Dutch East India Company Is Founded Summary

  • Last updated on November 10, 2022

The founding of the Dutch East India Company led to the founding of a large European empire in Asia and established the pattern of modern imperialism and colonialism.

Summary of Event

Although the Dutch East India Company was founded in 1602, its origins lay in the Netherlands’ successful struggle to free itself from Spanish rule during the preceding century. This feat was accomplished in 1581, when the seven northern provinces of the Netherlands won independence. These seven combined to form an economically dynamic, although politically decentralized, seafaring power—one ready to challenge the control its rivals exercised over oceanic trade routes. [kw]Dutch East India Company Is Founded (Mar. 20, 1602) [kw]East India Company Is Founded, Dutch (Mar. 20, 1602) Trade and commerce;Mar. 20, 1602: Dutch East India Company Is Founded[0270] Organizations and institutions;Mar. 20, 1602: Dutch East India Company Is Founded[0270] Economics;Mar. 20, 1602: Dutch East India Company Is Founded[0270] Expansion and land acquisition;Mar. 20, 1602: Dutch East India Company Is Founded[0270] Exploration and discovery;Mar. 20, 1602: Dutch East India Company Is Founded[0270] Colonization;Mar. 20, 1602: Dutch East India Company Is Founded[0270] Netherlands;Mar. 20, 1602: Dutch East India Company Is Founded[0270] Southeast Asia;Mar. 20, 1602: Dutch East India Company Is Founded[0270] Indonesia;Mar. 20, 1602: Dutch East India Company Is Founded[0270] Dutch East India Company

Spices from the East Indies had been vital to European cooking for centuries and were used to season food, to preserve it, and to disguise its flavor when preservation failed. The most common spices included pepper, cloves, nutmeg, and mace, the latter two derived from the seed of the same tree. Initially, European access to these spices was controlled by Muslim and Venetian merchants, most of whom had been supplanted by Portuguese traders in the fifteenth century. By the end of the following century, however, Portuguese power was waning. Trade;Dutch in Asia

Nine prosperous merchants from the province of Holland had formed the Company of Far Lands (in Dutch, the Compagnie van Verre) in 1594. Relying on information gathered by fellow countrymen who had sailed with the Portuguese, the company launched a small fleet of three ships under the command of Cornelis de Houtman Houtman, Cornelis de the following year. The route Houtman had to follow was a long one—around Europe and the southern tip of Africa and across the Indian Ocean. Despite the loss of one ship and almost two-thirds of the ships’ crews, however, the company made a small profit on the cargo of pepper the expedition brought back from the island of Java.

This initial success encouraged other merchants throughout the Netherlands, and twenty-two ships were launched by five companies in 1598. These included a second expedition from the Company of Far Lands, which made the company an enormous profit, and one launched by a new company from the province that was Holland’s greatest competitor. Zeeland merchant Balthasar de Moucheron Moucheron, Balthasar de had been active in seeking a northeast passage to the East Indies and had pioneered trade with West Africa and the Caribbean. So successful did his East Indies expeditions prove that he was in a position to threaten his competitors’ subsequent efforts to bring the trade under control.

Dutch companies launched sixty-five ships in 1601, allowing them to surpass their old rivals, the Portuguese, after only a few years’ effort. Yet, inevitably, such intense competition caused prices to rise at the sources of production in the East Indies and to fall in the Netherlands. So crowded was the field becoming that the Estates-General, the governing body of the Netherlands, encouraged the traders to join forces.

Representatives from the various provinces and companies gathered at the Inn of Brille in The Hague in December of 1601, with each party presenting a plan for coordinating trading efforts. Although the delegates came to agreement on a general structure, they were unable to set equitable terms for representation (and hence voting). Claiming that they were unable to negotiate further, the delegates from Zeeland withdrew. The Estates-General responded by calling a second meeting in The Hague on January 15, 1602. This session was led by Johan van Oldenbarnevelt, Oldenbarnevelt, Johan van the landsadvocaat of the Estates-General, who forcefully warned the delegates that their traditional enemies, the Spanish, and new competitors, the members of the British East India Company British East India Company , were prepared to take advantage of Dutch disunity. “It is therefore to the interest of the commonwealth,” Oldenbarnevelt warned, “that all parties get together and place themselves under one organization.”

The powerful Zeeland merchants, particularly Balthasar de Moucheron, remained reluctant and suspicious. Moucheron campaigned for a position as director of the proposed company and demanded sole rights to trade on the east coast of Africa. When the delegates voted to meet these conditions, and Oldenbarnevelt in turn hinted that further delay might well be interpreted as treason, opposition collapsed; Zeeland agreed to the compromise on March 16.

