Dutch Empire: Rise and Fall of the Dutch East India Company

The Dutch East India Company played an important role in South Africa during the earliest years of the colonisation of the Cape. Despite that, very little is expressed in a number of South Africa’s history books concerning what this Company was and how it managed to develop into a global trading empire during the 17th and 18th centuries. For that reason, this piece aims to deal with the Dutch East India Company. The piece looks at the establishment of the Company, its development into a global trading empire, its colonist ambitions in Southeast Asia and South Africa, together with its ultimate deterioration in the late 18th century. By the end of this article, it is clear that although the Company played an important role in history, it also did, however, stand as a fine example of why companies should never hold the kind of power that states do.

VOC fleet.
Image Credit: http://www.faisalkhan.com

Founding of the VOC

Throughout the 16th century, the trade routes to the Spice Islands – Maluku or the Moluccas, Indonesia, and the spice trade, were dominated by the Spanish and Portuguese. In contrast, the Dutch, who were dominated by the Spanish empire until 1581, relied on purchasing their spices from Lisbon, Portugal, sailing around Europe, and then, selling their spices for a profit. Shortly after the Spanish empire dominated Portugal, however, Dutch merchants were cut off from Lisbon, leaving them with no other alternative but to develop a trading system.

From the late 16th century, Dutch ships began sailing from the Dutch Republic in search of the home of the world’s spices. Before long, Dutch trading companies along with individual merchants were participating in the spice trade, competing against each other, in company with Spanish, Portuguese, and British trading companies and individual merchants. Recognising the growing conflict and competition, Dutch merchants and businesspersons identified that their best alternative would be to merge their trading companies and, in so doing, create a strong and unified economic structure. Thus, while the Spanish and the British were engaged in warfare during the late 16th and early 17th centuries, the Dutch, ready to take advantage of this moment, merged their trading companies, establishing the Verenigde Oost-Indische Compagnie (VOC) or United East India Company, later known as the Dutch East India Company (DEIC) on the 20th of March 1602.

Global Trading Empire

Resembling the East India Company, the Dutch East India Company was granted a government charter which ensured the support of the government and monopoly on trade. The government charter granted the Company the power to colonise any region it wanted, enforce slavery, build its army, build its navy, and declare and engage in warfare. Yes, the Company existed and operated as a state. What’s more, being granted a monopoly on trade meant that the Company had the power to determine the production and prices of products as well as the countries that the Company would trade with.

Concerning governance, 17 of the Company’s earliest investors made up the executive board of the Company, known as the Heeren Sewentien or the Lords Seventeen. While the Lords Seventeen was responsible for making major decisions on behalf of the Company, 6 chambers in major trading cities in the Dutch Republic that is, Amsterdam, Delft, Enkhuizen, Hoorn, Middleburg, and Rotterdam, were responsible for preparing ships and crews for voyages to the Far East. A great deal of the rest of the Company’s investors were responsible for managing the daily affairs of the Company. By the early 17th century, a regional government known as De Hoge Regering was established in Batavia (Jakarta), and in the same area, in 1603, the first trading station was established.

The Company also went on to establish several trading stations throughout East Asia, setting up trading stations in India, Indonesia, Malaysia, and Thailand. After a while, the Company also enlarged its trade operations, working in Japan, China, Taiwan, and Vietnam. Significantly, a lot of the territories that the Company occupied were former Spanish or Portuguese settlements that the Dutch, with the help of the British from time to time, attacked and dominated all through the first half of the 17th century. By the middle of the 17th century, the Company had dominated the spice trade for years, using force and violence, to gain complete control over spices like cinnamon, cloves, and nutmeg. Dominating the spice trade allowed the Company to dominate the European market, develop into the richest company in the world by 1669, and forced the Spanish to recognise the Dutch Republic’s independence in 1648. The power and influence that the Company exercised played an important role in increasing and strengthening the power of the Dutch empire.

