09 Apr, 2021
Abstract : This article explores through a comparative perspective with its contemporary rivals the Dutch East India Company (VOC) and its success and innovation as an imperial model. The VOC is responsible for trail-blazing many of the modern commercial practices we know today such as public stocks and bonds, but it was also in its time a new and innovative model of imperialism, based on efficiency and commerce rather than older conceptions that mixed gold alongside glory and god. It would inspire a string of larger and more successful imitators, the most famous of which was the British East India Company which overtook the VOC in the later 1640s. Prior to this the VOC dominated Europe-Asiatic trade having displaced Portugal and Spain in the eastern hemisphere as the most successful European imperial actor. Introduction: The Dutch indirectly ruled their eastern possessions through the Vereenigde Oost-Indische Compagnie (VOC), a private entity which built, facilitated, and administered Dutch expansion in the eastern hemisphere from its founding in 1602. The VOC shared similarities with contemporary empires like Portugal in methods of administration, but uniquely for the time emphasised long-term profits as its foremost aim, with its directors stating that ‘profitable trade… is the principal reason for and aim of this company’ (Hereen XVII, quoted in Steensgaard, 1982, p.17). This focus was due to the United Provinces uniquely having a large and influential merchant class at home, and its eastern-hemisphere expansion being coordinated and overseen by a business enterprise accountable to its investors aboard, rather than being an entity directly under state control. The VOC thus lacked the broader multi-purpose nature of other contemporary empires with aspects like geopolitical competition subsumed to the pursuit of profit maximization. Comparisons here will be mainly drawn primarily from Portugal’s Estado da India and Russia with limited references to other contemporary empires. Portugal due to its role as the VOC's most significant early rival in the eastern hemisphere and its similar contexts and challenges as a fellow small maritime state, will show how the VOC uniquely acted with profitability as its sole aim. Russia as a continuous empire will provide a contrast for the elements that the Dutch VOC lacked as they were unnecessary in a profit-driven enterprise. What the VOC? A unique success story and kick-starter for the 17th Century: The VOC was a truly unique and pathfinding organization. It was in technical terms a state chartered joint-stock company (Grell, 2008, p.218). In practice it operated as a privately owned sub-imperialist body organized as a sovereign power, but with the functions of a business partnership (Steensgaard, 1982, p.3). It was the first large-scale organization with such a form. Only in 1670 would their British equivalent in the ‘East India Company’ acquire similar powers (Niall Ferguson, 2003 p.20), in imitation of the VOC. Indeed, British expansion in the eastern hemisphere during the 17th century was heavily inspired by the Dutch VOC model. The scale of its economic success made abundantly clear when in 1622 its Governor-general Jan Pietersz Coen reported Dutch capital in Asia amounted to 2.9 million florins, while Portuguese-Spanish capital was only around half a million (Steensgaard, 1982, p.16). This disparity was due to the VOC’s globalist outlook as it uniquely sold directly to the most profitable places, not constraining itself to the exclusive periphery-core trading relationship used among all other contemporary empires (Steensgaard, 1982, p.3). For the VOC this meant it generated a larger reserve of capital than its rivals, which also uniquely in Europe was mostly reinvested, highlighting a ruthless streak of profiteering as the Netherlands did not, as others, directly reap the material benefits of empire, but rather put their returns to good use in expanding their operation. The VOC as an imperial actor: The VOC’s powers derived from its state given charter to maintain troops, negotiate with foreign powers, impose governors on its holdings, and wage war (Grell, 2008, p.218), these powers were effectively the Dutch state outsourcing its own role. The VOC could be construed as a state arm in-so-far as it provided aid to the United Provinces during its inter-state competition with rival European powers, much in the same way that Portugal’s Estado da India helped fulfil Portugal’s competitive and crusading ambitions through weakening the revenues of key Islamic powers such as the Mamelukes and Ottomans (Grell, 2008, p.201). However, the VOC was significantly different as a state-arm. Its Governor was not an extension of state as a Portuguese Estado da India viceroy was, but a merchant representing a private business, (Grell, 2008, p.218) held