Did the British East India Company operate in the West Indies? [duplicate]

Did the British East India Company operate in the West Indies? [duplicate]

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This question in the Science Fiction and fantasy This Site asks about the British East India Company operating in the West Indies. According to Wikipedia, there were a number of East India Companies.

  1. Austrian.
  2. British. Came to rule India.
  3. Danish.
  4. Dutch. Came to rule Indonesia.
  5. French. Fought the British for influence and control in India.
  6. Portuguese. Lost most of their colonies to the Dutch and British.
  7. Swedish.

According to Wikipedia, there were also a number of West India Companies.

  1. Danish. Ruled Danish Caribbean Islands.
  2. Dutch. Ruled New Netherlands, & some Caribbean islands, etc.
  3. French. Ruled all French colonies in the Atlantic Ocean 1664-1674.
  4. Swedish.

It would be natural to suppose that there could have been a British West India Company that monopolized all trade with British colonies in the Caribbean.

But there didn't seem to be any British West India Company. Did the British East India Company operate in the Caribbean?

If anyone answers, they can also answer and/or link to this question?

There is some evidence that the Honorable East India Company (HEIC) rarely if ever directly traded in the western hemisphere.

Fortunately it so happens that the flag of the HEIC was similar to the design of the Grand Union flag used by the American colonists for about a year and half from 1776 to 1777 when the first United States flag was adopted. Since the US flag is based on the Grand Union flag, the resemblance between the HEIC flag and the Grand Union flag indicates a possible HEIC flag influence on the US flag.

This discussion here indicates that the HEIC was not permitted to trade directly with any place except Asia and Great Britain.

The company's charter permitted them to traded only between the East, and English ports. Although the Act of Parliament of 1773 allowed the EIC to export tea to America, it had first to be landed in England. The tea that was dumped overboard in Boston, had been part of a much larger consignment shipped from China to England, where it was sold to dealers and merchants, and then freighted to Boston as part of a general cargo, in ships that did not belong to, and were not chartered by the EIC.

Secondly, as mentioned in the first paragraph, the EICe was not flown by ships north of St Helena.

Apparently the company charter was renewed every 20 years (1793, 1813. 1833) which gave many opportunities to adjust the terms of the charter.

Dutch West India Company

The Dutch West India Company (Dutch: Geoctrooieerde Westindische Compagnie, or GWC Dutch pronunciation: [ɣəʔɔktroːˈjeːrdə ʋɛstˈɪndisə kɔmpɑˈɲi] English: Chartered West India Company ) was a chartered company of Dutch merchants as well as foreign investors. Among its founders was Willem Usselincx (1567–1647) and Jessé de Forest (1576–1624). [1] On 3 June 1621, it was granted a charter for a trade monopoly in the Dutch West Indies by the Republic of the Seven United Netherlands and given jurisdiction over Dutch participation in the Atlantic slave trade, Brazil, the Caribbean, and North America. The area where the company could operate consisted of West Africa (between the Tropic of Cancer and the Cape of Good Hope) and the Americas, which included the Pacific Ocean and the eastern part of New Guinea. The intended purpose of the charter was to eliminate competition, particularly Spanish or Portuguese, between the various trading posts established by the merchants. The company became instrumental in the largely ephemeral Dutch colonization of the Americas (including New Netherland) in the seventeenth century. From 1624 to 1654, in the context of the Dutch-Portuguese War, the GWC held Portuguese territory in northeast Brazil, but they were ousted from Dutch Brazil following fierce resistance. [2]

After several reversals, GWC reorganized and a new charter was granted in 1675, largely on the strength in the Atlantic slave trade. This "New" version lasted for more than a century, until after the Fourth Anglo-Dutch War, during which it lost most of its assets.

In 1600 AD John watts and George white formed East India Company under a charter granted by Queen Elizabeth, British joint-stock Company, as it was called previously, comprised of British merchants and aristocrats. Though the East India Company comprised British members it had no direct link with the Royal British government.

British entered the Indian subcontinent via the same route as Portugal’s and other European trading companies did. British came in search of spices as it was a major preservative of meat in Europe and at that time India was one of the largest producers of spices, its major concentration was in the south.

