Dutch East India Co remembered 400 years on

Dutch East India Co remembered 400 years on

Melanie Cheary Reuters Amsterdam

Four hundred years ago today (Wednesday) the Dutch East India Company was established by ambitious shipping merchants tired of losing out on the booming Asian spice trade dominated by the Portuguese since 1498.

But the proud memory of mercantile success and Dutch maritime supremacy being celebrated in the Netherlands this year masks a darker history of exploitation still haunting the East India Company's Asian trading partners today.

Better known, or reviled, by its Dutch initials VOC, the Company was set up on March 20, 1602 by small, independent trading companies with a government charter to a virtual monopoly on Dutch trade and navigation east of Cape Town.

It wasn't just business. With the right to sail and trade came the power to occupy territories, seize land and wage war on indigenous people -- the darkest moment being the massacre of almost everyone on the Indonesian islands of Banda in 1622.

The Indonesian ambassador to the Netherlands is boycotting VOC celebrations this year and will not be going to a remembrance service attended by Dutch Queen Beatrix.

"To many people in Holland, the VOC represents the golden age of Dutch commerce. For Indonesians, however, the VOC's arrival in 1602 marked the beginning of Dutch rule in Indonesia, a time of oppression which brought great suffering and hardship to the Indonesian people," the embassy said on its web site.

Although the VOC's demise began in the late 18th century -- brought to its knees by risky financial investments, wars with the ballooning British Empire and a fall in spice demand -- the Netherlands only recognized Indonesia's independence in 1949.

Indonesia declared its independence in 1945 after fighting a four-year guerrilla war against the Dutch colonial troops.

But good relations are the foundation of good business and more often than not the VOC sought to conclude friendly alliances with Asian rulers who also profited, historians say.

"Mace and nutmeg cultivation on the tiny Banda islands were the great exception in the Dutch trading network. The VOC both brutally wiped out the Bandanese and dismantled the local economy. European colonists ran nutmeg plantations worked by Asian slaves," said VOC specialist Els Jacobs.

"Nowhere else in Asia did the Dutch organize the cultivation of cash crops, as in general the VOC left matters to the indigenous population," Jacobs said in a summary of her article "Merchants in Asia".

In the 16th and 17th centuries, cloves, nutmeg, pepper and tea were coveted luxuries in Europe and made importers fabulously wealthy.

"Spices were like oil nowadays," says Dutch Maritime Museum Coordinator Elisabeth Spits.

Portuguese explorer Vasco da Gama rounded the Cape of Good Hope -- near modern day Cape Town -- in 1498 and opened a passage to the East. He found a safe site on the coast of South Africa where future sailing ships could drop anchor to pick up fresh water and food.

But the journey from Europe to Asia -- which took almost a year in treacherous seas -- was becoming more dangerous as pirates started to prey on ships, snatching cargo and driving up prices as spice stocks in Europe dwindled.

Dutch merchants, already rich from trade in the Baltics, had the money to build and equip ships. They seized the opportunity but competition between them hit profits and the government convinced them to join forces for the greater national glory.

What started as the simple use of Portuguese trade routes grew into commercial colonization -- stretching from Yemen and Persia in the west to the Moluccas (Maluku) and Japan in the east.

"The only way to secure satisfactory long-term profits in the spice trade was to control supplies in Europe -- by conquering the production areas in Asia," Jacobs said.

"The Dutch won the European rush for spices and defeated all competitors around 1670. The Company determined sales prices in the Dutch Republic, controlled production in Asia and prevented all spice trade by others," she said.

The VOC, historians say, was the world's first multinational company. It was the first Dutch company to issue shares. These shares were traded and the Amsterdam stock exchange developed into the world's first stock market.

Before the VOC emerged it was normal for ship owners to sell their ships and dismiss their crews after each journey, dividing the spoils for immediate gain.

The VOC had durable assets. Its ships were maintained, investors paid dividends and profits were used to finance further expeditions. Low costs boosted its profitability and its sailors were paid a pittance.

Some 1,772 ships sailed about 4,780 voyages between the Netherlands and Eastern harbors. They carried gold and silver to pay local rulers, as well as bricks to build settlements.

A network of trading stations and storage depots was built across the East Indies with headquarters in Batavia, now Indonesia's capital Jakarta.

All went well until the late 18th century when European hunger for spices was replaced by a thirst for coffee and textiles, making trade with the Caribbean more lucrative.

The fall in demand, increasing competition, war with the British and risky loans combined with incompetent officials and corruption to bring the commercial giant to its knees.