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The Estates-General quickly moved to establish the United Netherlands Chartered East India Company (the Vereenigde Oost-Indische Compagnie, or VOC) four days later, on March 20, 1602. The company was to be run by a board of “Seventeen Gentlemen” (the Heeren XVII) apportioned to represent the various provinces, with eight of them coming from Holland. The latter number was a reflection of Holland’s relative strength but was deliberately set one short of a majority. The Seventeen Gentlemen were to meet at each provincial capital in turn, further assuring that no province would assert undue control. This carefully balanced structure was primarily the work of Oldenbarnevelt, who, although a native of Holland, had deliberately chosen to limit his province’s influence.

The Dutch East India Company was ostensibly a commercial enterprise, and any Dutch citizen had the right to buy shares in its operation. It was also given wide, almost absolute power over any territory it could annex east of the southern tip of Africa (the Cape of Good Hope) and west of the southern tip of South America (Cape Horn). It had the authority to wage war, establish diplomatic relations, sign treaties, coin money, and collect taxes, and it was granted a monopoly on Dutch trade in the same enormous area. In addition, it paid no import duties on the cargoes it brought back to the Netherlands.

Significance

The company’s formation led to the establishment of an enormous Dutch Empire in Southeast Asia, one that was more than fifty times the size of the Netherlands. This empire would eventually include the large islands of Java, Sumatra, and Celebes; most of Borneo; the western half of New Guinea; and a host of smaller islands. The empire consolidated Dutch political strength and the economic status of its prosperous, middle-class population. It also laid the groundwork for the establishment of Indonesia, which exists largely within the cultural and geographic framework forced upon it by the Dutch. This framework came at great price, however, for the Dutch proved insensitive at best and ruthless at worst in exploiting their new subjects.

Historians have identified the Dutch East India Company and its competitor, the British East India Company, as setting the pattern for modern European imperialism. The Spanish and Portuguese had established colonial empires a century before, but these were largely expressions of their monarchist political systems. The Dutch East India Company embodied a representative, middle-class ethic that was to distinguish subsequent colonization in Africa, mainland Asia, and the Pacific.

Further Reading
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    xlink:type="simple">Boxer, C. R. “The Eighty Years War and the Evolution of a Nation.” In The Dutch Seaborne Empire: 1600-1800. New York: Alfred A. Knopf, 1965. Treats the formation of the Dutch East India Company as an outgrowth of the creation of the Netherlands. Boxer’s book is regarded as a classic of popular history.
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    xlink:type="simple">Chaudhuri, K. N. “The Dutch and English East India Companies and the Bureaucratic Form of Trade in Asia.” In Trade and Civilisation in the Indian Ocean: An Economic History from the Rise of Islam to 1750. New York: Cambridge University Press, 1985. Compares Dutch, English, and French methods of trade in the Indian Ocean. Well illustrated with maps and period prints.
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    xlink:type="simple">De Vries, Jan, and Ad van der Woude. The First Modern Economy: Success, Failure, and Perseverance of the Dutch Economy, 1500-1815. New York: Cambridge University Press, 1997. Examines the Netherlands’ formation into a European economic power. Analyzes various sectors of the economy, including trade, with information about the Dutch East India Company.
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    xlink:type="simple">Irwin, Douglas A. “Mercantilism as Strategic Trade Policy: The Anglo-Dutch Rivalry for the East India Trade.” Journal of Political Economy 99 (December, 1991): 1296-1314. Argues that the Dutch prevailed in Southeast Asia because of managerial incentives inherent in the company’s charter.
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    xlink:type="simple">Israel, Jonathan Irvine. “The Breakthrough to World Primacy, 1590-1609.” In Dutch Primacy in World Trade, 1585-1740. Oxford, England: Clarendon Press, 1989. Surveys the factors that made the Netherlands a preeminent mercantile power.
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    xlink:type="simple">Israel, Jonathan Irvine. The Dutch Republic: Its Rise, Greatness, and Fall, 1477-1806. Oxford, England: Clarendon Press, 1995. A comprehensive history. Includes information on the Dutch East India Company, Oldenbarnevelt, and the Dutch economy.
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    xlink:type="simple">Masselman, George. “The Formation of the United East India Company.” In The Cradle of Colonialism. New Haven, Conn.: Yale University Press, 1963. One of the most readable accounts available. Subsequent chapters chart in considerable detail the early decades of the company’s development.
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    xlink:type="simple">Pflederer, Richard. “Dutch Maps and English Ships in the Eastern Seas.” History Today 44 (January, 1994): 35-41. Discusses the Itinerario of Jan Huygen van Linschoten, a volume of sailing directions that revealed Portuguese trade routes and practices in Asia to their Dutch and English rivals.
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