The British men first landed on the Indian Subcontinent at the port of Surat located in Gujarat, on August 24, 1608 AD for trading purposes in India.

Imperial villains

But I do find other elements more significantly problematic. Particularly, the way in which Taboo inflates the role of the EIC as a global power, while simultaneously erasing its most significant sphere of influence and its most profound impacts.

The East India Company is presented both as more powerful than it actually was and as guilty of atrocities it was not responsible for. Meanwhile, many of the crimes it actually did commit, such as facilitating the opium trade, exacerbating rural poverty and famine, and aggressively extracting revenue in India are written out of the narrative.

Admittedly, the institutionalised exploitation of colonial resources through over-taxation and the slow drain of wealth are not particularly televisual, but they had long-lasting consequences for Indian society and economy. The silences and exaggerations in the depiction of this period of Britain’s colonial past are also important because they speak directly to how we understand the relationship between colonial exploitation and Britain’s social, economic and political development.

James Delaney. Scott Free Prods/Olly Robinson

In a world in which jingoistic nationalism and imperial nostalgia are becoming increasingly potent forces, Taboo’s portrayal of the dark heart of colonial expansion is a timely reminder of the violent, ambivalent and amoral origins of globalisation. There is no doubt that there are some very “bad hombres” in this show, including Delaney himself (whose character seems to be symbolic of both British colonial violence and imperial paranoia about supposed “native” savagery).

Yet by focusing on these Machiavellian figures as the movers and shakers of empire, Taboo allows the viewer to disassociate imperial misdeeds from mainstream British history. In doing so, it overlooks the pervasiveness of the imperial connection, its importance to the development of modern Britain, and the deep structural inequalities that resulted from Britain’s global expansion.

Far from being the preserve of pantomime villains and all-powerful and unethical corporations, the impetus for – and profits from – slavery and colonial exploitation were deeply embedded in everyday life. They are therefore fundamentally entwined with our modern prosperity.


In the 18 th century the world’s greatest commercial business was based in London, with its grand headquarters in Leadenhall Street in the City. During its 270-year history the East India Company brought spices from the Far East that changed Britain’s cuisine, refashioned the nation’s use of fabrics from wool to cotton, then introduced tea as the favoured beverage. More significantly, it was in large part responsible for changing the world’s economy in favour of Britain but at great cost to the Indian sub-continent and China. Initially a trading company, its private army conquered a huge country, leading it to rule over a vast population.

For centuries Asia was the world’s greatest manufacturing area, with spices and exotic luxury goods sent overland from there to Europe via Istanbul and on to Venice. Thus, a camel was incorporated into the heraldic device of London’s medieval Grocers’ Company. Vasco da Gama was the first European to open a direct sea route with the Far East, first arriving in India in May 1498, and the Portuguese monopolised maritime routes with India and China for the next century. English merchants and privateers made exploratory trips to the Far East during the reign of Queen Elizabeth but little initially came of them other than gaining information that could be used on later voyages.

At the end of the 16 th century the Portuguese restricted the supply of spices. The Dutch reacted by sending their own ships to the Far East. They reached Bantam in Java from where they returned with spice in 1599. That led to the formation of the Verenigde Oostindische Compagnie (VOC) in 1602. It established a dominant position during the following century and for a time the VOC accounted for half the world’s shipping.

The actions of the Portuguese had caused the price of pepper to almost triple in England, which made London merchants determined to create their own monopoly of the trade. A meeting was chaired by the Mayor at Founders’ Hall and an association was formed. On New Year’s Eve 1600 a royal charter was granted to the ‘Company and Merchants trading to the East Indies’, or ‘East India Company’, giving them a monopoly on English trade between the Cape of Good Hope and Magellan’s Strait.

A small fleet of well-armed ships carrying around 500 crew, many of them Thames watermen, sailed from Woolwich in 1601, backed by 218 subscribers. The Company was given the right to export silver – something that had previously been illegal – in order to purchase spices. A variety of goods, including metals, fabrics, lace and gifts for foreign officials, as well as bullion, were sent on the outbound voyage. Despite poor sailing conditions that made for slow progress and many of the crew succumbing to scurvy, they arrived at Achin on the Indonesian island of Sumatra in the spring of 1602. A trade agreement with the sultan was struck and a small settlement established as a base. Pepper, cloves, indigo, mace and silk were brought back, providing substantial returns for the investors. Continuing voyages ensured that spices were thereafter widely available in Britain, changing the nation’s cuisine. A decade later a commercial treaty was concluded with the powerful Mughal emperor, who ruled much of the Indian sub-continent, giving the East India Company exclusive trading rights with the Surat region.

