Examining the Extent the Vereenigde Oost-Indische Compagnie a
Vector for Change in Dutch Society in the Early 17th Century
Table of Contents
Section 1: Identification and Evaluation of Sources
Section 2: Investigation
2.1 Introduction
2.2 Developments in Financial Institutions
2.3 Developments in Legal Structures
2.4 Developments in Culture
2.5 Conclusion
Section 3: Reflection
Works Cited
Section 1: Identification and Evaluation of Sources
In investigating the research question “To What Extent Was the Vereenigde Oost-Indische Compagnie a Vector for Change in Dutch Society in the Early 17th Century?”, the identification and evaluation of sources central to the investigation is a necessary step in establishing their credibility, usefulness, and limitations, and therefore fathoming the scope and value of the paper as a whole.
To begin, the Charter of the Vereenigde Oost-Indische Compagnie, shortened henceforth to its commonly used initialism VOC, known in English as the Dutch East India Company, is critical in evaluating the ideological foundations of the entity, the described aims of its operations, and the background which helped to shape it. The value of the origins of the Charter, first published 20 March 1602 and translated into English by Peter Reynders and Rupert Gerritsen of the Australian National University at Canberra in 2009, is that, in its role as a primary source, it offers insight into the rationale of the creation of the VOC by the governing body of the Netherlands, the States General. Its purpose further reinforces the usefulness of the origin – as a legal document, the Charter is specific in defining the nature of the VOC and as such gives insight into the context of Dutch society and the intentions of the Dutch government. The value of its contents is that they provide meticulous information concerning the raising of capital, plans for trade, legal structure, and then-contemporary Dutch culture. The limitations of the Charter lay in the fact that it is, indeed, a charter – a plan for the operations of a yet shapeless company, created with certain values and goals in mind, without evidence for the success or implementation of such values and goals.
Crucial initial analysis and fact collection is provided by financial theorist, historian, and neurologist Dr. William J. Bernstein’s book “A Splendid Exchange: How Trade Shaped the World”, which covers world trade from Mesopotamian times to modern globalization. The value of its origins is that Bernstein, as a both a financial theorist and neurologist, provides details concerning the economics of the Netherlands and the VOC’s role in them, as well as the psychology of the Dutch population, amongst others. The purpose of the book – to view how trade shaped the world in a wide scope – aligns with the purpose of this paper, only to a far greater scale, and hence Bernstein provides methods of analysis which contribute to and can be used in the assessment of the VOC. Its content’s value doubles down on the value of the purpose – the statistical data enclosed, and documents cited are critical pieces of evidence with which a balanced appraisal of the extent to which the VOC was a vector for change can be constructed. The limitation of the book is its breadth, as the focus does not remain on the conditions of 17th century Netherlands for long, leaving informational gaps whose supplementation required further research.
Section 2: Investigation
2.1 Introduction
Amongst the very first joint-stock companies to ever be founded was the Vereenigde Oost-Indische Compagnie (the VOC). It was chartered on the 20th of March 1602 as a trading enterprise with the founding aim of generating a profit for its investors, board members (known as the Heren XVII), and tax revenue for the Dutch government (Reynders and Gerritsen 2009, 2, 5). Considering that the VOC is hailed as “perhaps the first business organization that bears resemblance to today’s multination corporations” by such researchers as Dr. Stephen Grenville of the Lowy Institute (Grenville 2017), the question “To What Extent Was the Vereenigde OostIndische Compagnie a Vector for Change in Dutch Society in the Early 17th Century?” appears to be an important and foundational line of inquiry when determining the extent to which the VOC exacted change in the world beyond the Netherlands. In answering the question, it will be made clear that the VOC had a major role to play in developing stock markets, advancing the Dutch economy, establishing limited liability laws, and providing the wealth that fueled the cultural achievements of the Dutch Golden Age. It will also be shown that these developments and the VOC itself were not produced in a historical and causal vacuum, and that a preexisting foundation of Dutch governmental and economic institutions, as well as a culture of financial involvement and literacy in Dutch society, were critical in the birth, success, and impact of the VOC.
