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With a monopoly in copper from Japan, cloves from Amboina, and elephants from Ceylon, the Dutch East India Company controlled nearly all trade in the Indian Ocean and along the western rim of the Pacific for over one hundred years. They were not the first European traders in the region, nor were they the most recent success, but they were the first to assemble a trade empire from the east coast of Africa to Japan, connecting all points in-between, reaching as far south as the northern coast of Australia. The inexorable push for profit drove experienced Dutch traders into the Indian Ocean just prior to the turn of the seventeenth century, and they dominated the seas through the close of that century and for much of the eighteenth as well. Financed originally by the mundane, the trade in Eastern luxuries fell under almost exclusive Dutch control. Taking over the brisk local trade and combining it with long distance, inter-regional trade, the Verenigde Oost-Indische Compagnie (VOC) was able to assemble trade monopolies never contemplated by their competition, from sandalwood to elephants to Japanese copper as the only European traders allowed by the Shogunate. The Dutch forced Portugal out of an empire, prevented Spain from acquiring one, and held the capitalistic English at bay for a century before the final waning of their power. The VOC was able to rise and dominate because it out-coerced its competition, until changes in trade patterns forced the Dutch into obsolescence.
The East India trade sprang fully formed from the Dutch Republic at the end of the sixteenth century. The sixteenth century had been one of significant Dutch power in Northern European trade, leaving merchants primed to take the East India risks the moment Jan Huyghen van Linschoten’s Itinerario appeared. Linschoten had been a servant to the Portuguese archbishop in Goa, on the Indian coast, and in 1595, on his return to the Netherlands, he published his Itinerario, “a geographical description of the world, including . . . a series of sailing directions for reaching America and the Indies” (Parry, Establishment 99). The Dutch were in the middle of a long struggle for independence from the Spanish empire, and the war had “interrupted the supply of spices, of which the Dutch had been the distributors throughout Northern Europe” (Parry, Reconnaissance 197). Merchants immediately found captains willing to try the instructions, for the first to successfully penetrate the lucrative, Iberian-controlled spice trade was guaranteed fortunes far beyond his admittedly great expenses. After all, the Dutch had been going to the East for years in Spanish and Portuguese ships (much the same thing after the union of the crowns in 1580) as deck hands and officers, but no one had a true set of instructions until Linschoten’s publication in 1595 (Parry, Establishment 99). The first ships left Amsterdam beginning in 1595, under a number of private partnerships (Parry, Reconnaissance 198). The most impressive returns, however, came in 1599 when the fleet of Jacob van Neck returned from the Moluccas, in a fourteen-month turnaround, having traded very successfully with the local princes. As one contemporary wrote, “So long as Holland has been Holland, never have such richly laden ships been seen here” (qtd. in Parker 194). With a profit of 400 per cent on the venture, everyone who had not yet financed a trading expedition to the Spice Islands quickly found some starting capital, especially as van Neck testified to a warm reception. Trading in Ternate, Banda, and Amboina, each under the control of a different ruler, van Neck’s men “were well received almost everywhere. Unlike the Portuguese they did not in those early voyages mix their commerce with piracy or proselytizing, and their fleets were equipped for competitive trading”, bringing cash payments in silver coin (Parry, Establishment 100). However, van Neck was not the only man to go out in 1598: there were five fleets that year, comprising twenty-two ships, all competing for the same supply (100). The local rulers, seeing the sharp rise in demand, increased “prices, tolls, and harbour dues against Europeans”, cutting into profits from the beginning, for both the upstart Dutch companies and the established Portuguese (101). Already, it appeared to the Dutch government, the States General, that the East India trade was going to run itself into the ground through competition. In 1599, it refused to grant a charter to yet another company wishing to enter the spice trade, giving it permission only to trade in China (Masselman 142). When the terms of the charter were ignored, it was clear that more had to be done to alleviate the already worsening situation.
Near the end of 1601, with the spice trade already in jeopardy from competition and many companies nearing bankruptcy, the States General ordered consolidation of the Dutch companies. By the end of the next year, ships were going to the Indies under the banner of the United Dutch East India Company (Verenigde Oost-Indische Compagnie, or VOC). It was truly a united Dutch company, bringing capital from throughout the Low Countries to converge on the East Indies. Initial capital came from two important sources: individual investors and the sale of stock on the Amsterdam exchange. Over half the capital came from outside investment, allowing as many people as possible to profit from the East India trade (Masselman 147). Among the individual investors, it was decided at the outset that the merchants of “Amsterdam should supply half the capital, Zealand one quarter, and The Meuse and Northern Quarter each one eighth” (143). Those who paid in a minimum of 6,000 guilders were granted the right to sit on a regional board of directors and to sell their cargo in their own ports, though all profits were to go into the communal pot (147). From among these regional directors, the Heren Seventeen, the true leaders of the company, were chosen, based upon regional representation of capital (149). Amsterdam received only eight directors for its 57 per cent outlay, but as it required only one additional vote to attain majority, it accepted the division at eight from Amsterdam, four from Zealand, two each from The Meuse and Northern Quarter, and one rotating member from a smaller chamber to prevent gridlock in voting procedure (Israel, Primacy 69-70). These seventeen men were all successful merchants, not government representatives, thus putting the VOC firmly in the hands of experience, even if some of the gains to be had from trade were political (Masselman 147). The States General granted the VOC exclusive trading rights from the Cape of Good Hope to the Straits of Magellan and gave the Company the right to make peace or war with the local rulers. It was this last article that gave the Company the power it needed in order to compete with the established Iberians and the upstart English. The VOC had the right “to make treaties with princes and potentates in the name of the States General. The Company was also allowed to establish forts and garrisons at strategic points and to appoint governors and officers of justice to preserve law and order” (150). This was most important because the greatest competition came from the redistributive empire of the Spaniards, who had absorbed Portugal and the Portuguese colonies in Asia and could bring the whole force of empire to bear on unwilling potential trading partners. In fact, the object of the creation of a united Dutch company was dual: first to provide profits to the home region, and then to interfere in enemy trade where possible (150).
