Dutch trade overseas
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Around the year 1590 Dutch ships began to sail to the West Indies in search for salt they badly needed for the herring trade. The routes to the Western hemisphere were no secret to them. For many years Dutch masters and their crews, had sailed back and forth between Portugal and Brazil under the Portuguese flag.
Dutch capital was back of Brazilian trade as the capital of Flanders and Antwerp had been half a century before. The strict regulations issued by Philip II who, after 1580, was king of Portugal as well as of Spain, made Portuguese-Dutch cooperation more difficult but did not bring it to an end. By a decree of 1585 he ordered all Netherland ships in Spanish-Portuguese ports seized and in 1590 he sent the crews of 21 ships on their way home from the Mediterranean to the galleys. These decrees merely incited the Netherlands to further expansion.
On the coast of Guinea, where the Portuguese held a monopoly, Zeeland and Holland interlopers carried on such a brisk trade in the last two decades of the 16th century that their vessels often out-numbered those of the ruling power. By 1594, Dutch trading was expanding feverishly north and south, and the time was near when those enterprising merchants and mariners would begin to send their vessels around the Cape of Good Hope and through the Straits of Magellan. They were by no means unacquainted with these trade routes, for many Hollanders had sailed on Portuguese ships to the Indies, and though few such adventurers returned, several of them did come back to tell of their experiences. Dirk Gerritsen Pomp visited India and Java in the seventies and eighties of the 16th century, and Jan Huyghen van Linschoten who returned from India in 1592 published, a few years later, a detailed book with a description of the country and the course taken.
One of the main reasons the Netherlanders did not venture sooner on the Indian route was the exaggerated opinion of the efficiency of Portuguese control over the sea-lanes. As a neutral flag might provide some protection, we find enterprising traders negotiating in 1592 with a petty German prince, the duke of Lauenburg, for the organization of an expedition around the Cape. This scheme came to naught but in 1595 four ships commanded by Cornelis de Houtman set out for the Far East for the account of a group of Amsterdam merchants. Two years later three of the four came back, only half laden; but although the profits were by no means large, the success of the completed voyage provoked general enthusiasm and in 1598 no less than 22 ships, divided into five squadrons, each sailing for a different account, sailed on the same mission. Thirteen followed the route around the Cape explored on the first voyage, and of these, twelve came back, some of them with most precious cargoes that brought enormous profits. The other nine tried the western route through Magellan Strait, but of these only one returned to Holland. It was the ship commanded by Olivier van Noort who reached the Philippines by the western route and returned via the Sunda Islands and the Cape, thus completing the first Dutch circumnavigation of the world.
Of these five expeditions and five others that followed in 1599 and in 1600, only one, that commanded by Van Noort, turned to piracy and "preying on Spanish shipping" and that expedition resulted in the bankruptcy of Van Noort and of several of his financial backers. Jacob van Neck, commander of the second expedition to the Indies, proudly stated that his great commercial results were achieved solely by normal and honest trading. The leaders of the early expeditions usually received definite instruction to avoid bloodshed and violence with the natives as well as with the Portuguese. That policy changed after 1600 when the natives of the Moluccas, violently hostile to the Portuguese whom they had driven from most of their islands, requested help from the Dutch to oust their enemies completely. This led to the first clashes around Amboina and Tidore, but the initial military results gained by the Dutch were very meager.
Owing to the disasters that befell the expeditions which took the western route around South America, and to competition of the various companies, the total financial results of the first six years of the East Indian trade were small. Only one expedition gave the shipowners a profit of 100 percent, about 700,000 guilders in cash. Against this and smaller profits made by other expeditions around the Cape, stood a loss of half a million guilders on the voyages to the West. As a matter of fact the first six years enriched a small number of individuals and ruined some others, but did not yield the nation as a whole as much as the herring fisheries earned in two or three months.
This state of affairs was clear to everyone interested in the new trade. How could the East Indian trade ever become profitable if the Portuguese should organize the defense of their monopoly, thus forcing Dutch ship-owners to arm their ships more heavily and to garrison their trading posts in the East? A small Dutch squadron under Wolfert Harmenszoon, had gained a spectacular victory in 1601 over a Portuguese fleet off Bantam in Java, but it had been unable to exploit this success and the Portuguese had severely punished the people of Amboina for appealing to the Dutch, The East Indies trade could only be continued if it were organized and the States General and the States of Holland, prompted by Oldenbarnevelt, insisted on the amalgamation of the existing companies for Asiatic trade into one commercial body. In March 1602 the United East India Company received from the States General a monopoly for all Dutch trade east of the Cape of Good Hope and west of Magellan Strait.
The charter of the Company granted it the privilege of exercising all rights of sovereignty on behalf of the Netherland Republic in the territories it might conquer and in its relations with Asiatic powers. It received a subsidy from the national treasury to carry on the war against Spain and Portugal in the same regions. The orders issued to the Rext expeditions explicitly provided that war should be waged against the enemies of the State wherever necessary, without however putting war above trade. The latter interests were to be the paramount consideration. The Company was a business concern, not intended for the creation of an Asiatic empire. The capital of the Company was to be six and a half million guilders. The Board of Directors was to consist of seventeen members nominated by the four chambers of Amsterdam, Northern Holland, the Meuse, and Zeeland. Anyone was free to subscribe to the shares or to buy them on the stock exchange, but the Directors of the individual chambers, except in the case of Zeeland, were not to be elected by the shareholders but to be appointed from among them by the councils of the towns in which the chambers were located. In Zeeland the States of the province controlled new nominations. Thus the influence of the ruling class on the administration of the Company was assured.
The new organization immediately developed amazing activity. In three years it equipped thirty-eight ships for the Far East; and within a decade its vessels were seen off the coasts of Japan, of China and Siam, of India and Arabia. In die same ten years they had discovered parts hitherto unknown to Europeans, such as the northern coast o Australia. In those ten years the Company distributed dividends only once, in 1610. True it was a large dividend, no less than 162 per cent of the original capital, but in the same period the new enterprise was burdened with heavy debts for the organization of its power in the Indies. Because of the peculiar financial organization of the Company, it is impossible to calculate the real profits derived from this branch of trade in the early part of the 17th century. It is a safe conclusion, however, that the shareholders and some of the commanders in the East who were rarely averse to serving their own interests along with those of the Company, earned a great deal of money. The nation as a whole saw a large part of these profits neutralized by the continuous disbursements to keep the war-chests and cash reserves in the East sufficiently provided. In the first decade of its existence the Company always had between twenty and thirty ships and perhaps three to five thousand men in the Far East. The pay of the lower ranks was very low, a common sailor or soldier receiving about ten guilders a month for sailing half way round the world and venturing his life in war. The higher employees were not well paid either, but at least had a chance to make extra income by doing a little trading on their own account.