Monopoly and Decline

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Monopoly and Decline

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Dutch private trade

Monopoly and Decline

In the contemporary and scientific discussion on the VOC there is a strong emphasis on the study of the organisation of trade, mostly in combination with the idea of expansion and decline. The seventeenth century is seen as a period of expansion and most historians have marvelled at the way the VOC organised its trade in this century. At the same time, they have acknowledged the black pages of the VOC as it imposed itself most notably on the Spice Islands. For the eighteenth century the focus is on how the VOC tried to combat decline. For instance, J.P. de Korte has analysed how the VOC dealt with its finances and tried to find an explanation for the decline of the VOC in the eighteenth century.1 He tried to assess how the Directors financially ran and justified the financial state of the VOC. J.J. Steur has described the visions of Directors and policy makers, as they tried to combat the decline of the VOC in the eighteenth century. Naming his book, ‘recovery or decline’, the monograph takes us through all the plans made in the Republic envisioning to bring the VOC back to its former splendor.2 In these contemporary plans nobody doubted the monopoly and its profitability. Even in its declining years after 1780, nobody really doubted that monopoly was the best way to organise trade. Official policy was simply preoccupied with how to make the company solvent again.3 Apparently the logic that the spice trade was profitable, simply reduced all criticism on the VOC monopoly to silence.

In the published primary sources, a similar preoccupation can be traced with keeping the VOC on a profitable footing. Pieter van Dam served the Company as ‘Advocaat’ of the Company and secretary of the Gentlemen XVII for over 35 years. As he had a tremendous amount of experience, his information and experiences were deemed vital for the prolonged profitability of the VOC. He was then asked by the Gentlemen XVII to write down his experiences, which comprised 8 volumes, which were kept behind locked doors to prevent the information falling in the wrong hands.4 Primary source material has also been published on the opinions expressed between Asia and the Republic on the state of the VOC.5 In multiple volumes a dense account is made of all the correspondence on the highest level from Batavia and the Republic. Within Asia, the tradition within the VOC to inform successors to governor posts of the situation on the spot, has led to the publication of multiple of these ‘Memories van Overgave’.6 Although, they have not all been conserved, those who remain give abundant detail about change in the diplomatic, economic and social interactions between Europeans and Asians. Still, much more can be said about the political economy through publications on specific areas within Asia. The Dutch historiography has made it a tradition to hand over ‘their own history’ to the people of Asia through the study of documents in the VOC archives, as these source are often the sole sources of information we have left.7

Monopoly or private trade in Asia

The history of the Dutch East India Company is profoundly linked to its trade in spices. With its control over the trade in several spices, the VOC build up both a profitable trade between Europe and Asia as well as a profitable trade within Asia. It exchanged commodities from all over Asia for spices, whilst spices gave the VOC the opportunity to open markets in Asia. These advantages gave the VOC the basis for a profitable intra-Asian trade.8 By monopolising trade in Asia where it could, the VOC maximised profits and thereby reduced its requirements of bullion from Europe.9 In the eighteenth century cracks began to appear in this system and various developments robbed the system of its initial shine and brilliance.10 Nevertheless, because of the unwavering profitability of the system, no historian has ever seriously doubted that the VOC retained its policy of monopoly well into these more demanding times.11 This successful system of multiple monopolies has given the VOC the name of the most monopolistic company, but is this completely correct?

In his monumental ‘Rival empires of trade’, Furber argues the monopolistic nature of VOC trade made it vulnerable and eventually made it loose out to the competition of its rivals.12 His argument, often repeated by historians after him, is that while the English East India Company allowed private trade in the intra-Asian trade, the VOC kept a strict monopoly. Although the monopoly system of the VOC had been successful in the seventeenth century, the flexibility of private trade made the EIC more successful in the eighteenth century. In turn, most VOC historians have treated the existence of any Dutch private trade as corruption as they consider the intra-Asian trade the prerogative of the VOC.13 They adhere to the principle that the VOC ‘perished under Corruption’ as the VOC servants evaded any prohibition on a large scale. Still, it has been stressed that sometimes the VOC allowed private trade in Asia, but the literature considers the allowance of trade outside of the monopoly the exception rather than the rule. 14 The best known example is Deshima in Japan. Kambang trade, or private trade on VOC ships between Deshima and Batavia was allowed by the Japanese authorities in Nagasaki for political reasons.15 At the same time, the Chinese Junk trade was considered as vital to the prosperity of Batavia, even though it meant allowing strange merchants in the heart of its commercial empire.16