This combination of trade and politics was inevitable in the Dutch republic. Trade between Northern Europe and the Iberian Peninsula had been the economic base for centuries. It was the head of the States General, Johan van Oldebarnevelt, who initiated the consolidation of the various Dutch companies into the VOC, for the solidification of Dutch power against the Iberians in addition to the ultimate quest for profit. The relationship between the ostensibly private company and the public government became more and more blurred from 1602 until the final collapse in 1798. The Dutch success is due entirely to the Company’s position as an arm of the government in the East Indies. No one else attained an organization quite like it: “Commenting on the persistently closer relationship of the Dutch East India Company (VOC) to the Dutch ruling oligarchy, and the Dutch statecraft, than that of its English counterpart to the crown and Parliament of England, Niels Steensgaard held that the Dutch company was not a ‘pure’ type, since it was strictly neither a business, nor a ‘redistributive enterprise’ operated by the state, but a complex blend of the two” (in Israel, Primacy 16). The English attempted to run a business; the Spanish attempted to build a land-based political empire that would be useful for trade. The Dutch chose the middle course. Trade was initially in private hands, but even as early as 1598, the States General “tried to arrange an orderly development of the East India trade . . . Early in January of that year all companies were instructed to send delegates to The Hague for a discussion of this matter” (Masselman 141). Even before there was a trade, the States General involved itself, yet when the actual VOC was created, it stepped back to allow those knowledgeable in trade take the lead. Political moves did not always benefit the VOC, as evidenced by Oldebarnevelt’s attempts to liquidate the Company in 1607. The Spanish wanted the Dutch to stop menacing their trade at Manila, and they were willing to concede Dutch independence if the Dutch would leave the Indies alone. The war for independence had already been a thirty year struggle at that point, and politically speaking, Oldebarnevelt “evidently believed that withdrawal from the Indies was a sacrifice well worth making for the sake of a full peace with Spain and secure, internationally recognized borders” (Israel, Hispanic 6). Moves towards liquidation encountered heavy resistance, however, as the war was allowing profits in one trade sector even as it was strangling profits in another. Oldebarnevelt was forced to tell the Spanish emissaries in 1608 that “too many prominent personages in the Republic were involved in the East India Company for it to be disbanded” (9). The English could revoke the charter to their company at any time, as the power of the monarchy did not rest with the merchant class. In the Spanish empire, “the whole India trade, as well as the means of transportation, were the prerogatives of the king. Not only did he see fit to exclude his own subjects, but also, on the basis of a Papal Bull, all other nations as well” (Masselman 149-150). The Dutch system of private corporations had been at work in the Baltic for generations, and the idea that the government could eliminate a profitable corporation for political gain was anathema to the Dutch merchant class. It was necessary for the government, therefore, to work with the merchants and maintain the company as a private entity with government intervention only when requested. The entire creation was essentially “a harnessing of the Dutch entrepôt to the machinery of the Dutch state” (Israel, Primacy 16). Because the VOC was run by merchants for profit, but could call on the government for infusions of capital or military assistance, it was able to compete with the government of Spain and keep the private English company at bay through force when necessary.
The primary motive behind the creation of the VOC was to set up a Dutch monopoly of trade between the spice growing regions of Southeast Asia and the Northern European consumers of spices whom the Dutch had been servicing for years. After all, “a centralized monopoly was the easiest to protect” (Parry, Establishment 153). Monopoly was necessary in order to protect the heavily laden ships both going to the Indies with bullion and coming from the Indies with spices and the proceeds of the China trade. As long as the Spanish remained in the region, they would consider Dutch ships to be prizes of war, for the final peace was not ironed out until 1648, and even 1649 saw skirmishes between the Dutch and Spanish in the Indies. During the wars of independence, trading posts in the East were more vulnerable than the home provinces. In 1619, the Spanish decided that it was in their best interests “to capture the newly flourishing Dutch factory at Pulicat . . . arguing that this would much impede the Dutch spice trade and stimulate the rival Portuguese spice trade” (Israel, Hispanic 67). Eastern warehouses were to be attacked. Already, the Dutch were busy taking as prizes Goa-bound Portuguese ships rounding the Cape of Good Hope (118). It was to be expected that if the other nation would not keep their ships out of controlled waters, those ships were fair game, and certainly easier to eliminate, in many respects, than the land-based, fortified warehouses. Trading privileges, as well as the proceeds of trade, had to be protected by the monopoly system. By intervening in local quarrels when requested, the Dutch received the gratitude and trade concessions of the local principalities, “which strengthened the company’s command of the surrounding sea. . . . By the end of the century . . . a [great] area was covered by states which had become virtually Dutch protectorates” (Parry, Establishment 156). Monopoly also covered the inputs to the system of spice trading. When it was discovered that greater profits could be made by exchanging spices in India for cotton cloth that was desired in Indonesia, the VOC had to assume control of Indian trade from the Portuguese as well, for if they were not forced out of the cloth trade, “this would only encourage the revival of their spice trade in the islands” (Israel, Primacy 103). Acquisitions were then under the centralized control of the Dutch entrepôt system. The Asian center of business was set up at Batavia (now Jakarta), on the island of Java. Products from as far west as Mocha, on the Arabian peninsula, and as far east as Nagasaki, the one open Japanese port, were brought to Batavia to be sent out again. Batavia became “a central mart for inter-Asiatic trade, and the general warehouse of eastern goods for export to Europe” (Parry, Establishment 152-3). The entrepôt consolidation of product allowed the VOC to ship the desired cargoes anywhere in Asia or Europe. It was highly inefficient from the standpoint of Mocha, Surat, and all other points west of Batavia, “but as usual at that time, considerations of convenience were expected to give way to considerations of monopoly” (153). Indeed, monopoly was attained in approximately a fifty-year period. The consolidation of all trade in the region allowed the Dutch what appeared to be continual expansion.
