WHY WAS THE VOC FOUNDED?

Perennial lack of funding for the independence war, prior to the formation of the VOC

Even in the earliest written explanations of why the “Vereenighde Oost-Indische Compagnie” (VOC) or United East Indies Company, was founded the 80-year Dutch war of independence against Spain is considered a key ingredient. This war is recorded to have started in 1568 with the lead up to the battle near the monastery of Heiliger-Lee (Holy Lion) close to Groningen. The battle took place on the same battleground where in earlier history Hermann, a famous Teutonic hero, had beaten “three veteran legions of tyrant Rome” (Motley 1910).  In May 1568 a veteran Spanish army was defeated by troops of rag tag mercenaries under Counts Lodewijk (Louis) and Hendrik van Nassau at Heiliger-Lee. They were brothers of William I (the Silent), Prince of Orange. Another brother, Count Adolphus van Nassau, fell in this battle as did the leader of the Spanish army Count Aremberg.

Later that year, after a spate of executions of Dutch leaders by way of revenge by the Spanish authorities, a large Spanish army took revenge. The Duke of Alva, whose ruthlessness has been compared to the that of the Roman Emperor  Nero (e.g. as the local representative of the King, Alva had sentenced the whole Dutch population to death, excepting Catholics), defeated Lodewijk at Jemmingen killing most of the troops. Some escaped , including Lodewijk, by swimming across the river Ems.

The underlying reason for the defeat was their lack of funds to pay their troops, a problem that would plaque the Dutch for much of the war. Many battles followed, on both land and sea, including against the Spanish Armada in 1588, a fleet that was meant to conquer both England and the Dutch rebel provinces.

On land the well-paid and well-drilled Spanish armies often prevailed. They would conquer protestant cities such as Mechlin, Naarden and Zutphen and send whole populations to their death as punishment. At sea the Dutch, with centuries of sea-faring tradition in herring fishing and mercantile shipping, could usually match the Spaniards. The Prince of Orange however became poor so soon that the ship's crews were not paid and they resorted to taking Spanish merchant ships as booty - a practice learned form English pirates.

The Spanish leadership in Holland therefore called them mockingly “des gueux”, French for beggars. This the sailors and the general population bastardised to “geuzen” or “water-geuzen”. This new name, a Dutch loanword indicating they were the fighting poor, the proud underdogs, they carried with pride as they invariably defeated the paid Spanish Navy.

The battles soon depleted all of the then limited wealth of the leading Orange/Van Nassau family and their friends. The continuance of the war had to be funded from elsewhere. Funds were raised continuously from the Northern Dutch cities that in turn made much of their income from mercantile shipping.

Spain funded their side of the Dutch war from silver and gold extracted from their new colonies in the West Indies. A substantial proportion of Dutch shipping was involved in the distribution of the very profitable spices and other products from the Orient. It was mainly the Dutch that were trading in these products in Europe, buying them in Lisbon, the Portuguese capital. Hence the key to much of the income of Dutch cities and of the economic base for their war was their access to the spice market at Lisbon harbour.

In the 16th century it was only the Portuguese who brought goods from the Far East to Europe and who jealously guarded the secret of the route to these riches. This monopoly had been wrestled from Arab sea-farers after the  Portuguese discovery of a route around the Cape of South Africa to the coasts around the Indian Ocean on to the Far East excepting, we still believe, Australia.

The longer term context

In 1555 Phillip II became both King of Spain and Lord of the Netherlands through abdication of his father Charles V of Burgundy. Charles had conquered one by one all previously independent Netherlands provinces the last one being Gelderland in 1543. Phillip’s second title meant he was ruler over the seventeen “Spanish” Netherlands. Seven of these would form the Dutch Republic in 1648 with the rest, now known as Belgium, remaining under Spanish control until 1713 when the Austrian Emperor became head of State of the Southern Netherlands as part of the settlement of the War of Spanish Succession.

When the VOC folded in 1800 the Northern Netherlands were under French rule and hence were associated at war with England. The Southern Netherlands became part of France in 1794 until the fall of Napoleon I at Waterloo in 1815 after which they were reunited with the Northern Netherlands as the Kingdom of the Netherlands under Prince Willem IV of Orange, renamed King Willem I (William, King of England was Stadholder of the Netherlands, Prince Willem III of Orange, Grandson of William the Silent). In 1830 Belgium became independent.