Recently, the policy of the VOC has been put in a different light, as the VOC was seen as much more pragmatic and permissive in allowing private trade. It is essential to note that at least the idea of freedom of trade was not without precedent and ran throughout the whole period of the existence of the Company like a scarlet thread.17 Occasionally the VOC even acted on these plans, revealing its pragmatic nature.18 From 1740 onwards, however, the VOC structurally allowed private trade in the intra-Asian trade and constantly reassessed the rules to fit its own interests. 19 It defined and kept on redefining the articles it still considered under monopoly and what commodities were allowed for private trade. And the reforms which allowed VOC subjects private trade under specific circumstances and in particular regions are mentioned. At first, the VOC viewed allowing private trade in the intra-Asian trade as a way to optimize its trade in Asia, but after 1771 it became a tool in the competition with its rivals and in the fight against decline.20

The lasting existence of institutions related to private trade further points to the change of attitude of the VOC towards private trade in Asia.21 There was even a separate trading company set up to manage the trade to Sumatra (1749-1759).22 Probably the best known example is the Opium Society, which was a private company trading opium to the Indonesian Archipelago on behave of the VOC .23 The VOC also commenced accepting more letters of exchange for Europe, an unequivocal indication of a change in the approach towards intra-Asian trade. All official enquiries to discover how these fortunes had been made, were also stopped. The VOC also commenced relying more on their money to finance its own trade. 24 The fortunes garnered by Company servants were used temporarily by the VOC in its trade to Europe, thereby circumventing the extra costs of purchasing and sending silver out from the Netherlands.25

Julia Adams claims VOC servants colluded with EIC servants in ways to make their fortunes as the VOC did not offer sufficient ways to make their fortunes.26 She strongly points towards private trade as the main way of making a fortune and the ban of the VOC on private trade. In the Shadow of the Company not only challenges this idea by arguing private trade was allowed in the case of the VOC, it also offers a different explanation to decline by looking at the actual day-to-day functioning of private trade. Form at least 1740 onwards, the way the VOC organised strongly resembled the way the other companies organised the allowance of private trade, in other words by constantly assessing private trade through regulations. At the same time, the opportunities for an income from private trade cannot be detached from the official hierarchy, as it was only considered fair that those high in high in the hierarchy profited most from these privileges. Although private trade in Asia was a ‘European’endavour and cannot be studied in a ‘national’ perspective, private traders falling under different companies had different assets to offer.27

At the same time, ‘In the Shadow of the Company’ argues that making a fortune was strongly linked with the establishment and the governance of empire, both in the Dutch and English case. In that sense, private trade was the least coveted way of making a fortune as it took more time to make fortune, whilst at the same time the private trader ran the risk of losing his investment in the process. When empire was attained, servants very easily stepped away from private trade in favour of easier income from government and war. The presence of English and French State sponsored fleets and armies, a support the VOC had to do without, meant that the servants could take advantage of different organisational structure. As a consequence, the authority of the French and English companies eroded, while the VOC was much more able to control the empire seeking desires of its servants, avoiding costs that Empires entailed.

Monopoly and trade to Europe

The private trade to Europe on company ships has been much less studied. The first book that shed a little light on the subject was primarily aimed at how the trade of the commanders of VOC ships was organised.28 This is a distinguishing feature of early modern shipping in general, as commanders and the officers on board of ships were paid little, they were compensated with private trade privileges. This is true for all commanders and officers of the VOC as well as of the other companies, who sailed either between Europe and Asia or in Asia itself. Again, a system of regulation existed of this trade, as for instance the VOC became wary of indulging the commanders and officers too much.