Initially, monopolistic expansion was defined as acquiring a monopoly in each tradable commodity, most of which were to be found only in a particular island or island group. The occupation of Java brought pepper, indigo, and cotton yarn into the VOC’s coffers, a treaty with the Susuhunan of Mataram required regular deliveries of rice from that principality, and the Sultan of Bantam, by treaty, sold his entire pepper crop to the Company at Company prices (Parry, Establishment 160). In 1613, the sandalwood producing island of Solar was seized from the Portuguese, assuring Dutch supply of a trade good popular in Java, China, and India, securing trade in commodities for European markets (Israel, Primacy 103). The English were forced out of Amboina, the center of clove cultivation, in 1623 (Masselman 431). Dutch intervention on the side of the Sinhalese rulers of the interior of Ceylon against the Portuguese, brought most of the island’s cinnamon into Dutch hands (Israel, Hispanic 278). By the end of the 1650s, the VOC controlled a near monopoly over the world’s cinnamon - the exports to Europe alone more than paid the military costs to maintain the monopoly, especially in the following decade of rising cinnamon prices in Amsterdam, and cinnamon was sold in large quantities in India as well (Israel, Primacy 251-2). A side-trade developed as the VOC became the sole exporter of elephants from Ceylon to the Indian subcontinent. By 1674, the Dutch had completely cornered trade in the Moluccas, the main source of pepper, and the Banda Islands, the only source of nutmeg and mace (253). The Dutch were the only Europeans allowed to trade with Japan, bringing in quantities of copper for the India trade and silver bullion to be exchanged with the Chinese (172). In addition, control of Taiwan proved extremely lucrative in the 1630s, when the Brazilian sugar plantations were devastated, as sugar prices in Europe rose and the VOC controlled the Chinese supply (174). A monopoly on shipments of Gujarati indigo to Northern Europe was maintained by trade advantage, rather than force (180). The China trade, once broken open to the VOC by force, showed no reluctance to trading with the entrepôt of Fort Zeelandia, on Taiwan (174). Everywhere they could, the VOC established a monopoly in trade and set up an Asian variety of the traditional Dutch entrepôt system. To the great benefit in trade, it was widely known that “Only the Dutch were in a position to ship in cloves - the fastest selling spice in Gujarat - Japanese copper, and Chinese goods to Surat, Persia, and Arabia. As in Europe, the entrepôt system was the key to their strength” (180). Control over individual commodities, and control over their global distribution, allowed the Dutch to penetrate inter-Asian trade, something the Portuguese, until the seventeenth century the foremost traders in the region, never chose to do.
The Dutch monopoly on inter-Asian trade is the true success of the VOC. As early as 1614, the empire building governor-general, Jan Pieterszoon Coen, recognized the potential for inter-Asiatic trade. When petitioning the Heren XVII for more troops and more capital to secure Asian trade, Coen argued that even more important than controlling the traditional trade “was the need to exclude the enemy from inter-Asiatic trade, which was ‘more profitable than the entire spice trade of Europe’” (Masselman 308). There was already trade between the various regions of Asia, much of it in the hands of the Chinese and the Gujarati. Coen aspired to the creation of a Dutch trade hegemon, where the only niche for local traders would be purely local at best. The trade along the Chinese coast, by Chinese, was even menaced by the Company in order to gain trading privileges in spite of imperial hostility towards the Dutch (Israel, Primacy 173). Inter-Asian trade was rather ignored initially by the directors, as they preferred the assured profits from the Asia to Europe trade. However, by the 1630s, the war with Spain had escalated again, and purchasing power, especially in the form of bullion, was not forthcoming from the Low Countries (176). In addition, protection costs in the Indian Ocean had risen enormously once the English tried to exert some force against the Dutch. Expansion of trade was necessary to keep profits flowing in order to maintain the already overextended VOC. The only way this expansion was possible “was by generating vast new profits through the mechanisms of local, inter-Asian trade. The Company became an Asian trader on a large scale and, by doing so, generated the additional purchasing power, in coin and commodities, which it needed to settle its mounting balances” (176-177). A roundabout trade emerged, limiting the reliance on silver bullion that had caused the Company problems since its inception:
Shipping fine spices, Chinese silks and porcelain, and Japanese copper to India, the Company purchased cotton textiles in Gujarat and Coromandel which it then sold in the Archipelago for pepper and fine spices. In the same way, spices, Chinese silks, Japanese copper, and also coffee from Mocha helped pay for the VOC’s purchases of silk and drugs in Persia. Pepper and spices also supplemented silver in the Company’s purchases of Chinese wares, on Taiwan (177).
