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 DUTCH EAST INDIA COMPANY, THE (Oostindische Vereenigde Maatschappij), a body founded by a charter from the Netherlands states-general on the 20th of March 1602. It had a double purpose: first to regulate and protect the already considerable trade carried on by the Dutch in the Indian Ocean, and then to help in prosecuting the long war of independence against Spain and Portugal. Before the union between Portugal and Spain in 1580–81, the Dutch had been the chief carriers of eastern produce from Lisbon to northern Europe. When they were shut out from the Portuguese trade by the Spanish king they were driven to sail to the East in order to make good their loss. Unsuccessful attempts were made to find a route to the East by the north of Europe and Asia, which would have been free from interference from the Spaniards and Portuguese. It was only when these failed that the Dutch decided to intrude on the already well-known route by the Cape of Good Hope, and to fight their way to the Spice Islands of the Malay Archipelago. A first expedition, commanded by Cornelius Houtman, a merchant long resident at Lisbon, sailed on the 2nd of April 1595. It was provided with an itinerary or book of sailing instructions drawn up by Jan Huyghen van Linschoten, a Dutchman who had visited Goa. The voyage was marked by many disasters and losses, but the survivors who reached the Texel on their return on the 20th of August 1597 brought back some valuable cargo, and a treaty made with the sultan of Bantam in Java.

These results were sufficient to encourage a great outburst of commercial adventure. Companies described as “Van Ferne”—that is, of the distant seas—were formed, and by 1602 from sixty to seventy Dutch vessels had sailed to Hindustan and the Indian Archipelago. On those distant seas the traders could neither be controlled nor protected by their native government. They fought among themselves as well as with the natives and the Portuguese, and their competition sent up prices in the eastern markets and brought them down at home. Largely at the suggestion of Jan van Oldenbarneveldt, and in full accordance with the economic principles of the time, the states-general decided to combine the existing separate companies into one united Dutch East India Company, which could discharge the functions of a government in those remote seas, prosecute the war with Spain and Portugal, and regulate the trade. A capital estimated variously at a little above and a little under 6,500,000 florins, was raised by national subscription in shares of 3000 florins. The independence of the states which constituted the United Netherlands was recognized by the creation of local boards at Amsterdam, in Zealand, at Delft and Rotterdam, Hoorn and Enkhuizen. The boards directed the trade of their own districts, and were responsible to one another, but not for one another as towards the public. A general directorate of 60 members was chosen by the local boards. Amsterdam was represented by 20 directors, Zealand by 12, Delft and Rotterdam by 14, and Hoorn and Enkhuizen also by 14. The real governing authority was the “Collegium,” or board of control of 17 members, of whom 16 were chosen from the general directorate in proportion to the share which each local branch had contributed to the capital or joint stock. Amsterdam, which subscribed a half, had eight representatives; Zealand, which found a quarter, had four; Delft and Rotterdam, Hoorn and Enkhuizen had two respectively, since each of the pairs had subscribed an eighth. The seventeenth member was nominated in succession by the other members of the United Netherlands. A committee of ten was established at the Hague to transact the business of the company with the states-general. The “collegium” of seventeen nominated the governors-general who were appointed after 1608. The charter, which was granted for twenty-one years, conferred great powers on the company. It was endowed with a monopoly of the trade with the East Indies, was allowed to import free from all custom dues, though required to pay 3% on exports, and charged with a rent to the states. It was authorized to maintain armed forces by sea and land, to erect forts and plant colonies, to make war or peace, to arrange treaties in the name of the stadtholder, since eastern potentates could not be expected to understand what was meant by the states-general, and to coin money. It had full administrative, judicial and legislative authority over the whole of the sphere of operations, which extended from the west of the Straits of Magellan westward to the Cape of Good Hope.

The history of the Dutch East India Company from its formation in 1602 until its dissolution in 1798 is filled, until the close of the 17th century, with wars and diplomatic relations. Its headquarters were early fixed at Batavia in Java. But it extended its operations far and wide. It had to deal diplomatically with China and Japan; to conquer its footing in the Malay Archipelago and in Ceylon; to engage in rivalry with Portuguese and English; to establish posts and factories at the Cape, in the Persian Gulf, on the coasts of Malabar and Coromandel and in Bengal. Only the main dates of its progress can be mentioned here. By 1619 it had founded its capital in Batavia in Java on the ruins of the native town of Jacatra. It expelled the Portuguese from Ceylon between 1638 and 1658, and from Malacca in 1641. Its establishment at the Cape of Good Hope, which was its only colony in the strict sense, began in 1652. A treaty with the native princes established its power in Sumatra in 1667. The flourishing age of the company dates from 1605 and lasted till the closing years of the century. When at the summit of its prosperity in 1669 it possessed 150 trading ships, 40 ships of war, 10,000 soldiers, and paid a dividend of 40%. In the last years of the 17th century its fortunes began to decline. Its decadence was due to a variety of causes. The rigid monopoly it enforced wherever it had the power provoked the anger of rivals. When Pieter Both, the first governor-general, was sent out in 1608, his instructions from the Board of Control were to see that Holland had the entire monopoly of the trade with the East Indies, and that no other nation had any share whatever. The pursuit of this policy led the company into violent hostility with the English, who were also opening a trade with the East. Between 1613 and 1632 the Dutch drove the English from the Spice Islands and the Malay Archipelago almost entirely. The English were reduced to a precarious footing at Bantam in Java. One incident of this conflict, the torture and judicial murder of the English factors at Amboyna in 1623, caused bitter hostility in England. The success of the company in the Malay Archipelago was counterbalanced by losses elsewhere. It had in all eight governments: Amboyna, Banda, Ternate, Macassar, Malacca, Ceylon, Cape of Good Hope and Java. Commissioners were placed in charge of its factories or trading posts in Bengal, on the Coromandel coast, at Surat, and at Gambroon (or Bunder Abbas) in the Persian Gulf, and in Siam. Its trade was divided into the “grand trade” between Europe and the East, which was conducted in convoys sailing from and returning to Amsterdam; and the “Indies to Indies” or coasting trade between its possessions and native ports.

The rivalry and the hostilities of French and English gradually drove the Dutch from the mainland of Asia and from Ceylon. The company suffered severely in the War of American Independence. But it extended and strengthened its hold on the great islands of the Malay Archipelago. The increase of its political and military burdens destroyed its profits. In the early 18th century it was already embarrassed, and was bankrupt when it was dissolved in 1798, though its credit remained unshaken, largely, if its enemies are to be believed, because it concealed the truth and published false accounts. In the later stages of its history its revenue was no longer derived from trade,