2.2 Developments in Financial Institutions
The VOC affected change in the financial institutions of the Netherlands in two primary and interconnected ways. The first is direct innovation, wherein new structures created for the sake of easing burdens of business were implemented by the VOC in an effort to minimize costs and maximize profits for itself, its investors, and in the same vein, the tax revenues of the government which created it. The second is through the capitalization on preexisting financial structures of the Netherlands. The very first stock market, the Amsterdam Stock Exchange, was founded in 1602 by the VOC as a front through which to trade shares and bonds of itself (Braudel 1992, 26). The trading of commodities itself was not a novel idea, as markets for commodities existed in the Netherlands before, but the widespread selling of shares through a window into the public was – a model far-removed from the cloistered world of aristocratic, economic power which domineered Europe and the constituent states of the Netherlands for centuries before (Van Steensel 2012, 76-81). As such, the demonstration of financial institutional innovation through the VOC is clearly established, and further advancements in the involvement of the public as investors can be found in the company’s charter.
The VOC Charter expects that public interest in the shares of the company would be sufficient to generate “50,000 guilders or more” throughout the cities of the Netherlands (Reynders and Gerritsen 2009, 4). Moreover, the Heren XVII were required to swear an oath stating that “the distribution of profits obtained from the returned cargoes shall not favor the greater shareholders over the lesser ones.” (Reynders and Gerritsen 2009, 5). What these founding elements of the company reveal is that there existed an expectation of public interest in the VOC and that care was taken, at least on paper, to ensure that participation of such a nature would be enticed through the safeguarding ocf the interests of small investors – another slight against the highly stratified and classist notions of European aristocratic societies (Gelderblom 2003, 624-628). Bernstein notes that the history of the creation of the Netherlands – through the use of land reclamation projects via the building of dykes and windmills – which was funded by bonds bought by common Dutch people, created a Dutch farmer class free of feudal lords (Bernstein 2008, 223). It was this preexisting Dutch social practice and a common class of greater agency than most peasants and surfs had that allowed for the initial funding of the VOC and the company’s advancements in financial institutions and investor safeguards. Rather than undermining the role of the VOC, this context shows that changes in history are inextricably tied to preexisting foundations; every cause is itself an effect of a previous cause.
2.3 Developments in Legal Structures
The legal developments in Dutch society caused by the VOC start, as all investigations into the matters of change catalyzed by the VOC, with the Charter of the company, but stretch into the first two decades of its existence – marking a course of mistakes and ameliorations to the legal superstructure that allowed the VOC to function. The first development of note is a restrictive one; the Charter makes clear that the VOC was founded as a conglomerate of preexisting, sequestered trading ventures and small companies, which, once united, would form a monopoly and any enterprises and merchants operating outside of the VOC umbrella, in the context of the spice trade, would face “confiscation of ships and cargoes.” (Reynders and Gerritsen 2009, 6). Notwithstanding, the existing respect for contracts is revealed in the fact that the very next sentence of the Charter ensures that merchants who have been given permission to trade in the Indies would be able to continue trade to the full length of their permits. This Dutch legal superstructure is what allowed for trust in joint-stock companies to be as high as it was, and further allowed for innovations to be made through the decisions in the courtroom (Van Gelderen 2002, 207-209). Gelderblom, de Jong, and Jonker demonstrate that the VOC was pivotal in the creation of the legal concept of limited liability. During the first two decades of the VOC’s operations, several investors had their trust in the company tested when they were apparently given fraudulent shares and bonds in the company by the bookkeepers of the Amsterdam Stoch Exchange. Following lengthy lawsuits charging the Heren XVII with the damages sustained by the investors, the Supreme Court of Holland and Zeeland reached a verdict; that the board members themselves were not responsible, but rather that the legal entity of the VOC was (Gelderblom, de Jong, and Jonker 2013, 1068-1073). The extent to which this ruling was revolutionary is difficult to fully express, as limited liability companies dominate the modern market and serve as the principal engines of capitalist economies (Economist 1999). As such, once again, it is shown that the VOC was able to affect great change in Dutch society and the world, based on the foundations of agency and legalism which existed in said society before, and grew stronger as a result of, the VOC.