Colonial Aims

Developing into a global trading empire, in the way that the Company did, did however, have its costs. Existing and operating as a state, not being accountable to anyone, allowed the Company to abuse its power, often exploiting and even killing indigenous populations wherever and whenever the Company’s interests or authority was challenged. In the Banda Islands, the only place where nutmeg was produced, for example, although Dutch merchants developed good relations with the Bandanese at first, after some time, however, to maximize profits, Dutch merchants tricked the Bandanese into accepting and signing a trade agreement that involved giving the Company exclusive right to nutmeg. Within a short time, war broke out and ended in the subjugation of the Bandanese. As follows, within the first few decades of the 17th century, by way of force and violence, the Dutch were able to not only dominate the Banda Islands but, the spice trade too.

In South Africa, after a suggestion was made to the Company’s executives about setting up a refreshment station, in 1652, a group of Company representatives set up a refreshment station at the Cape of Good Hope. The refreshment station was set up to provide services to ships and crews, journeying to and from the Far East. While the Cape was only intended to be a refreshment station, at first, after a while, however, recognising the richness of the Cape, the Company occupied the region, forcibly removing the Khoikhoi from their land. Thus began the Dutch-Khoikhoi Wars of the second half of the 17th century. These conflicts plus the illnesses brought to the Cape by the Dutch resulted in the eradication of the greater part of the Khoikhoi. Though the Dutch’s handling of local communities differed in Southeast Asia and South Africa, in general, however, the Company developed into a global trading empire using force in violence in the territories it operated in.

The Decline

During its earliest years of existence, the Company established the world’s first stock market in Amsterdam, and in so doing, developed into the world’s first publicly traded company. As a trading company, it traded not only in spices from Indonesia but too, in gold and silver from Japan, and tea from China. On account of the power that it was granted, even as a trading company, it also participated in the slave trade as well as in the race to colonise regions. Although the Company exercised a great deal of power, its power and influence, however, weakened during the 18th century as a result of a number of factors. First, tastes changed in Europe. With the changes in European tastes, the Company ended up simply not making the kind of profits that it had made up until that time. Second, holding the kind of power that states do proved, over time, to be incredibly dangerous. Different from states, who are accountable to their citizens, the Company, however, was accountable to no one.

Furthermore, the absence of competition at home contributed heavily to allowing the Company’s merchants and officials to relax, exploiting the power and position that they found themselves in. Third, corruption. Not like the East India Company that allowed British merchants to engage in private trading, Dutch East India Company merchants and officials weren’t allowed to involve themselves in private trading. Because Dutch merchants and officials earned low wages, they succeeded in finding ways to generate more money, even if those ways were illegal. Fourth, the Company was also engaged in an ongoing war with its greatest competitor, the East India Company, over trade and territories. Not only were these conflicts with the British costly but, by the end of the fourth Anglo-Dutch War, the British proved that they had grown far more powerful than the Dutch. Finally, the war against the British coupled with the French invading and dominating the Dutch Republic in 1795, overwhelmed the Dutch. By 1799, the Company declared bankruptcy, bringing the age of the world’s first multinational company, the Dutch East India Company, to an end.

References and Further Readings

Business Casual. (2018). When the Dutch Ruled the World: The Rise & Fall of the Dutch East India Company. [Online]. Available: https://youtu.be/ewCs5CF5HEg

CrashCourse. (2015). Capitalism and the Dutch East India Company. [Online]. Available: https://youtu.be/zPIhMJGWiM8

Hunt, J. (2005). Dutch South Africa: Early Settlers at the Cape, 1652-1708. Matador

Oostindie, G. (2008). Dutch Colonialism, Migration, and Cultural Heritage: Past and Present. BRILL

Ray, M. (2020). Dutch East India Company. Britannica. [Online]. Available: http://www.britannica.com

South African History Online (SAHO). (2019). Dutch East India Company (DEIC)/VOC. [Online]. Available: http://www.sahistory.org.za

Theal, G. M. (2018). History of South Africa under the Administration of the Dutch East India Company, 1652-1795. Creative Media Partners

World History Project. (2015). Capitalism and the Dutch East India Company: Crash Course World History. [Online]. Available: https://youtu.be/zPlhMJGWiM8

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