Age of Mercantilism in Southeast Asia Summary

  • Last updated on November 10, 2022

The theory and practice of mercantilism led to European—especially Dutch—expansion into Southeast Asia, where European powers and local states competed for control of the strong and profitable spice market. The age of mercantilism was a key period in the development of the European economy and in the establishment of European colonialism.

Summary of Event

By the seventeenth century, Western Europe had developed into a region of competing nation-states, each with a central government, and each practicing mercantilism. According to the principles of mercantilism, the goal of trade is to increase the wealth of a nation. To increase and store wealth, according to mercantilist theory, states were encouraged to export more goods than they import. [kw]Age of Mercantilism in Southeast Asia (17th cent.) [kw]Asia, Age of Mercantilism in Southeast (17th cent.) [kw]Mercantilism in Southeast Asia, Age of (17th cent.) Economics;17th cent.: Age of Mercantilism in Southeast Asia[0040] Expansion and land acquisition;17th cent.: Age of Mercantilism in Southeast Asia[0040] Government and politics;17th cent.: Age of Mercantilism in Southeast Asia[0040] Colonization;17th cent.: Age of Mercantilism in Southeast Asia[0040] Southeast Asia;17th cent.: Age of Mercantilism in Southeast Asia[0040] Indonesia;17th cent.: Age of Mercantilism in Southeast Asia[0040] Mercantilism;Southeast Asia

Within a given country, mercantilism calls for individuals to be thrifty so that the amount of national wealth spent on consumer goods is minimized and the amount flowing to the country’s treasury maximized. Internationally, export was key to a nation’s wealth, as it led to the creation of a monopoly on vital goods and a monopoly on income. The strong armies made possible by increasing national wealth enabled states to establish colonies, to protect their markets, and to compete with one another directly in wars. In addition, rising states in other parts of the world followed economic practices similar to those of the competing European nations. Several of those non-European states were in the islands of Southeast Asia.

The Southeast Asian cluster of islands now known as Indonesia Indonesia;Europe and had long been the primary source of spices for Europe. The islands of the Moluccas were called the Spice Islands, and much of the European Age of Discovery during the sixteenth century involved European efforts to find sea routes to the Moluccas to obtain advantages in the spice trade. In 1511, the Portuguese established the first secure European foothold in the Spice Islands when Malacca fell to Portugal.





The Netherlands, along with Belgium and Luxembourg, had been ruled by the distant king of Spain until the end of the sixteenth century. While still throwing off Spanish control, Holland especially, as the dominant Dutch province, enjoyed rapid economic growth because of its access to the fishing territory of the North Sea and its central location along the trade routes of Europe. The strong Dutch economy helped the nation expand its shipping and trade economy to the area of the East Indies (Indonesia). In 1602, the Dutch established the Vereenigde Oost-Indische Compagnie (United East India Company), better known as the Dutch East India Company Dutch East India Company , to trade in the East Indies and to help secure wealth for the continuing struggle against Spain for Dutch independence. Although the Portuguese, Spanish, and other Europeans were active in the islands of Southeast Asia, the Dutch and the English became the primary competitors for control of the region.

Within Indonesia, local empires were expanding and, like the Europeans, trying to control trade and establish monopolies. The small kingdom of Banten Bantam (Bantam), founded in the mid-sixteenth century at the northwestern end of the island of Java, engaged in a series of wars and established control over some of the pepper-producing regions. As a result, Banten became a major pepper port. Bordering Banten, a Muslim ruling class took over central Java in 1600 and founded the kingdom of Mataram Mataram . Mataram sent out raiders, also attempting to take control of the profitable sea trade of the islands. In eastern Indonesia, the kingdom of Gowa Gowa had made itself the center of a loosely tied empire and a great trading power.

Mercantile policies brought the Dutch into Southeast Asia, putting the Dutch in contact with Southeast Asian powers who had similar monopolistic goals. This meant that the Europeans would not simply trade with the people of the Asian states, but would compete with the Asian rulers for the domination of commerce. At the beginning of the seventeenth century, the Dutch established a headquarters at Jacatra Jacatra (Jakarta), on the northern coast of Java between Banten and Mataram. The ruler of Jacatra was a vassal of Sultan Abul Mafākhir Abul Mafākhir of Banten. In 1617, Abul Mafākhir tried to expel the Dutch by laying siege to the European camp.