2.4 Developments in Culture
The success of the VOC was not limited to the developments which it catalyzed in the financial and legal spheres of Dutch society. Its success as a flexible and evolving trading venture was the foundation of the cultural advancements of the Dutch Golden Age (Price 1976, 27). The extraordinary wealth generated by the VOC for its shareholders – the public – the government, and the economy, as reflected by an unrivaled GDP per capita of $2,175 (almost double that of Portugal, England, or Spain) and an interest rate of 4%, compared to the English 10% (Bernstein 2008, 221, 222) was sufficient to propagate the kind of wealth necessary to fund advancements in the arts, sciences, and architecture. This leap is much reminiscent of the situation of the Renaissance, wherein Papal and banking wealth of such families as the House de Medici funded art, science, and architecture advancements at unprecedented rates (Prak 2003, 236).
Figure 1: Vermeer, Johannes. "The Little Street", Painting, 1657-1658, Rijksmuseum Amsterdam, Retrieved 2022
The figure above, of Vermeer’s famous painting “The Little Street”, shows a subject of art which was new to the Netherlands and Europe as a whole – the imperfect and humble domicile of two common, industrious women, and, research suggests, an almshouse (Grijzenhout 2015). The development of the architecture of such cities as Amsterdam and art by the likes of Rembrandt and Vermeer are, in part, accreditable to the wealth brought in by the VOC, and served to expand the preexisting valuation of the common individual, their lives, their potential, their humility, their work ethic, and their homes (Facos 2018, 47, 258, 501), (Weller et al. 2002, 14, 21, 32). 2.5
Conclusion
From the above recounting of the progression of history in the early 17th century in the Netherlands and the subsequent analysis of the VOC’s role in it, it can be fairly concluded that the company had, to a great extent, acted as a vector for change in Dutch society, whilst understanding that the change catalyzed by the VOC, and indeed, change universally, can manifest itself only because of a preexisting foundation of institutions, values, and culture. jkm980- 9 Section 3:
Reflection on the Work of a Historian
Having conducted the above investigation into the extent to which the VOC was a vector for change in Dutch society, I am left with a primary reflection on the role and work of a historian – the construction of complex, nuanced narratives, drawn from varied sources. In the nascent stages of the research for my investigation, I found myself convinced that the VOC instituted nearly unparalleled changes to Dutch society, and the financial world more broadly. Though the I still stand behind that sentiment to a lesser degree, the wider web of causes was not revealed to me until I read Dr. William J. Bernstein’s book “A Splendid Exchange: How Trade Shaped the World”. The example which Bernstein gives – that of the preexisting tradition of purchasing bonds for land-reclamation projects in the Netherlands – showed me how critical existing norms of a given society are in enabling changes in said society. Without this consideration, one might be too eager to conclude that this or that advancement was made by a certain people because of some greater virtue which they or their culture possesses, rather than understanding the nuanced reality – that it is the often unconsidered minutiae of society that provide the unseen foundations for changes and progress.
I am also struck by the role that scope plays in the writing of history papers. Having read much about the VOC, I had created a bloated draft which covered elements such as the massacres of the Banda people, the wars with England, and the eventual collapse of the monopoly. Although I am convinced that these details would provide the reader a fuller picture of the history of the VOC, I discovered that, in answering the question with precision, one must scuttle peripheral elements of the investigation, which detracts from the breadth of the work but sharpens the focus of the argument and the accuracy of the answer.
