VOC headquarters were located in Ambon during the tenures of the first three governors-general, 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 India to Japan. A location in the west of the archipelago was thus sought. The Straits of Malacca were strategic but became 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 voyage commanded by Sir Henry Middleton reached the islands of Ternate, Tidore, Ambon and Banda. In Banda, they encountered severe VOC hostility, sparking Anglo-Dutch competition for access to spices. From 1611 to 1617, the English established trading posts at Sukadana, Makassar, Jayakarta and Jepara in Java, and Aceh, Pariaman and Jambi in Sumatra, which threatened Dutch ambitions for a monopoly on East Indies trade.
In 1620, diplomatic agreements in Europe ushered in a period of collaboration between the Dutch and English spice trades. This ended with the notorious Amboyna massacre, 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 Banten, and focused on other Asian interests.