England also entered the competition for control of the spice trade in much the same way as the Dutch. Queen Elizabeth I granted a charter to the English East India Company British East India Company in 1600. Elizabeth I (queen of England) This brought England and Holland into fierce competition for spices. The Dutch tried to force local rulers to grant monopolies to their own company, and the Dutch called the English “smugglers” for attempting to set up trading posts.

Abul Mafākhir attempted to make use of the English-Dutch competition by encouraging the English admiral Sir Thomas Dale Dale, Sir Thomas to take part in the attack on the Dutch camp outside Jacatra. Dale drove away a Dutch fleet under the command of Jan Pieterszoon Coen Coen, Jan Pieterszoon . Dale’s forces were about to take the Dutch camp when soldiers of Banten arrived, took over Jacatra, and forced the English to leave. Although Abul Mafākhir wanted to get rid of the Dutch, he did not want to replace them with other European competitors. In May, 1619, Coen returned with a larger fleet, drove the Banten troops away, and destroyed Jacatra. The city was renamed Batavia, Batavia and it became the center from which Holland established its rule over the islands of the region. Coen became one of the most important Dutch figures in the region, serving as governor-general twice, from 1619 to 1623 and from 1627 to 1629. Colonization;Netherlands of Indonesia

After securing Batavia, Coen led an armed expedition against the Banda Islands Banda Islands , the world’s primary producers of nutmeg and mace, in 1621. The people of the Banda Islands had a contract to sell exclusively to the Dutch, but they also had been trading with the English. Coen took the Banda island of Lonthor, killing or exiling most of its inhabitants. He returned to the Netherlands in 1623 to serve as head of the Dutch East India Company. After returning to Batavia four years later for his second term as governor-general, he defended the Dutch headquarters against two sieges by the ruler of neighboring Mataram, in 1628 and 1629.

In eastern Indonesia, the Gowa kingdom was an obstacle to Dutch attempts to create a monopoly and end smuggling. Sultan ՙAla al-Dīn ՙAla al-Dīn , the ruler of Gowa until 1639, worked with traders from Asia and other European nations to undermine Dutch efforts to impose a trade monopoly. From 1615 until 1637, the Dutch East India Company and Gowa were in a state of sporadic warfare. In 1637, and again in 1655 and 1660, the Dutch and Gowa signed treaties. After 1660, though, the Dutch joined together with the Bugis prince Arung Palakka Arung Palakka , a rebellious subject of the Gowa Empire. With the defeat of Gowa, the Dutch had eliminated most of the major hindrances to establishing a spice monopoly, although the subjugation of what would become known first as Dutch East India and then Indonesia would be a long process.


The quest for monopolies of profitable goods and the surplus of wealth created by government efforts to increase national treasuries created capital for investment. Surplus wealth, which paid for large military forces in Western European nations, made possible European domination of other parts—and peoples—of the globe, leading to the establishment of European colonialism.

The Dutch gained control of the Spice Islands and the surrounding region, and out of this region came the nation of Indonesia. Other nations in Southeast Asia that were initially seeking spices seized other territories, creating other nations. To the north, much of the long southern peninsula of Southeast Asia fell under the English and became Malaya (now called Malaysia). To the west, the Spanish held on to islands they had taken in their quest for the spice market in the late sixteenth century, and these islands became the Philippines.

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Magnusson, Lars. Mercantilism: The Shaping of an Economic Language. New York: Routledge, 1994. Magnusson looks at the development of mercantile theory and practice. Chapter 4 is devoted specifically to seventeenth century developments.
  • citation-type="booksimple"

    xlink:type="simple">Ricklefs, M. C. A History of Modern Indonesia Since c. 1200. 4th ed. Stanford, Calif.: Stanford University Press, 2001. Part 2, “Struggles for Hegemony,” explores the establishment of colonial power by the Dutch East India Company in the seventeenth century. Includes excellent maps.
  • citation-type="booksimple"

    xlink:type="simple">Taylor, Jean Gelman. Indonesia: Peoples and Histories. New Haven, Conn.: Yale University Press, 2003. A general history of Indonesia. Chapters 5 and 6, on the entry of Europeans and on the Indonesian sultanates, deal directly with economics. Scattered throughout the book are capsules summarizing key topics.
Related Articles in <i>Great Lives from History: The Seventeenth Century</i>

Piet Hein; John IV; Maurice of Nassau; Michiel Adriaanszoon de Ruyter; Abel Janszoon Tasman; Maarten Tromp; Zheng Chenggong. Mercantilism;Southeast Asia

Categories: History