Cash flow problems were solved by a much more limited reliance on silver as the basis of trade, and Japanese silver helped offset the deficiencies in what could be supplied from home. The Dutch were the only Europeans to replace the existing trade structures in the Asian system. Initially, the Portuguese and then the Spanish “had more or less integrated themselves into the structures which they found upon their arrival in Asia,” leaving trade systems for the most part intact (Kriedte 83). Overland routes through Persia remained viable, and those proceeds picked up by the Dutch Levant trade through the Mediterranean, through the early years of the seventeenth century (83). Trade diminished through Persia only when the VOC took control of Asian trade. England remained a constant threat in the Asia to Europe trade, but it did not attempt to control regional trade on the level of the VOC. It was the Dutch who “connected the various trade zones of Asia, systematically exchanging commodities between Near East, India, Indonesia, and the Far East in ways that the English Company could not do and never did” (Israel, Primacy 187). Throughout the seventeenth century, it was the inter-Asian trade that bolstered the VOC against English competition in Europe as well, by trading regional goods for regional goods and thus conserving far more expensive bullion.Trade supremacy in the East Indies, for the most part, was determined by the results of coercion. The Dutch preferred to use coercion very specifically to control the prices in the spice trade. In general, the VOC would, “as soon as its growing power permitted, . . . regulate production in order to maintain prices, and . . . confine production of especially valuable spices to areas under its own control” (Parry, Establishment 160). Treaties had been made with the rulers of various islands or parts of various islands in the Indonesian archipelago, and these treaties, while initially simply asking that taxes or tribute be paid in spices, or demanding an entire year’s crop, began to put the Dutch in direct control of the lands involved. The VOC did not seek to enter the colonization business - they were involved only in trade. The directors were certain that colonial land grabbing had depleted Portuguese resources, and they were determined that the Dutch not bankrupt themselves in territorial acquisitions (152). Instead, the treaty system dominated. It proved successful for a time, as “commercial treaties led to alliances, and alliances to protectorates” and the policy was more successful in some quarters than in others until it was shown that treaties were quickly and easily broken when competitors came to call, forcing the Dutch to “[follow] in the footsteps of the Portuguese” in territorial acquisition (153). After the completely failures of treaties in the Banda Islands, especially, compromises had to be made (Masselman 417). A 1657 treaty with the sultan of Ternate “confined spice-growing in the Moluccas to islands directly controlled by the Dutch”, subordinating production for his own profit to security from the Dutch war machine (Parry, Establishment 161). On the Dutch controlled islands, whether actually Dutch owned or simply Dutch manipulated through threats of force, “production was ruthlessly adjusted to trade needs year by year; in some years, trees were cut down to avoid a surplus; in others, the inhabitants were compelled to plant trees at the expense of other crops” (161). The VOC had already suffered through a European oversupply of pepper in 1604 (Masselman 173). The Company was determined to control the supply in order to maintain profit, even at the expense of becoming a colonial power.
The acquisition of large parcels of land was not in the original plan of the VOC, but it soon prove necessary to acquire more direct control over certain areas in order for the trade empire to exist at all. Territorial acquisition was expensive. It required the construction of forts and significant garrisons, both considered the realm of government, not a private trading company. However, competition in the spice trade led to profit for the natives and a loss in profits for the company. When treaties were broken, the only way to exert control over the spice-growing islands was by territorial conquest. The local governors of the Company knew almost immediately that only acquisition would guarantee them real control over the spice growing islands (Parry, Establishment 152). Acquisition was necessary only “to be a means of protecting trade after treaties with local potentates had been broken repeatedly” (Masselman 225). It was obvious that something had to be done when Company officers could not leave trading posts for fear of their very lives. In Bantam, one of the first locales opened by the Dutch, “throughout most of the seventeenth century the Dutch could not venture far from the town without danger from Bantamese dacoits and kidnappers” (Parry, Establishment 152). It was necessary to protect the personnel, as well as the trade, by a gradual process of territorial acquisition. The greatest problems came from the Banda Islands, the only source of nutmeg and mace, and it was there that Coen concentrated his force, finally with the blessing of the company. Difficulties had been mounting for years because the Bandanese broke treaties of exclusive sale made to the Dutch whenever other buyers came to the islands. Coen complained to the directors, “It is well known in Europe that in spite of our great expenditures (to protect our contract) the English are still able to obtain nuts and mace and that the Portuguese buy them from the Javanese” (qtd. Masselman 311). Measures had to be taken, and in 1615, the Heren XVII directed, “the Bandanese should be overpowered, the chiefs exterminated and chased away, and the land repopulated with heathens” (qtd. 420, note 16). Such a plan could have no name but colonization, as labor was required to collect the nutmegs, and someone had to oversee that labor. The directors acknowledged that the Company would have to become a colonial power if it were to maintain the precious monopoly. Coen led a small Dutch force to bargain further with the Bandanese. When terms of monopoly were rejected, battle ensued. The Bandanese surrendered to Dutch sovereignty, which was all the Company asked, it being even more expensive to bring in the “heathens” (slaves) suggested by the directors. It was only when the terms of surrender were broken that a true slaughter depopulated the great island that was the center of nutmeg cultivation (418-419). With the natives gone, “the Banda Islands became virgin territory which the Company could now exploit as it wished” (420). Coen hoped to bring colonists from the Netherlands to settle the now vacant and extremely profitable territory. As no real experience was necessary to collect the nutmegs, the Company would provide African slave labor, and each burgher would receive a plot of fifty trees plus slaves (422). Colonization on a large scale never really succeeded in the trading stations of the East Indies, but it did put a