The VOC was strict in the non-allowance of private trade in spices in the return voyages and in the intra-Asian trade, much stricter than its sister organisations. As it depended much less on new goods as tea and textiles than the other companies, the VOC was in turn much more indulgent in giving private trade privileges in this part of trade. ‘In the Shadow of the Company’, already argues that a similar freedom existed for private trade in textiles to Europe. An example is, the authorization of the shipment to Holland on VOC ships of certain prescribed amounts of cloth granted to employees and free-burghers after 1771.29 The Europe’s Asian centuries project has taken up this challenge and has studied such regulations and the actual functioning of private trade between the Indian subcontinent, China and Europe. The VOC, in contrast to the spices trade, was often much more liberal than the competition in allowing private trade privilege in commodities such as tea and textiles.30

1 J.P. De Korte, De jaarlijkse financile verantwoording in de VOC, Verenigde Oostindische Compagnie (Leiden: Nijhoff, 1984),

2 J.J. Steur,Herstel of ondergang: de voorstellen tot redres van de Verenigde Oost-Indische Compagnie, 1740-1795 (Utrecht: Hes, 1984).

3 Ingrid Dillo, De Nadagen van de Verenigde Oostindische Compagnie, 1783-1795 (Amsterdam: Bataafsche Leeuw, 1992).

4 Pieter van Dam, Beschryvinge van de Oostindische Compagnie [Description of the East India Company] 7 vols., ed F.W. Stapel en C.W.Th. van Boetzelaer van Asperen en Dubbeldam (‘s –Gravenhage: Martinus Nijhoff, 1927-54).

5 Coolhaas, Generale missiven van gouverneurs-generaal en raden aan Heren XVII der Verenigde Oostindische Compagnie (Den Haag:Instituut voor Nederlandse geschiedenis, 1997), multitple volumes, still new volumes coming out every couple of years.

6 To give some examples of these memories: Pieters, S., Memoir left by Gustaaf Willem baron van Imhoff, governor and director of Ceylon, to his successor, Willem Maurits Bruynink, 1740 (Colombo: 1911). Reimers, E., Memoir of Jan Schreuder, governor of Ceylom. Delivered to his successor Lubbert Jan van Eck on March 17, 1762 (Colombo: 1946).

7 The TANAP-project was based on this principle. The publications coming out of this project, often put a strong emphasis on this idea. With TANAP, Asian historians wrote their own histories, instead of European scholars working on Asia.

8 Jonathan I. Israel, The Dutch Republic, its Rise, Greatness, and Fall 1477-1800 (Oxford: Clarendon Press 1998), 943.

9 Els M. Jacobs, Koopman in Azië (Zutphen: Walburg pers, 2000), 1-4 (English version: Merchant in Asia, CNWS, 2008) and Israel, The Dutch Republic, 941.

10 Holden Furber, Rival empires of trade in the orient, 1600-1800 (London: Oxford University Press, 1976), 275, ‘(...) The Dutch company’s restrictions on the ‘private trade’ of its servants prevented the growth of a Dutch private country fleet at all comparable to the British. (...)’

11 Femme. S. Gaastra, De geschiedenis van de VOC (Zutphen: Walburg Pers, 2002), 119-124; W. Ph. Coolhaas, ‘Zijn de Gouverneurs-Generaal Van Imhoff en Mossel juist beoordeeld?’ in: BKI. 114 (1958), 29-54: J.J. Steur, Herstel of ondergang, de voorstellen tot redres van de verenigde Oost-Indische compagnie, 1740-1795 (Utrecht, HES, 1984): Jacobs, Koopman in Azië, 221: Leonard Blussé, Strange Company, Chinese settlers, mestizo women and the Dutch in Batavia (Dordrecht: Foris, 1986), 158; Ian B. Watson, Foundation for Empire, English Private Trade in India 1659-1760 (New Delhi: Vikas, 1980), 17; Holden Furber, Rival empires of trade, 52; Peter Marshall, East Indian fortunes: the British in Bengal in the eighteenth century (Oxford: Clarendon Press, 1976); Chris A. Bayly, Imperial Meridian: the British Empire and the world, 1780-1830 (Harlow: Longman, 1989), 66.