Works Cited
Bernstein J., William. A Splendid Exchange: How Trade Shaped the World. Atlantic Books, 2008. https://books.google.com/books/about/A_Splendid_Exchange.html?id=huPRIAAACAAJ
Braudel, Fernand, translated by Sian Raynold. Civilization and Capitalism, 15th -18th Century, Vol. II. The Wheels of Commerce. University of California Press, 1992. https://www.ucpress.edu/book/9780520081154/civilization-and-capitalism-15th-18thcentury-vol-ii
The Economist, The Editors of. The key to industrial capitalism: limited liability. Finance and Economics, The Economist, 1999. https://www.economist.com/finance-andeconomics/1999/12/23/the-key-to-industrial-capitalism-limited-liability
Facos, Michelle. A Companion to Nineteenth-Century Art. John Wiley & Sons, 2018. https://books.google.com/books?id=CCxuDwAAQBAJ&dq=dutch+golden+age+art+foc us+on+ordinary+life&lr=
Gelderblom, Oscar. The Governance of Early Modern Trade: The Case of Hans Thijs, 1556- 1611. Cambridge University Press, 2003. https://www.cambridge.org/core/journals/enterprise-and-society/article/abs/governanceof-early-modern-trade-the-case-of-hans-thijs15561611/E10B46B52FD2C72C8393461ABBB923E4 jkm980- 11
Gelderblom, Oscar, Abe de Jong, and Joost Jonker. The Formative Years of the Modern Corporation: The Dutch East India Company VOC, 1602-1623. Cambridge University Press, 2013. https://www.cambridge.org/core/journals/journal-of-economichistory/article/abs/formative-years-of-the-modern-corporation-the-dutch-east-indiacompany-voc-16021623/E16FF67D27465278E442A974954741BB
Grenville, Stephen. The first global supply chain. The Interpreter, The Lowy Institute Organization, 2017. https://www.lowyinstitute.org/the-interpreter/starting-point-firstglobal-supply-chain
Grijzenhout, Frans. Vermeer's Little Street: A View of the Penspoort in Delft. University of Amsterdam, Rijksmuseum Amsterdam, 2016. https://artsandculture.google.com/story/FQXx5pT_lFc9IQ
Prak, Maarten. Guilds and the Development of the Art Market during the Dutch Golden Age. Stichting Nederlandse Kunsthistorische Publicaties, 2003. https://www.jstor.org/stable/3780918
Price L., John. Dutch Culture in the Golden Age. University of Chicago Press, Reaktion Books, 1976. https://books.google.com/books?id=- wgfipvScEIC&dq=the+voc+led+to+the+dutch+golden+age&lr=&source=gbs_navlinks_ s
Reynders, Peter, and Rupert Gerritsen. A translation of the charter of the Dutch East Indies Company (Verenigde Oostindische Compagnie or VOC): granted by the States General jkm980- 12 of the United Netherlands, 20 March 1602. National Australian University at Canberra, 2009. https://catalogue.nla.gov.au/Record/4765500
Van Gelderen, Martin. The Political Thought of the Dutch Revolt 1555-1590. Cambridge University Press, 2002. https://books.google.com/books?id=hXK2fxzn2lAC&dq=dutch+revolt&lr=&source=gbs _navlinks_s Van Steensel, Arie. Noblemen in an urbanized society: Zeeland and its nobility in the late Middle Ages. Journal of Medieval History, 2012. https://doi.org/10.1080/13044184.2011.646743
Weller P., Dennis, Cynthia von Bogendorf Rupprath, and Mariet Westermann. Jan Miense Molenaer: Painter of the Dutch Golden Age. North Carolina Museum of Art, 2002. https://books.google.com/books/about/Jan_Miense_Molenaer.html?id=B7XnCEEjJr4C
Figure 1:
Vermeer, Johannes. The Little Street, Painting, 1657-1658. Rijksmuseum Amsterdam, Retrieved 2022. https://www.rijksmuseum.nl/en/collection/SK-A-286
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