firm Dutch hold on the important islands. Of the trading islands, first cloves (Amboina), then pepper (Ternate and Tidore), then nutmegs (Banda Islands) were put under direct Dutch administration, each through warfare with either the local governments or with foreign traders. Ternate and Tidore were the sites of continual warfare with Spain, Ternate seeing fighting even after the end of hostilities in 1648 (Israel, Hispanic 336). Early control of the small spice growing islands led to a lapse in territorial ambitions until it became possible in the late 1630s to push the Portuguese off the coast of Ceylon. The cinnamon-growing regions of Ceylon never completely subordinated to Dutch control, but Dutch administration of the entire coast by the middle of the seventeenth century gave the VOC some regulatory power in cultivation through buying practices. One company-controlled colony stands out for its success as an actual colony. In 1652, the VOC started a true colony at the Cape of Good Hope. There was nothing to trade for in the region, but control of the Cape gave the Company a support base in Africa, as the Portuguese had had for a century, where ships could take on water and fresh supplies as well as make repairs. Small farmers, from Holland and some of the other provinces, “were eager only for land and did not resent the political and commercial restrictions placed upon them by the company. Within a few years the colony was producing wine and provisions in considerable quantities and had become a valuable asset” (Parry, Establishment 158). The Cape Colony was the only true colonial success of the land-grabbing strategy that became necessary to pull trade and production into the Dutch monopoly structure.
All the work put into territorial acquisition was necessary because of the constant encroachment of the already established Iberians in the region. The Portuguese, and then the Spanish, had been trading in the East Indies for a century by the time the Dutch sent ships in force. Initial gains in trading were not guaranteed to last as the Spanish maintained military forces in the region. As the VOC was set up with the intention of disrupting Iberian shipping as well as trading for spices, the Dutch were profiting by taking China ships (both Spanish ships and Chinese junks to Manila engaged in the China trade) as prizes, as well as through actual trade (Israel, Primacy 173). The success of the blockade of Goa was that ships carrying coin for trade purposes were forced aground off the coast of Africa (Israel, Hispanic 118). It was evident to all involved that “In the vast colonial possessions of Spain and Portugal . . . the Dutch had uncovered the soft under-belly of the Spanish Monarchy” (2). The Spanish crown had little choice to protect their territory than to move the war with the Low Countries from Europe into the Indian Ocean. The military advisors to Philip of Spain believed that due to the commercial nature of the VOC, “it would prove less able than the Spanish crown to stand up to a prolonged period of increased expenditure such as a resumption of war would inevitably entail” (67). The Twelve Years Truce was not renewed, and the Dutch found themselves fighting the Spanish, Portuguese, and English, having barely gained a foothold in the region. The only way out of the corners into which the VOC traders were continually forced by the Spanish was to make real war against the enemy. For this purpose, the States-General finally stepped in and made an agreement with the English government, whereby the Dutch and English would work in tandem to reduce the Spanish threat, and the English would receive certain trading privileges in Dutch territory (Masselman 406-407). The English could always be expelled later, as they were given leave to build warehouses and trade in locales already firmly under Dutch control. For the moment, the greatest threat to both groups was that Spain would protect its interests, which it was no longer shy in defending. The VOC became a warmaking machine. It was impossible to distinguish between the Company and the government, as the Company led the war in the Indies and the government led the war in the Republic.
A true war, as opposed to a complete rout by the Spanish, was possible because at all times, trade had to be enforced by coercion. The VOC maintained a battlefleet, twenty forts, and enough troops to maintain a garrison of several hundred men at each fort (Israel, Hispanic 67). The Spanish tactic was not so much to win outright, but rather “to ruin the East India Company by relentless join Castilian-Portuguese action in the East” (68). As a profit-making venture, war cost a great deal and brought in very little. The starting capital was still in place, but only because it had been borrowed back to continue financing the company’s actions against the Spanish after public enthusiasm waned and stock prices fell (Masselman 426). The Dutch simply could not afford, as a profit-making venture, to hold back the English and uproot the Spanish at the same time. The great advantage the VOC had over the English East India Company was control over its armed forces; even so, the English government had sent naval forces into the Indies to help the consistently failing English company (408). The only way was a temporary truce with the English in order to concentrate on the ever-growing Spanish problem. The combined forces proved successful in combating Iberian shipping and allowing the maintenance of garrisons in both previously conquered and newly acquired territories. The blockade of Goa, a combined Dutch and English effort, forced the Portuguese to beg the Spanish crown for a truce (Israel, Hispanic 118). Manila Bay was blockaded for a year with virtually no resistance from the Spanish - the one profitable enterprise, shared with the English, was the taking of Chinese junks as prizes (118). The use of English ships in these operations freed the Dutch to send a fleet of their own to hem in Malacca, the greatest rival to the VOC at Batavia. This operation was also successful in diverting trade to the VOC, but the costs were heavy. Coen was forced to report, “Great damage was done to the enemy, in his trade to China and surrounding lands, and he lost many ships . . . but little has the Company profited from this” (qtd. 119). Costs, which had been high even before English assistance arrived, continued to rise, with little additional trade coming through Batavia in spite of the great Dutch offensive of the early 1620s (119). The Portuguese were essentially out of the war, but the Spanish wished to continue (122). The English were tired of the conflict and refused to assist further (Masselman 429). For a period, the Dutch had to give up the offensive and keep what they had been able to gain. After four years of fighting the Spanish, from 1620 to 1624, the years 1626-1634 saw the VOC unwilling to renew attacks in the East (Israel, Hispanic 272). The constant back and forth of initiating military offensives then pulling back to solidify the gains in trade was the hallmark of VOC expansion in the Indies.