Lisbon closed

In 1580 Phillip II conquered Portugal and became King and ruler of that country. Since Phillip was also at war with the Netherlands, or at least with those Northern Dutch cities that objected to his heavy taxes and religious persecution of his inquisition, he closed the harbour of Lisbon to Dutch ships from these cities. The Dutch found themselves pushed out of the lucrative spice trade and as a result much less capable of funding their wars. For some years the complete ban on Dutch ships at Lisbon was ineffective as the Dutch used a range of tricks to obtain the desired spices, porcelain, tea, cotton, etc. but by 1594 all loopholes had been closed and Dutch ships were left empty.

Dutch traders felt that they should be able to haul oriental goods from the lands of origin themselves. But how to get there? The 'theory' that the closure of Lisbon harbour was the reason the Dutch sailed to the spice islands has been questioned as the Portuguese may have been challenged around this time anyway. English ships, pirates etc. such as Francis Drake, rather than traders, had been noticed in the Indies and the maps and information on how to get there began to percolate through to other seafaring nations.

Expeditions to find the spice islands

The Dutch organised a number of shipping expeditions to find a route to the Far East. Famous is a third failed attempt to sail to the east via the north of Russia. Captains Heemskerk and Barentsz in a small ship with a crew of only 17 got stuck in the polar ice and had to stay the winter near Nova Zembla during the winter of 1596-97 where Barentsz. died. The Barentsz Sea is named after him. Heemskerk returned.

One fleet of five ships left Rotterdam in 1598, the year that Phillip II died, to find the route via the Strait of Magellan. Of these, the Commander’s ship De Hoop disappeared in the Pacific. The ship De Liefde arrived in Japan with 24 out of a crew of 110. The ship Het Geloof  lost its way for a while and returned to Rotterdam without having landed anywhere. The Trouw still had a crew of 24 out of 89 when it was captured by the Portuguese in Tidore, where all were murdered. De Blijde Boodschap surrendered to the Spanish at Valparaiso (Leuftink 1963).

One fleet of four ships, an investment from the City of Amsterdam only, under Commanders De Houtman and Van Beuningen with a total crew of 240 sailed from Amsterdam in 1595 to try and follow the Portuguese route via the Cape of Good Hope and along the southern Asian coasts described by a former employee of the Portuguese. One of these ships was the Duyfken that later, in 1606, would make landfall upon a hitherto uncharted land, now known as Australia, becoming the first recorded European ship to go there and return. Two and a half years later  in 1597 three ships returned with a total crew of only 87. The rest had perished through scurvy, diseases such as the ‘red runs’ (dysentery), skirmishes at far away beaches, accidents and punishments or had stayed behind. However the Dutch were delighted, the route had been found and with it the spice islands.

Because the profits from a successful return journey promised to be enormous many a seafaring town now founded its own company, sometime more than one to capitalise on the new route to the east. As a rule the investment was made for one trip. Upon its return the ships and cargo were sold and funds returned to its investors and what was left of the crew was sacked.

Between 1595 and 1601 a total of 15 fleets sailed with a total of 65 ships from 9 companies.

The skimping on investment and the lack of experience of such very long trips caused many expeditions to fail at enormous financial and human costs. One in 10 ships and three quarters of crews did not return at all. The records of these pre-VOC journeys show horrific stories of human suffering, death and failure. (Leuftink,1963). Also, competition and fights between all these seafaring entities had the effect of substantially increasing product price levels at source and hence reduce profits.

Van Oldenbarneveldt

Before the creation of the Dutch Republic in 1648, the seven northern  provinces that united in the war against Spain were held together by a loose alliance, known as the Union of Utrecht. Its appointed military leader called the Stadholder,  was the Prince of Orange. Representatives of the various areas met in a governing body known as the States-General seated at The Hague. The province of Friesland had its own aristocrat-Stadholder. The province of Holland had an administrative head called the “raadpensionaris” or Secretary of State.

The “Vereenighde Oost-Indische Compagnie” (VOC) or United East Indies Company, was the brainchild of a lawyer, Mr Johan Van Oldenbarneveldt (pictured left), the Secretary of State of the province of Holland of the day. The founding of the VOC cannot be discussed without the name Van Oldenbarneveldt.

It was his lobbying and negotiating skills and drafting of the company structure, powers and the State Charter that achieved agreement between all the leading personalities of several cities to form one single company to trade on the Far East.