accountable to directors and investors (Hereen XVII). A fact highlighted with the VOC’s investors and director’s reminder to Governor-General Coen that the objective of profits over glory-seeking enterprises was to be strictly ‘obeyed’ (Hereen XVII, quoted in Steensgaard, 1982, p.17). In contrast Jan Van Linschoten, a Dutch merchant in the late-16th century, states a Portuguese viceroy had ‘absolute power’ bestowed directly from the Portuguese Monarch allowing them to act as they pleased without significant reference to others (Van Linshoten, 1964a, p. 1). While this is perhaps an exaggeration of a viceroys powers lending from Van Linschoten’s heavy critiquing of the Portuguese system (Van Linshoten, 1964a, p.1), possibly in favour of the limited powers given to VOC governors who also needed their council’s approval to act (Grell, 2008, p.218). It does though bear a significant degree of truth showcased by the Portuguese crown’s instructions that the viceroy be obeyed as if ‘[the King] had…commanded it’ (Grell, 2008, p.200). A fact made necessary due to the length of time orders and communications from the central state could take to reach the imperial periphery, typically a message and its response could take a full year (Chaudhuri, p.57-70). God, Gold or Glory? The VOC’s profit motive Portugal’s direct control through their viceroy meant that unlike the VOC’s clear profit driven enterprise, multiple ambitions and aims clashed within its apparatus. The Portuguese crown’s religious aim of marginalizing and weakening Islamic power in Europe and the Middle East through undermining their spice revenue monopoly (Grell, 2008, p.201) and the expansion of state income through tribute and maritime trade to off-set Portugal’s resource disadvantage compared to its Christian European rivals (Grell, 2008, p.194), conflicted with the Fidalgos (sons of Portuguese gentry- a lower nobility) who in their capacity as state officials with a culture of feudal militarism saw conflict, and the glory and prestige found within it, as the only path to success (Grell, 2008, p.195). They specifically sought out personal wealth and societal prestige through plunder (Van Linshoten, 1964a, p.2), which conflicted with the stable economic growth needed if Portugal was to grow its economic power in a sustainable way to compete with European rivals. This is perhaps the reason why a Portuguese merchant in 1626 identified that both king and nobles ‘thought more highly of soldiering than of …trade’ (Solis, quoted in Steensgaard, 1982, p.17) The cost of militarisation for goals other than the pursuit of economic profit detracted from potential crown revenues. Meanwhile while the VOC recognized that military action might be needed in the course of its form of imperial expansion, this was carefully budgeted within its expenses, and only needed to be engaged in if a power was aiming to harm its profitable trade, or prevent the expansion of its trade networks. This is highlighted most succinctly by the VOC dismantling a number of its military assets in Asia as soon as their need had passed (Grell, 2008, p.219). A sophisticated economic operator As in Russia, Portuguese merchants had very little influence over state policy. This is most ably shown in the direct crown control of the spice monopoly in Portugal which forced the sale of spice immediately and in bulk to Portuguese ports. The VOC however, with a society in which the merchant classes held political influence within the unique monarchical-republic of the United Provinces were able to operate with a greater degree of market sophistication as they withheld their spice stocks so as to not flood the market and thus consistently manipulated favourable profits far in excess of those Portugal and other contemporaries achieved (Steensgaard, 1982, p.3). The geopolitical weaponization of the profit drive The VOC aims in maximizing profits alternatively complimented the government of the United Provinces, particularly in the context of its competition with the Portuguese-Spanish crown-union. The VOC was set up originally indeed to circumvent an embargo on Dutch merchants buying spices in Lisbon due to the ongoing Eighty years War (1568-1648) by controlling eastern commodities at source, whilst stemming declining profits due to Dutch merchants competing against one another, as well as their foreign counterparts (Grell, 2008, p.217-18). This coincided with the United Provinces’ aim of striking back at their Portuguese and Spanish rivals in a way that they may engage on equal terms due to the strength of their maritime forces, and weaken Portugal-Spain’s vastly larger military machine (Steensgaard, 1982, p.5). As the Dutch Republic was uniquely dominated by merchants at the political level, many of whom held an interest in the Asian trade (Grell, 2008, p.214), the economic was married to the