Trade was the prime mover not only due to the demands of profit, but also because the war for independence had created blocks in the traditional Dutch traffic. The Dutch had traditionally been the carriers of Iberian products to Northern Europe. Entry into the spice trade was initially dictated by the embargo put on Dutch vessels in Spanish ports when the war for independence escalated. The Dutch had been accustomed to taking Spanish colonial products into Northern Europe, trading spices and silks for the maritime products of the Baltic states (Israel, Primacy 5). The Spanish government placed Dutch traders under an embargo in 1598, forcing the Dutch to enter the Indies trade in force themselves or go without the products of the East (Israel, Hispanic 20). The strictest embargoes were placed on the Low Countries beginning in 1621. Dutch merchants could not enter Spanish harbors, and Dutch products carried by neutral ships would also be seized by the government (134). The Dutch were a nation of traders, and if they could not receive the necessary inputs to the system as it had been, they would simply create a new system of trade in order to survive. The simple fact that the Dutch were entrenching themselves in the Indies and had not been put out of trade with Northern Europe even after the factors had changed, forced the Spanish to make concessions for their own benefit. By 1641, a few licenses were allowed to Dutch merchants for the shipment of “foodstuffs and munitions, but not manufactures or spices, to certain specified Portuguese and Andalusian ports”; these merchants could then depart with Iberian salt for the northern trades, albeit heavily taxed, and wine and citrus fruit in supply only enough for their crews (336). Colonial products in commercial quantities, from either side, were still strictly forbidden. It was not until 1647 that the Spanish finally lifted the embargo against the Dutch, in preparation for the final peace treaty (345). In twenty-six years of stringent controls, the Dutch were able to solidify their trade in the Indies; the embargoes had kept the Dutch out of Spanish ports, but they had not succeeded in quenching the Dutch thirst for the goods to which they were accustomed. The Spanish crown precipitated its own loss of power in the East through their embargoes on the West.
The English created a very different problem. While the Spanish and Portuguese were attempting to maintain their territories in the Indies, the English had the same aspirations of profit as the Dutch. The English were not as well equipped, but they proved a powerful enough anti-Dutch force nonetheless. While the Dutch maintained a permanent source of capital from the start, the English financed voyages individually, a separate joint stock for each voyage to the Indies (Parry, Reconnaissance 197). The lack of systemization when compared to the Dutch put the English at a distinct disadvantage. The English monarchy, however, was willing to bail out its company as long as the war with Spain continued. It had enough resources to stumble along, for a while with the assistance of the Dutch, for a while on its own, being pushed to India, the fringe of trade for most of the seventeenth century, until trade patterns shifted in its favor (256). Before the Dutch were well-entrenched in the Indies, however, the English, even in small numbers, proved a competitive threat because they were willing to pay slightly higher prices to the rulers of Dutch-aligned principalities. It was the English trade that led to the destruction of the Banda Islands. Coen, the real leader in the formative years of the VOC, was constantly worried about the competition of other Europeans, but the English in particular, far above the Iberians in terms of trade competition. The English already claimed “‘You do the fighting in the Moluccas and we will reap the benefits!’ Having a well-grounded opinion of the people of Amboyna and Banda, Coen realized that something of the sort was quite likely to happen unless counter-measures were taken” (Masselman 309). The English never had problems trading in the Banda Islands, and in 1619, they attempted to take the Dutch entrepôt of Batavia by force, mimicking the Dutch strategy. It proved a miserable failure because the Dutch had the support of the rulers of Java, even if they did not enjoy widespread support in the entire archipelago (Masselman 370-390). The requisite force to take possession of the Dutch entrepôt existed; it was simply never used efficiently due to lack of co-ordination. The English had to settle for receiving a third of the spice trade under the Treaty of Defense, which proved to be more costly than expected. It was after this treaty began to collapse that the English became a true military threat. The English had begun, as early as 1609, establishing rival trading posts in the most important of the spice-growing islands. When the Dutch countered the threat by erecting a fortress on the largest of the Banda Islands, “The English replied by switching to the smaller islands . . . and instigating an anti-Dutch rising among the islanders” (Israel, Primacy 104). With the breakdown of the Treaty of Defense in 1623, exacerbated by the uncovering English plots against the Dutch at Amboina and the subsequent execution of those involved, the Dutch and English became firm enemies (Masselman 431).