The cities of Amsterdam, Rotterdam, Enkhuizen, Hoorn, Middelburg and Delft took part and would have representation on the VOC’s governing body. He travelled for months between the various cities promoting his case with its leaders and investors. These investors were typically the Directors of the 9 companies who had already been sending ships to the east.

He argued that the company should pool available investment so ships could be kept as capital property, properly equipped and manned, accumulate experience and knowledge about discoveries, accumulate mapping and it would distribute profits to all its partaking investors. The notorious failure rate would come down dramatically, he promised. It would have a monopoly on all trade to the east.  He also pointed out that the Dutch would need to beat not only the Portuguese and Spanish, but even beat the English to the riches of the East as just over a year before an English East India Company had reportedly been set up. Van Oldenbarneveldt is considered the initiator and driving force behind the founding of the VOC.

Founding the VOC

In January 1602  Van Oldenbarneveldt called all relevant leaders together in Amsterdam to refine and agree on the final provisions of the Charter to be presented to the States-General. An unprecedented and speedy cooperation between State and commercial interest took place. There was a war on. There had been massive genocides in various towns that had been captured by the Spanish troops. Recently some military help had been provided by the English but this had turned out to be an expensive failure, as they too had to be paid and Spanish troops were still raiding the country. The English showed a desire to make peace with Spain, so they were asked to leave. Something had to be done to change decisively the course of the war in favour of the Dutch. In march the States-General approved the VOC Charter providing for the Monopoly for 20 years..

The VOC had six chambers, one each at Amsterdam, Rotterdam, Middelburg Delft, Enkhuizen and at Hoorn. Above these ruled the Board of Directors, called the "Gentlemen Seventeen" -  8 from Amsterdam, 4 from Middelburg (Zealand), 1 from each other city with one of them 2 in turns. Starting capital was 6.5 million guilders through shares.

The Gentlemen Seventeen had their headquarters in Amsterdam in a building called ‘Het Oost-Indische Huijs’ that still (partly) exists as a University Building and can be visited in the Oude Hoogstraat.

They were given far reaching ‘sovereign’ powers. Apart from a monopoly on trade in the Far East they had the right to hire troops, build ships (which would make Amsterdam Europe’s largest centre of shipbuilding), start wars, capture land, build and occupy fortifications, negotiate with far away chiefs, all on behalf of the States-General and of course, to trade, all on their own judgment.

The company pioneered the raising of capital through shares and not only from the member cities. It thereby opened a new chapter in Dutch capitalism. It is considered the first multinational corporation as the cities considered themselves independent national entities and the entities it controlled traded in many countries in the world and between them and it became a limited liability company.

Rise, change and decline

In years ahead the VOC provided, through taxes and grants, much of the capital to win the war against Spain and after the creation of the Dutch Republic in 1648 it continued to bring wealth to the Netherlands at least for its first one hundred years. In the middle of the 17th century there were 1700 Dutch ships involved in international trade, more than those of France, England and Scotland combined. Between 1600 and 1800 A.D. a total of 9641 trips by European ships were made to Asia. 4720 of these were by Dutch ships (Mak, G, 1994).  The Company traded by negotiation competing with the local Asian trade, in other areas did it throw its diplomatic and financial weight around and obtained preferential treatments through trade treaties, whilst in still other regions it used military violence to control the production of some ‘monopoly products’ to the detriment of the locals. Its long and changing operation is another story as are the forces that led to the demise of this the largest company in the world for two centuries. 

The VOC’s second century was one of slow decline. Following The Netherlands’ defeat in its fourth war against  England (it had won the other three) when most unfavourable conditions were imposed, it went down rapidly until the company folded bit by bit between 1798 to 1803 after having been nationalised in 1696. It left debts that were a burden to the nation until deep into the 19^th century.

Peter Reynders.

Consulted references

Motley  J.L, The Rise of the Dutch Republic, Vol 2, John Murray, London 1910

Van Zanden, H., 1606 Discovery of Australia, Rio Bay Enterprises, Rev Ed., Perth, 1999

Leuftink A.E., Chirurgijns Zee-Compas, Mycofarm, Delft, 1963

Romein J & A, Erflaters van onze Beschaving, 9th ed. Querido, Amsterdam, 1971

Mak G., Een Kleine geschiedenis van Amsterdam, Olympus (Contact), Amsterdam, 1994

Femme S Gaastra, De geschiednis van de VOC, Walburg Pers, 2002

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