geopolitical. The VOC was tasked to muscle in on Portuguese and Spanish eastern trade networks and disrupting their shipping. It was to ruthlessly pursue profit, and so in the process aid the Dutch state by disrupting and diminishing the income its rivals in lucrative markets, and by boosting the revenue of the Dutch state and political elite, which could then be further spent on defence. This resulted in a specific understanding that the VOC’s market domination and thus profitability was central to both its own affairs, and those of the United Provinces. Commerce over politics That the Dutch did not remove the Portuguese entirely from the East Indies, as the Russians had overran their rival Novgorod in 1478, shows that state competition was not a main factor. This is despite the VOC’s ability to make money and disrupt trade being incredibly helpful to the United Provinces in this area. The VOC had the ability to wipe out Portugal’s Asian presence, holding as it did the largest stock of modern ships in Europe, their type of galleon being far faster, cheaper and more powerful than Portugal’s equivalents. Indeed Portugal continued to rely on old stocks of medieval carracks for much of its trade (Grell, 2008, p.199 and 215). This disparity is highlighted in Francesco Carletti’s 1602 account of the Dutch ‘ruining’ the Portuguese carrack he was on and plundering it with ease (Carletti, 1964d, p.1). There are three Dutch ships noted in the encounter perhaps showing their regional superiority, and the battle is portrayed as one sided in favour of the far more manoeuvrable Dutch galleons. While Carletti might be overly critical of the Portuguese carrack’s ability to cope military due to his resulting financial loss (Carletti, 1964b, p.2), the encounter regardless remains a Dutch victory. Despite these material military advantages, the VOC did not attempt to eliminate the Portuguese presence in Asia, unless the Portuguese were specifically disrupting trade, or sitting on a particularly lucrative position. It was simply not in the VOC’s interest who answered to its shareholders before any state considerations. This is highlighted in the VOC’s directors’ chastisement of Governor-General Coen that the VOC’s military costs need to be reduced (Grell, 2008, pp.218-19), despite the fact that war is raging at the time. This is unexpected to say the least if state competition and expansion were deemed at all important aims for the VOC, especially as it was actively involved in a global war with Portugal. Indeed, Russia who aimed to compete with rival western and southern states prioritized military budgeting specifically to dominate its vast territory and expanded partly as a means to secure further revenue to pay for this (Chant, 2008, p.246). Budget warfare Instead the Dutch used their superior fleet to hit Portuguese return shipping. Forty-five percent of which was sunk in 1600 (Grell, 2008, p.216), probably because like Carletti’s returning ship, they were laden with goods to be seized by their VOC counterparts. That this was the primary strategy employed by the VOC to contribute directly to the war effort- maritime commerce raiding, rather than pushing the Portuguese out of the region, or physically expelling their forts highlights how military action for the VOC is subsumed into simply being another means of making a profit. The Portuguese were thus squeezed out of the market, but not the eastern hemisphere, and the VOC received revenue from encouraging business-minded privateering. Dutch shipping superiority was also used to uniquely change and secure the eastern intercontinental trade lanes and largely displace the traditional routes (Grell, 2008, p.223) to favour the Dutch at the expense of their rivals. The journey was thus also rendered more efficient, being faster and more secure, indicating that profitability and decreasing risk was the key concern. By comparison Portugal’s Estado da India had relied in Asia on simply partaking in the existing regional trade systems and were satisfied by gaining an income primarily through customs duties and shipping passes enforced by a string of forts and bases built to command these traditional trade systems (Grell, 2008, p.207). By direct comparison Spain created a new American trade lane with their annual treasure fleet, but the driving force here was not profitability, however. The revenues, as with Russia’s drive for increased economic returns were used to pay for military enterprise in Flanders to prop up Habsburg power against the United Provinces and other rivals and act as collateral on loans to keep the monarchy solvent (Waites, 2008, p.150). The English raided Spanish shipping lanes though unlike the Dutch they did so individually for personal wealth of the privateer captains and as part of state rivalry (Williams, 2008a, p.1). They did not set up for this venture