Even after the break with the Dutch, and the resumption of warfare between the two companies, the English proved ineffectual in taking control of the Asian trade from the Dutch. They pulled out of Japan even before the Shogunate began expelling foreigners because they simply could not afford to remain (Masselman 429). The greatest foothold the English were ever able to achieve was in western India, where the Dutch went only for the cotton cloth that proved a valuable input to the spice trade, bringing Anglo-Dutch conflict back into full flame around the middle of the seventeenth century. At the moment the Dutch had been able to leave the war-making business with Spanish acknowledgment of a continued Dutch presence in the Indies in the final peace treaty for independence, the English initiated a new war, both in the Indies and closer to home (Israel, Hispanic 369-370). It was the English who suffered under the war they had started, unable to make any headway against Dutch shipping in the Indian Ocean. The VOC ran the war there, and they were the ones taking prizes, as the English lost overall, in the course of three years, 400 ships from the Baltic, Levant, and Indies trades combined, compared to the loss of Dutch fishing boats and colliers near home (Primacy 212). England was not in a position in the middle of the seventeenth century to prove a military threat on a large scale. Indeed, “that a war which cost so much in men, ships, and trade should have ended without any tangible gains is the measure of England’s failure” (213). After the failure of the first Anglo-Dutch war, England found itself in collaboration with the Portuguese in India, only to lose favor in the southern part of the subcontinent when the Portuguese repeated lost territory to the VOC during the struggle for cinnamon and cotton cloth domination in the early 1660s (249). The Second Anglo-Dutch war, started in 1665, left the English in the same position they were in after the first Anglo-Dutch war (278). This war barely touched the VOC, as they had in that year solidified agreements with the Indian rajas of the Malabar coast, expelling the English from formerly Portuguese territory (250). The Third Anglo-Dutch war, coming less than a decade later, also had no results in ousting the VOC from the Indies trade - the Indies had no part in it at all (299). Always attempting to play the same coercive games at the Dutch, the English continually found themselves at the fringes of economic power. Their consistent lack of organization was the problem they seemed unable to solve. The VOC directors in the Indies knew when to subordinate current profits to direct needs for protection. Such measures were built into the system under which they controlled their own troops and battle fleet. Through the Dutch period, the English government maintained a near monopoly on coercion, whereas the Dutch Republic loaned it out to the most profitable bidder (Parry, Reconnaissance 197). The ability of the VOC to control its own military structures gave it the coercive power to act in the same manner as their predecessors and competition, the Iberian monarchies, but in a systematized manner such that exact costs could be calculated and factored into the sale price of Eastern products in the Low Countries (Kriedte 85). The English did not solidify their organizational and military apparatus until the Dutch had attained primacy in most parts of the Indies. It was only when the fringes of trade, the cotton and tea trades, became the mainstream that the English were able to push the Dutch out of hegemony, though never from Indonesian waters (Israel, Primacy 337).
The VOC reached its prime around the middle of the century, thought it was never able to let down its guard as the English were always trying to find a way in and the Spanish and Portuguese maintained fortresses in the region. The States General had not had to completely bail out the Company, though the first twenty years was most difficult. Profits were not always forthcoming, and stock prices bounced back and forth, especially during the many wars that characterized the first half century of the VOC. For the period from 1611 to 1632, “the Dutch East India Company declared only ten dividends” (Parker 195). Most merchants involved with the VOC were still involved in the Baltic trades or in manufactures, which had made the fortunes that could be invested in an uncertain venture (Wilson 225). Not until 1634 were large dividends seen on a regular basis, but even then the war decades immediately following slowed growth (Parker 195). Yet once the Company pushed its way into the valuable niches in the Indies, “the average dividend . . . was 18.2%. In thirteen of [the] years [of the Company’s existence], investors received 40% or more” (Kriedte, 85). Profits to investors in the early years had to be subordinate to the expansion of the VOC, for without expansion there would be no future profits at such a scale. Return fleets in the 1660s were still only ten to twelve ships, but the total value of the goods of those ships were usually between fifteen and twenty million guilders, the same as the combined total of the Cadiz and Smyrna fleets that serviced Spain and the Mediterranean (Israel, Primacy 257). The VOC was not the only joint-stock company, and it was not the only private company with extremely close ties to the States General, but it was the company in the Republic that could guarantee extremely high returns on investment once the trade was secure. The 1660 fleet carried thirty million guilders in cargo, but this was possible only as the traditional trades re-sold silks, spices, and porcelain throughout the Mediterranean, the Baltic, and even the Spanish Americas (258). The Dutch fleets completely changed the world economy in their constant quest for profit. Even in 1600, most Eastern goods reached the Mediterranean through overland trade with the Persian and Ottoman Empires. Once the Dutch were able to control many of the shipments to the Persians, and had trading factories established at both Smyrna and Aleppo on the Mediterranean, former trade patterns “changed dramatically. The land routes became almost totally insignificant” (Kriedte 83). The places that were consumers of Eastern products but who did not produce the trade inputs the VOC wanted were still serviced by the Dutch, providing the extended market in which the VOC could continue to grow without the problem encountered with initial oversupply at the beginning of the century.
