For over a century, Portugal effectively controlled all European trade with India, reaping precious spices and other goods from both of India’s coasts and approximately half of Ceylon and distributing them through a Portuguese factor based in the previously quiet village of Antwerp in Holland, which was then a possession of the Spanish Crown. The insistence of the Spanish government on converting the Protestant Dutch to Catholicism, however, prompted a rebellion by the seventeen United Provinces against Spanish rule in 1566, which set off an eighty year war of independence immortalized in Goethe’s famous play Egmont, in which the principal villains are the Spanish king Philip II and the Duke of Alba. It was by the machinations of this same Duke of Alba that, in 1580, that same Philip II became also Philip I of Portugal, wearing both countries’ crowns upon his head.
It was a masterstroke of military action backed up by quick diplomacy, but it was also a disaster for the Dutch merchants. Overnight, Portugal became their enemy and Portuguese trade in Europe was redirected through German merchants instead of the factory at Antwerp. If Holland, desperately in need of funds for its struggle against Spain, which had now become a struggle against Portugal as well, was to continue to grow rich off the trade with India, it would have to undertake that trade on its own, and this became a disaster for Portugal.
In 1602, a group of Dutch merchants banded together to form the United East India Company (VOC in Dutch) to establish independent Dutch ventures in Asia. Their approach was patterned on that of the English, who two years before had formed the East India Company (EIC) as a national monopoly enterprise for Asian trade. In this way, the English overcame the chief difficulty of the trade, which was that the European demand for spices was constant but the Asian supply was not. As soon as traders outside the Portuguese system became involved, as they began to starting in the late 16th century, prices became subject to sudden fluctuations, and it was an all-too-common occurrence that an expensive trading fleet, even if it survived all the dangers of shipwreck and piracy, would return to port only to find that prices for spices had fallen, suddenly rendering their cargo less valuable and the trip unprofitable. Forcing trade into monopoly national conglomerates that could control the market as a cartel mitigated this risk, and the EIC had driven many of its independent Dutch competitors to ruin by doing so.
The VOC not only copied the English advantage, then, but improved upon it by becoming the first corporation in history to publicly trade stock (some of which was bought by German and Belgian merchants, thus making the VOC the world’s first multinational corporation at the same time). Almost instantly the capital holdings of the Company expanded to ten times the capital of the EIC, enough to rig out not only an extensive trading fleet but an extensive armada of warships.
Although Spanish overseas holdings in Africa and the Americas were heavily defended, owing to a long history of competition, Portuguese holdings in India, having grown complacent, were easy targets. What is more, the same policies of violent catholicization pursued by Spain that had triggered the revolt in Holland were followed by the Portuguese in India, leading to tremendous local dissatisfaction with their rule. Thus, when the VOC’s traders arrived near Pulicat in 1606, the reigning queen Eraivi was only too happy to extend them permissions to build a fort and do business in her kingdom, relying on the strength of their presence to discourage a Portuguese return when she expelled them and the entire Jesuit order. Pulicat soon became the headquarters of a growing colony in Dutch Coromandel.
This colony was followed by others in Dutch Malabar, Dutch Bengal, and Dutch Suratte, each governed separately but all administered by the VOC, which did not turn out to be quite the liberator many Indian rulers had hoped for. The Dutch were actually invited to Ceylon by the King of Kandy, whose Sinhalese kingdom had been fighting the Portuguese on and off for decades; the Dutch were only too happy to accept the invitation. Together with their new allies, who brought significant naval power, the Sinhalese were able to expel the Portuguese from nearly all their holdings. The King of Kandy wanted to destroy the captured European forts, but the wording of the treaty with the Dutch that would have allowed him to do so appeared only in the Sinhalese, and was absent from the Dutch version. So the Dutch occupied the Portuguese forts themselves and, although far more tolerant of local religions than the Portuguese had been, were on the whole no more pleasant neighbors.
By the mid-17th century, the VOC had supplanted the Portuguese in nearly all their Indian holdings. Between 1602 and 1795, the Company became the largest privately held enterprise that had ever existed, shipping over a million Europeans to Asia and returning with over 2.5 million tons of goods for trade. For almost two hundred years, it paid an annual dividend to the world’s first shareholders that averaged 18%.
Where the Portuguese had become complacent about defenses, however, the Company became complacent about bookkeeping. By the end of the 18th century, the fact that VOC was also the Dutch acronym for “perished by corruption” was a common jest. Paying substantially lower wages than other European East India companies and allowing no opportunities for employees to profit by private side-trading, as was the usual practice elsewhere, it encouraged a culture of pocket-lining and indolence among its 50,000 employees that cut substantially into its profits. To make matters worse, although French and English trading companies were backed by less capital, they were backed by governments with more guns. The Dutch king ceded all Dutch colonies in India to Britain in 1795 merely to prevent them falling into the hands of the French. Although these were restored to Holland in 1814, they were ceded again, permanently, to Britain in 1825, as part of an agreement intended to ensure Dutch control over what is now Indonesia, which, due to changes in European demand and in the domestic transport networks of the subcontinent, had become far more profitable for the little republic than its Indian holdings.
Today, little remains of the Dutch presence in India aside from grave markers and the ruins of a few churches and factories. It is outside India that the Dutch legacy has marked Indian civilization. Beyond the subcontinent, the VOC controlled vast territories that today comprise much of Indonesia, South Africa, Suriname, and other countries. Some of the first Indians to arrive in Africa came as Dutch prisoners to the Cape of Good Hope in the 18th century, including an ancestor of former president F.W. De Klerk, who officially ended apartheid. Today, Durban, South Africa is the largest Indian city outside India. In the late 19th century, long after the VOC had gone bankrupt and been nationalized by the Dutch government, Holland still turned to India to recruit laborers for the plantations of Suriname, where today almost 40% of the population claims Indian descent and Hinduism is widely practiced.
But while the VOC and its successors exported Indian culture to distant continents, the EIC permeated and transformed the culture of India itself, and it is in the holds of its ships that we will travel next time.