an organized business arm with sophisticated commercial practices as the Dutch had. Side Note: Shipping Changes: The VOC’s larger stock of modern ships allowed them to seize commercial and strategic superiority from Portugal. In doing so they came to dominate key regional trade lanes, shifting them through volume to a way that suited the VOC (routing much traffic through Batavia, which became the VOC-owned controller of European trade in South-East Asia). The VOC also discovered and utilized the Brouwer route- founded by VOC explorer Hendrik Brouwer. It was a straight crossing from the Cape and up towards Java, and by 1616 was compulsory for all VOC ships travelling to the region. The winds on the route allowed for greatly increased speed, and thus shipping efficiency, which translated into profits. Though it required a skilled captain to make use of due to the difficulties navigating it without an accurate way to determine longitude at the time. In this way it was far safer for VOC ships, who were less likely to fall victim to disruption or piracy from regional or European rivals, and the expected usage meant VOC captains were experienced enough to utilize it effectively. It would displace the traditional Monsoon route used by the Portuguese. (Parthesius, 2010, pp.1-59) Endemic economic short-termism vs the VOC’s long-term outlook All this goes to highlight the short-term economic natures of most empires in comparison with the VOC’s long-term outlook. Portugal relied on local trade from which it skimmed profits (Grell, 2008, p.195). Likewise, English privateers were reliant on continued Spanish economic activity and a state of war. Spain’s wholesale extraction of commodities actually collapsed Spanish commerce (Waites, 2008, p.151) showing the pre-eminence of the state interests in these cases over those of their merchants. Meanwhile the Dutch uniquely sought to create a stable controlled trading monopoly keeping commodities profitable, but not so high that rivals would be tempted to take the risk and try and muscle in on market share, in a serious way (Steensgaard, 1982, p.3) avoiding the circumstances which had made Portugal a target for them, and ensuring that as far as possible they could keep their own military spending and activity commensurately low, ensuring higher returns from their commercial activity and greater focus on economic expansion. To ensure this the VOC aimed to control trading commodities directly like the Spice Isles, which were seized and made a plantation colony (Szczepankski, 2016) giving them greater control over pricing and scarcity. Portugal in comparison had relied on local merchants and facilitators to sell the commodities to them in the region for re-export to Europe. The use and role of a physical presence in Asia The VOC did though borrow the idea of regional enclaves from Portugal as these were pragmatic and efficient bases of operation (and control). They were necessary as economically and militarily powerful and populous states surrounded the India Ocean in this era, such as the Mughals, Indian kingdoms, Khmer and China to name a few who were capable of successfully combatting the smaller European presence and utilized similar technology, or imported it in from Europe (Scammell, 1980, p.3). This was a situation vastly unlike Spain’s American or Russia’s Siberian experience where existing states and entities were far weaker than the new arrivals and lacked comparable technology. The Portuguese enclaves were placed strategically to control local shipping and extract tribute from the area (Grell, 2008, p.207). The cost of running this system, due to the large-scale military presence needed at each outpost, and the sheer amount of enclaves, led an English ambassador in the east to note in 1616 that it was Portugal’s ‘beggaring’ (Roe, quoted in Steensgaard, 1982, p.16) correlating with Solis’ previous comment that Portugal relegated commerce in favour of short-term state revenues and military presence. VOC enclaves to facilitate their trading lanes were placed to directly control commodities like at Banda with its spice (Szczepanski, 2016), rather than simply to project power over a nearby territory. As such while the Portuguese expanded their physical presence, the Dutch were more cost-efficient; their directors even suggested removing a number of enclaves to streamline the VOC’s presence due to their existence being unnecessary for profit (Grell, 2008, p.219). Something unheard of in other contemporary empires as state-led expansion was linked to state and personal glory, Portugal for instance held onto unprofitable regions, and fought to do so due to prestige. (Williams, 2008b, p.116) a factor the VOC downplayed in its own calculations. Social, cultural and settler integration The Portuguese enclaves also differed from the Dutch as argued by Malyn Newitt by