12 Holden Furber, Rival empires of trade, 52.

13 Jacobs, Merchant in Asia. The Trade of the Dutch East India Company during the Eighteenth Century (Leiden: CNWS press, 2006).

14 Jacobs, Merchant in Asia, 17. Gaastra, The Dutch East India Company, Expansion and Decline (Zutphen: Walburg Press, 2003). S. Arasaratnam, ‘Monopoly and Free Trade in Dutch-Asian Commercial Policy. Debate and Controversy’, Journal of Southeast Asian Studies, 4, 1 (1973).

15 Jacobs, Merchant in Asia, 120-122.

16 Leonard Blussé, Strange Company, Chinese settlers, mestizo women and the Dutch in Batavia (Dordrecht: Foris, 1986).

17 J.K.J. de Jonge, De opkomst van het Nederlandsch gezag in Oost-Indie: verzameling van onuitgegeven stukken uit het oud-koloniaal archief (’s-Gravenhage: Nijhoff, 1862-1909), Volume 10, xix. The idea of legalizing private trade in the VOC intra-Asian trade had already been proposed by Governor-General J.P. Coen (1619-1623 and 1627-1629). During the seventeenth century, other advocates of private trade within the VOC had spoken out, among them J. Maetsuyker (1653-1678) and R. van Goens (1678-1681). Their plans were seriously considered again in the eighteenth century by Governor-General J. van Hoorn (1704-1709). Different Governors-General sent their plans to the Republic with suggestions for reforms in the intra-Asian trade. J. de Hullu, ‘Een advies van Mr. Pieter van Dam, advocaat der Oost-Indische Compagnie, over een gedeeltelijke openstelling van Compagnie’s handel voor particulieren, 1662’ in: bijdrage tot de taal-, land-, en volkenkunde van Nederlands-Indië (’s-Gravenhage, 1918) volume 74, 267-298. Nor was Batavia the only place where Company servants toyed with the idea of allowing private trade. In this context the plans of P. van Dam (1621-1706), the advocaat (attorney) of the VOC in the Republic, are very significant. In 1662, this influential VOC servant wrote a tract in defence of Van Goen’s plans to liberalize trade. Also see: P. van Dam, Beschryvinge van de Oostindische Compagnie, uitgegeven door F.W. Stapel en C.W.Th. van Boetzelaer, boek I, deel I (‘s –Gravenhage 1927), xvii.

18 Jan Steur, Herstel of ondergang: de voorstellen tot redres van de Verenigde Oost-Indische Compagnie, 1740-1795 (Utrecht: Hes, 1984). Coolhaas, W.Ph., ‘Zijn de Gouverneurs-Generaal Van Imhoff en Mossel juist beoordeeld?’, BKI 114 (1958) and Belt, van den B., Het VOC-bedrijf op Ceylon: een voorname vestiging van de Oost-Indische Compagnie in de 18de eeuw (Zutphen: Walburg Pers, 2008).