The Dutch trade hegemony in the Pacific was hard fought and paid for in the blood of both the natives and VOC operatives, but it was never completely strong. Approximately every twenty-five years, the Company would run into another crisis whereby it could be completely ruined. Each time competition began to encroach to the point where the slim Dutch foothold was slipping, the VOC would literally bludgeon its way out of crisis until it could not longer take that path (Israel, Primacy 247). The war against the Portuguese in the late 1640s staved off problems until the 1670s. The stock exchange crash of 1672 put a dent in the Company, but it was able to recover again through entrenching its position in the East by war, this time with the French. The VOC succeeded not only in forcing back the French but also taking the French trading center of Pondichéry, which would have solidified their control further north in the Indian subcontinent, until it was stripped by the States General in the agreed peace treaty (333). The northern parts of India, the true sources of the cotton industry of the subcontinent, remained in English and French hands. Ceylon was costing more and more to keep and producing less and less in the way of profit. The spice-producing islands of the archipelago were seeming more and more porous, and just as the flow to other countries stopped, a fundamental change in European demand created the final crisis that the Dutch could not have foreseen: spices were no longer in higher demand than other products. At the turn of the eighteenth century, “spices and pepper provided only 23 per cent of the total value of the merchandise the VOC shipped to the United Provinces” (336). Forcing the China trade had been, while extremely beneficial at the time, the worst mistake the VOC made. With a few years to recover, the Chinese were making significant inroads back into Japan themselves, avoiding trading with the Dutch on Taiwan (246). In 1662, the Chinese overtook that fort themselves, completely excluding the Dutch from the China trade except by any indirect means they could find (254). Initially, the losses were made up elsewhere, until the mass market in Europe for tea emerged in the 1690s (336). The Dutch were not allowed into China because they had treated Chinese traders in the region atrociously since they arrived, and the losses incurred by Chinese shipping during the Dutch war with Portugal made it impossible that the VOC could be allowed into China (338). The English and French were given the right of trading directly at Canton for Chinese tea, silks, and porcelain, which gave them the competitive edge in those commodities in Europe. The VOC was able to take note of the rising demand in Europe for coffee and established coffee plantations in Java while going back to Mocha, which had been allowed to lapse to the fringe of the Indian Ocean trade. The problem came with the heavy entrepôt structure: it was company policy to send back to Java, then on to Europe, while the English at Mocha shipped directly home (338). The English were making inroads into the pepper producing locales again, but pepper was no longer what it had been and the Dutch were too busy re-entrenching themselves in more profitable areas after 1713, when the losses began to re-occur (392). The Dutch were able to maintain control of the calico and muslin trades for several more decades, however, and this bolstered the VOC. The Company was losing political leverage to the English and French at the beginning of the eighteenth century, but it was still able to send silks and cotton to Europe in impressive quantities. Bengal would still accept some payment in spices as well as in silver, flowing again from Spanish America, and Bengali raw silk fed the mills at Leiden, where the Dutch now produced silk as well as linen and woolen cloth for export within Europe and the Spanish Empire (352). The British never expressed an interest in Indian silk, and they remained out of the cotton cloth import trade due to home protectionism (337). The greatest problem for the VOC was still the rising importance of cloth over spices. Control had always been based in the Indonesian archipelago, and even then only on the necessary islands. Suddenly, demand was for the products of Bengal and Gujarat, places the Dutch had no political control and which had been at the fringe of Dutch interests. The VOC lacked the leverage to keep the Dutch the exclusive traders, and they were not as willing in the eighteenth century to use coercive measures to gain trading privileges, as they did not have a ready source of funding at home as competition was encountered on a large scale in all sectors of trade. As the spice trade was no longer quite so important, local rulers tried their chances at removing the Dutch one more time, as alliance with the Dutch had proved not as beneficial for the local economies as had been hoped, and much of Dutch control of southern India and Ceylon was crumbling (392). After 1710, the English were able to import Indian cotton cloth in significant quantities, catching up with the VOC by 1720 and overtaking the Dutch interests all along both Indian coasts by 1740 (391). Yet the VOC somehow held on, a shadow of what it had been, until the Dutch government finally paid the remaining debts and absorbed what was left in 1798 (Masselman 468).
The VOC was certainly successful - it defined the terms of seventeenth century trade and continued to last through the eighteenth century, even after the terms had changed. Dutch mastery of the Indian Ocean brought Asia into the world economy as no one else would - by the end of the great Dutch century, Asia and Europe were inextricably linked on a massive scale. Only the Dutch, with their pursuit of profit, could mobilize the requisite forces in the requisite manner to bring in Asia as an economic partner. The Portuguese and Spanish sought territorial conquest rather than profit, and the English profit-seekers had neither the means nor the energy to accomplish a complete integration of all of Asia with all of Europe. The Dutch were inevitably forced into grabbing colonies, but only in the eighteenth century did the Indonesian archipelago become politically identified with the Dutch Republic. The VOC was a coercive regime, but of a far different sort to the Spanish. In most cases, local rulers retained political control over their people, subordinating the economy but not the culture to the Company. The VOC did not take over Asia as the Spanish did the Americas; rather, it increased the size of the known world to include these far-flung regions in a manner equivalent to the way they battered about Denmark for control of the Baltic trade. The Company was always an arm of the government, but rarely a political machine: it survived because it was a government like the Spanish with the goals of the English, and only the English could supplant it because profit can only bow to profit. The greatest success of the Verenigde Oost-Indische Compagnie was that it made its own collapse possible. It fed the European demand, and filled the Dutch coffers so well for over a century that the rising economic powers of Europe had to take the fringes of the game for themselves. The VOC was the nexus of Asia-Europe development that made the British empire of the nineteenth century possible. Its death was most proper: born of government planning, the government re-absorbed its Asian arm at the outset of the nineteenth century colonial boom. In this manner, the VOC never truly left the Indonesian archipelago until independence in 1949.
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Wilson, Charles. The Transformation of Europe 1558-1648. Berkeley: University of California Press, 1976.