being small-scale settlement colonies with large numbers of Portuguese men settling and creating a mixed ‘Luso-Asian’ colonial population. This is evidenced in Carletti’s account of the Portuguese enclave of Goa, where the most marriageable women are ‘born…of Portuguese fathers’ (Carletti, 1964c, p.2). By this it is clear that there has been wide scale and historic cultural integration between Portuguese and Indians, and also that Portuguese men are commonly during the writers’ time, seeking local women to marry and settle down with in the enclave. Carletti further notes that baptism is a common practice for all subjects, as is Portuguese fashion indicating the adoption of Portuguese culture and religion by Indians, creating a colonial population with ties to Portugal. The few Dutch who settled in Asia themselves married Luso-Asian women, thus not creating a similar loyal colonial population. These women and their families tended to keep their Portuguese culture and Catholicism (Grell, 2008, p.223). The ecological footprint of the VOC was thus comparatively small as they did not transpose their culture unlike Portugal. The Portuguese’s more widespread presence as settlers was helped by Portuguese service-men having to pay for their own passage home, an exorbitant prospect that could cost up to a full years wages for many (Van Linshoten, 1964b, p.1), resulting in the poorer sailors and officials settling in ‘miserie’ as Linschoten’s writes at the time (Van Linshoten, 1964b, p.1). Though Linschoten’s accounts negative focus contrasts with Carletti’s idyllic lifestyle for Portuguese settlers (Carletti, 1964c, p.2) perhaps because of bias or the discussion of different social classes. Regardless large numbers of Portuguese settled to create a large mixed colonial population. By contrast most Dutch officials returned home after service (Grell, 2008, p.223). This when combined with the fact that the VOC applied strict trading restrictions on any company officials who chose to remain in the eastern hemisphere after their contract was up implies a policy of discouragement for settlers. This is likely because of the VOCs business focus. The independent trading of these individuals could disrupt the VOC’s ability to control profits and would affect their market monopoly and share. In contrast to attract settlers Russia gave ‘financial aid’ to prospective colonists of its eastern expansion to help them create a sustainable living for themselves, and eventually contribute to the state (Veradsky, 1972, p.1). The Dutch enclaves are thus one-dimensional in comparison to other states’ multi-functional settlements, being just assets to secure and facilitate trade and profit, rather than as dynamic settlements were integration and sustainability of presence was deemed important goals. The treatment of indigenous peoples The VOC was similarly pragmatic with indigenous peoples. They were uninterested in influencing local culture, society, or religion. This ran counter to Portugal’s creation of an informal empire in Japan with the active conversion of ‘300,000’ (Carletti, 1964a, p.2) locals by their state-sponsored Jesuits (Grell, 2008, p.211) and Spain’s conquest-based campaigns to ‘civilize’ non-Christians evidenced by Bernal Diaz justifying his participation in the massacre at Cholula as saving indigenes from ‘a state of idolatry’ in the long-term (Diaz, 1963 [c.1570], p.11). The VOC meanwhile concentrated on trade and economic gain, not souls. Religion was a fundamental part of contemporary life; it was not merely a cynical legitimisation for exploitation. The Spanish encomienda were meant to facilitate the conversion of Amerindians as well as utilizing their labour for economic gain. They were specifically chartered with having responsibility for their workers religious welfare (Waites, 2008, p.133). This highlights the entwined nature of economics with religion for most empires, excepting the VOC and Russia. Instead Russia was careful to maintain stable revenues for the crown, even forbidding Russians to baptize indigenous peoples (Dmytryshyn, 1991, p.5) as once baptized, subjects could become enslaved and removed from directly paying tribute. Moreover, Russia incorporated indigene nobles into what M.I. Finley terms an imperial hierarchy regardless of their religion or culture (Chant, 2008, p.240). Spain also did this through the vassalage of indigenous rulers (Waites, 2008, p.141). The Dutch lacked an imperial hierarchy as its maintenance was costly. The VOC were more interested in allying with indigenous peoples against Portugal rather than adopting them into their own imperial system. This was not altruistic by any means but was meant to further diminish the Portuguese threat to VOC control of profitable commodities by making their presence difficult to maintain (Steensgaard, 1982, p.9). It also meant the VOC