19 Chris Nierstrasz, ‘Reguleren of Corrumperen? De VOC en hervormingen in de Privé-handel (1743-1799)’, Tijdschrift voor Zeegeschiedenis, October 2006 and in Chris Nierstrasz, In the Shadow of the Company, the Dutch East India Company, its Servants and its Decline, 1740-1796 (Leiden: Brill 2012). In this article and book, references are made to successive plans and changes, apart from the fundamental first plans of Van Imhoff, in the allowance of private trade, for example: Mossel: J.A. van der Chijs, Nederlandsch-Indisch Plakaatboek, 1602-1811 (The Hague: Martinus Nijhoff, 1889), VI, 493-5, Mossel, 3 Augustus 1753, Extracten uit de voorschriften nopens de vrije vaart; Ibidem, 610-1, Mossel, 13 december 1753, Vernieuwd verbod tegen particulieren handel met zekere soorten van manufacturen. Ibidem, 651-61, 29 Maart 1754 mossel, Voorschriften nopens particuliere vaart en handel. Opkomst, X, uitleg lijst, 223-227 en235-6; Van der Parra; : Van der Chijs, Nederlandsch-Indisch Plakaatboek, VIII, 262-7, Van der Parra, 11 junij 1767, Extracten uit de reglementen nopens de vrije vaart om de Oost, Noord en West; Ibidem, VIII, 31 December 1771, Van der Parra, 729-32, Korte uittreksels uit de orders op de vrije vaart om de Oost, Noord en West. Opkomst, XI, uitleg lijst, 203-213; De Klerk; Van der Chijs, Nederlandsch-Indisch Plakaatboek,, X, 300-14, De Klerk, October 1778, Extracten uit de orders nopens de vrije vaar om de West, Oost en Noord; Ibidem, X, 234-6, Alting, 9 april 1778, Intrekking van het bepaalde: 1_) op 1 julij 1777 nopens inkomende regten van Chinesche goederen; 2_) op 13 Mei 1774 nopens vrije vaart en handel; Alting: Van der Chijs, Nederlandsch-Indisch Plakaatboek, X, 469-78, Alting, 23 Februari 1781, Voorschriften nopens de vrije vaart, april 1778; Ibidem,X, 573-577, Alting,october 1781, Alting, Extracten uit de orders op de vrije vaart om de Oost en Noord; Opkomst, XII, 5-8, Alting, 9 October 1781.

20 Chris Nierstrasz, In the Shadow of the Company, the Dutch East India Company, its Servants and its Decline, 1740-1796 (Leiden: Brill 2012).

21 N.P. van den Berg, De Bataviasche Bank-Courant en Bank van leening 1746-1794 (Amsterdam: Van Kampen, 1870) and Femme Gaastra, ‘De Amfioen Sociëteit. Een geprivilegieerde handelsmaatschappij onder de vleugels van de VOC, 1745-1794’, in Ebben, M. en Wagenaar, P., (eds.), De cirkel doorbroken. Met nieuwe ideeën terug naar de bronnen, Opstellen over de Republiek (Leiden: Instituut voor Geschiedenis, 2006).

22 Ibidem, 131.

23 Femme Gaastra, ‘De Amfioen Sociëteit. Een geprivilegieerde handelsmaatschappij onder de vleugels van de VOC, 1745-1794’, in Ebben, M. en Wagenaar, P., (eds.), De cirkel doorbroken. Met nieuwe ideeën terug naar de bronnen, Opstellen over de Republiek (Leiden: Instituut voor Geschiedenis, 2006).

24 Femme Gaastra, ‘Private Money for Company trade. The role of bills of exchange in financing the return cargoes of the VOC’, in Itinerario 13/1 (1994), 65-76. And Femme Gaastra, ‘British capital for the VOC in Bengal. Private fortunes and financial transactions by servants of the Dutch and English Indian companies in Bengal, c. 1760-1790’ (Unpublished paper Delhi School of Economics, New Delhi 1994). The Role of British Capital in financing the Trade of the VOC Factory in Bengal, c. 1760-1795’, in J. Everaert, and Jan Parmentier, (eds.), Shipping, Factories and Colonzation (Brussels: Koninklijke Academie voor Overzeese Wetenschappen, 1996).

25 Femme Gaastra, ‘Particuliere geldstromen binnen het VOC-bedrijf 1640-1795’ (Van Gelderlezing, 2002).

26 Julia Adams, ‘Principal Agents, colonialists and company men, the Decay of colonial control in the Dutch-East Indies’, American sociological review, vol. 61, no. 1 (feb 1996), 12-28.

27 For a more elaborate story also see: Chris Nierstrasz, In the Shadow of the Company. The Dutch East India Company and its Servants in the period of its Decline (1740-1796) (Leiden: Brill, 2012).

28 Jaap Bruijn, Commanders of Dutch East India Company ships in the eighteenth Century (Woodbridge: Boydell and Brewer, 2011).

29 Jacobs, Merchant in Asia, 111.

30 For instance tea: paper Venice 2013: Chris Nierstrasz: Have your tea and drink it too! How the trade of rogue companies, private traders and smugglers popularized the consumption of tea in Western Europe (1700-1760).

  • Monopoly or private trade in Asia
  • Monopoly and trade to Europe
  • Van der Parra

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