Dutch East India Company

The United East Indian Company (Dutch: Vereenigde Oost-Indische Compagnie; VOC), referred to by the British as the Dutch East India Company,^[2] was originally established as a chartered company in 1602, when the Dutch government granted it a 21-yearmonopoly on Dutch spice trade. It is often considered to have been the first multinational corporation in the world ^[3] and it was the first company to issue stock.^[4] It was a powerful company, possessing quasi-governmental powers, including the ability to wage war, imprison and execute convicts,^[5] negotiate treaties, strike its own coins, and establish colonies.^[6]

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, 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.^[7]

Having been set up in 1602, to profit from the Malukan spice trade, in 1619 the VOC established a capital in the port city of Jayakartaand changed the city name into 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.^[8] It remained an important trading concern and paid an 18% annual dividend for almost 200 years.^[9]

Weighed down by corruption in the late 18th century, the Company went bankrupt and was formally dissolved in 1800,^[9] its possessions and the debt being taken over by the government of the Dutch Batavian Republic. The VOC's territories became the Dutch East Indies 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 the Republic of Indonesia.

During the 16th century, the spice trade was dominated by the Portuguese who used Lisbon as a staple port. Before the Dutch Revolt, Antwerp had played an important role as a distribution centre in northern Europe. However, after 1591 the Portuguese used an international syndicate of the German Fuggers and Welsers, and Spanish and Italian firms, that used Hamburg as its 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, and therefore each lag in the supply of pepper caused a sharp rise in pepper prices.

In addition, as the Portuguese crown had been united in a personal union with the Spanish crown in 1580, with which the Dutch Republicwas at war, the Portuguese Empire became an appropriate target for Dutch military incursions. These three factors motivated Dutch merchants to enter the intercontinental spice trade themselves. Further, a number of Dutchmen like Jan Huyghen van Linschoten andCornelis de Houtman obtained first hand knowledge of the "secret" Portuguese trade routes and practices, thereby providing opportunity.^[10]

The stage was thus set for Houtman's 1595 four-ship exploratory expedition to Banten, 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, losing twelve crew 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 the following year, but with enough spices to make a considerable profit.^[11]

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 March 1599, a fleet of eight ships under Jacob van Neck was the first Dutch fleet to reach the 'Spice Islands' of Maluku, the source of pepper, cutting out the Javanese middlemen. The ships returned to Europe in 1599 and 1600 and the expedition made a 400 percent profit.^[11]

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.^[12] 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 once again captured Solor, in 1636.^[12]

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