could spend less on military enterprise, relying instead on local support. Further, The VOC also participated in the slave trade, indigenous kingdoms and powers would sell them their sells and the VOC would ship these to plantation colonies in the eastern hemisphere or elsewhere, or on to other European traders. Conclusion The lack of primary source coverage over-time and in an equal matter handicaps the analysis somewhat in presenting a full range of differences that might be correlated with one another, especially as sources are an individual’s experience and not indicative alone to the larger picture. This makes comprehensive analysis of every aspect difficult. This article is thus not exhaustive, but highlights through key elements the VOC’s importance in shaping the eastern Dutch empire by uniquely subsuming all other typical imperial interests of contemporaries to the pursuit of stable profits due to its nature as a business enterprise, supported by an understanding merchant-led state. This mitigated the competing interests that watered down the aim of profit in other empires. The VOC’s pursuit of permanency of profits acted as a model for future sub-imperialist enterprise as states like Britain and France saw a cost-efficient model for expansion which guaranteed economic returns without directly shouldering the costs of empire. Bibliography: Primary Sources: Carletti, F. (1964a) First Chronicle of the East Indies. In Which is told the voyage from the Philippine Islands to those of Japan, and other notable things of that region, New York, Pantheon Books Carletti, F. (1964b) Third Chronicle of the East Indies. Which treats of the voyage made from the island of Macao in China to Malacca and thence to Goa, and of what occurred during that voyage, New York, Pantheon Books Carletti, F. (1964c) Fourth Chronicle of the East Indies, Dealing with the debarking and stay in the city of Goa, up to embarking for Lisbon, with all other particulars of the matters of India, New York, Pantheon Books Carletti, F. (1964d) Fifth Chronicle of the Second Oriental Account, Which deals with the departure from Goa en route for Lisbon and with what happened that voyage up to arrival in Zeeland, New York, Pantheon Books Diaz, B. (1963 [c.1570]) The Conquest of New Spain, Harmondsworth, Penguin Dmytryshyn, B. (1991) A petition on the Siberian fur trade from the merchant Guselnikov to Tsar Mikhail Fedorovich protesting excessive regulation of the fur trade in Siberia, 1639, Fort Worth, Texas, Harcourt Brace Jovanovich College Publishers Las Casas, B.D. (2004 [1552]) A Short Account of the Destruction of the Indies, London, Penguin Tavernier, J.B. (1925) Travels in India, London, Oxford University Press Van Linshoten, J.H. (1964a) The Voyage of Jan Huyghen van Linschoten to the East Indies, New York, Thomas Y. Cromwell Van Linshoten, J.H. (1964b) The Voyage of Jan Huyghen van Linschoten to the East Indies, New York, Thomas Y. Cromwell Veradsky, G. (1972) VIII:77. Administrative instructions for Western Siberia, 1664–1680, New Haven and London, Yale University Press Secondary Sources: Chaudhuri, K. N., (1992), ‘The Portuguese Maritime Empire, Trade and Society in the Indian Ocean During the Sixteenth Century’, Portuguese Studies, 8, p 57-70. Chant, C. (2008) ‘The Expansion Of Russia 1500-1725’, How do empires begin?, Milton Keynes, The Open University Ferguson, N. (2003) Empire: How Britain Made The Modern World, London, Allen Lane Grell, O.P. (2008) ‘Empires of Trade? The Portuguese And The Dutch In East Asia 1580-1670’, How do empires begin?. Milton Keynes, The Open University. Hack, K. (2008) ‘Tools And Terms For Studying Empires’, What are empires?, Milton Keynes, The Open University. Parthesius, R., (2010) Dutch Ships in Tropical Waters: The Development of the Dutch East India Company (VOC) Shipping Network in Asia 1595-1660, Amsterdam: Amsterdam University Press. Scammell, G.V., (1980) ‘Indigenous assistance in the establishment of Portuguese power in Asia in the sixteenth century’, Modern Asian Studies Vol.14 no.1 Steensgaard, N., (1982) ‘The Dutch East India Company as an institutional innovation’, Dutch Capitalism and World Capitalism, Cambridge University Press Waites, B. (2008) ‘The Beginning Of Atlantic Empires: Spain In The New World’, How do empires begin?. Milton Keynes, The Open University. Williams, C.A. (2008a) ‘Pirates, Pilgrims, Plantations and Pigs: The Beginnings Of The British Atlantic Empire 1497-1660’, How do empires begin? Milton Keynes, The Open University. Williams, C.A. (2008b) ‘Introduction’, How do empires begin?. Milton Keynes, The Open University. Online Sources: Szczepanski, K. (2016) ‘The Bandas Massacre’ in Nutmeg: The Unsavoury History Of A Tasty Spice [Online]. Available at: http://asianhistory.about.com/od/colonialisminasia/p/Nutmeg-Unsavory-History.htm (Accessed 19th December 2017)