The basis of the Dutch East India Company was established by nine most daring merchants from Amsterdam. In 1594, they merged to assemble a small fleet and to send it to India. All four ships returned with rich booty and made their owners rich. Therefore, these associations of merchants to trade with India and other Asian countries were created in large quantities. The influential Dutch politician, a former adviser to William of Orange, Johan van Oldenbarnevelt offered to merchants to unite into a single company in order to avoid internal competition. Merchants managed to reach a consensus, as the danger of civil strife and price wars frighten everyone. The Dutch government wanted to merge the activities of small entrepreneurs that were trading with India. The main purposes of the foundation of the Dutch East India Company were strengthening of the Dutch monopoly on the Indian trade routes and a ban on trade with India to other companies and countries. Thus, in 1602 was founded the Dutch East India Company. The States General have given the company a monopoly on trade from Africa to America. The Netherlands Government has granted to the Company a permission on the independent conclusion of international agreements, exploration of new territories and the “defensive war” (“Dutch East India Company”).
Perhaps for the first time in history, the company's capital was formed through the Initial Public Offering. Every resident of the Netherlands, who can pay at least 3,000 guilders per one share, could become a co-owner of the company (Petram, 194). Despite the high input threshold, there were many wishing to become members of the company. Anyone can become a co-owner of the shares, but only a limited number of co-owners had managed and controlled the company. The Dutch East India Company was the first company in which the shareholders had limited liability. Usually, in all other companies, co-owners divided their obligations among themselves whatever big they were. In the Dutch East India Company, all responsibilities were limited in accordance with a number of contributions, and it guaranteed that investors won't go bankrupt if their ship would sink. In addition, the shareholders could not take the capital invested, they could only sell their shares at the current market price.
In 1677, the Dutch East India Company established a policy of compulsory supplies. For this purpose, was developed a system of measures aimed at the preservation of pre-capitalist, backward forms of production relations. Lands were distributed in property between employees of the company with the obligation that all products would be sold to the company at a fixed price. Lands were processed by the local population or slaves. Initially, in the areas that were controlled by local feudal lords, were concluded the trade treaty agreements, that ensuring Dutch freedom and privileges. With the growth and development of the power of the Company, this agreement was replaced by the obligation to trade exclusively with the Dutch East India Company.
The policy of the Dutch East India Company was an outstanding example of the methods that were used in the era of primitive accumulation of capital. The main means of capturing vast areas of (Java, the Moluccas, and Bantam), and the creation of bases in these areas in the XVII - XVIII centuries, were rude deception, violence, and bribery. For the preservation of exclusively high prices in the European market during the periods of their decrease, the company carried out mass destruction of the whole plantations of spices. Therefore, the company provides for the payment of high dividends to its shareholders. By 1669, the company was the richest private company in the world. It owned more than “150 merchant ships, 40 warships, 50,000 employees and a private army of 10,000 soldiers” (Jäger& Kümmel, 27). The company took part in the political debate of that time, along with the states. In 1641, the company without the help of the Dutch government expelled the Portuguese from the territory of present Indonesia. For this purpose, at the expense of the company were created armed groups from the local population.
The company was in constant conflict with the British Empire. The competition was especially fierce in the field of spices trade, which gave the highest percentage of profit. As a result of long and heavy Anglo-Dutch Wars (1652-1654, 1665-1667, 1672-1674 and 1780-1780) the Dutch East India Company lost a lot of its trading posts and forts. The company's debt in 1796 was over 100 million florins. In 1798, the East India Company has been disbanded and its property passed into the ownership of the Batavian Republic.
Since the establishment till the end of its existence, the United Dutch Company surpassed its competitors in terms of business operations, and the European Regional tonnage of the fleet, geographical coverage and has reached the highest level of success.
Works Cited
“Dutch East India Company, Trade Network, 18th Century”. Department of Global Studies &
Geography, Hofstra University. Web. Accessed 21 Apr 2016 at <https://people.hofstra.edu/geotrans/eng/ch2en/conc2en/map_VOC_Trade_Network.html>
Jäger, Thomas and Gerhard Kümmel. “Private Military and Security Companies: Chances,
Problems, Pitfalls and Prospects”. Springer Science & Business Media, 23 Apr 2009. Web. Accessed 21 Apr 2016 at <https://books.google.com/books?id=_QdHAAAAQBAJ&hl=uk&source=gbs_navlinks_s>
Petram, Lodewijk. “The World's First Stock Exchange”. Columbia University Press, 20 May
2014. Web. Accessed 21 Apr 2016 at <https://books.google.com.ua/books?id=V8fbAgAAQBAJ&hl=uk&source=gbs_navlinks_s>