Each of the early voyages was funded as an individual venture but in 1657 a permanent joint-stock corporation was formed, allowing the shares to be publicly traded. They could initially be purchased from the East India headquarters and later at the Royal Exchange. After a further two years, following a charter to the Company from Oliver Cromwell, an important supply base was established on the island of St. Helena in the South Atlantic, en-route between England and the Far East. An additional base was later available from when Cape Town became a British colony during the Napoleonic Wars.

The East India Company was expelled from the Spice Islands by the Dutch in 1682 and instead focussed its attention on India and its textiles. One of the Company’s trading stations was established at Bombay on the west coast of the Indian sub-continent. It had originally been founded by the Portuguese but transferred to Charles II in 1661 as part of the dowry of Catherine of Braganza and rented to the East India Company for £10 per year. (Oddly, the letters patent that sealed the agreement placed Bombay “in the Manor of East Greenwich in the County of Kent”). In the 1690s another base was established at the commercial centre of Calcutta on the prosperous Bengali coast of India and the area was soon providing over half the Company’s imports from Asia.

By 1700 the East India Company was making twenty to thirty sailings per year to the Far East and was England’s largest corporation. The Indian subcontinent accounted for substantially more than 20 percent of the world’s gross domestic production, compared with less than two percent by Britain. The Bengal region in the north-east was the richest part of the Mughal empire. Its weavers had for centuries efficiently produced a vast range of the finest textiles in silk and cotton. These colourful products, such as muslin, calico, chintz, dungaree and gingham, became the East India’s primary imports into England. Business boomed and in the early 18 th century East India-imported calico overtook native British wool as the most popular textile in English homes. This was to the great detriment of the local weaving industry, leading in 1697 to riots by London’s textile workers and assaults on the property of the Company and its directors. Two decades later there were attacks on London’s streets on women wearing calico. The government’s response was to restrict its importation and ban the use of powered looms in Bengal.

Between 1699 and 1774 the East India Company’s business increased to as much as 15 percent of total annual imports into Britain, its taxes and other payments often keeping the British government solvent. From its headquarters in London instructions were sent around the world regarding what goods should be purchased and the price to be paid. Local Company governors in India were given autonomy as to how those purchases could be achieved.

Did the British East India Company operate in the West Indies? [duplicate] - History

The British presence in India was heralded by the creation of the East India Company (EIC). This was the first joint stock company, set up by royal charter in 1600 to trade between Britain and India. Its charter was renewed and extended under Charles II and James II.

The United East India Company, the Dutch company trading with India and the east, was already fully operational when the English entered this competitive region.

For the early merchant adventurers, establishing a foothold in India was not an easy task. The East India Company did not establish its first 'factory' or permanent depot until 1619, at Surat. The opportunity for the British to expand came in 1661, when Charles II married Catherine of Braganza and as part of his dowry gained Bombay from the Portuguese.

The commercial success of the British in India was impressive, and by the 18th century the previously strong positions held by the Portuguese, Dutch and French had been undermined. The profits of the slave trade gave Britain a huge financial advantage over all its competitors. Contracts were made with Indian merchants and artisans for all kinds of luxury goods, in exchange for silver from Britain. By the 18th century, the East India Company was shipping more Indian goods to Europe than any of its rivals.

For Indian states, European settlement offered a mixture of advantages and disadvantages. Some local rulers resented the British presence, while others benefited from the coastal trade in pepper, tea and textiles.

Controlling the East India Company

In 1773 Parliament, tired of the East India Company's abuses of power and its financial problems, passed a Regulating Act, which imposed some financial controls on the East India Company and created the new post of Governor-General of India. A few years later, in 1784, the India Act brought the Company under the direct control of the British government through a new Board of Control. This was a compromise arrangement, however, and the administration of India remained in the hands of the directors of the East India Company until 1858, when the British government took over the rule of India from the Company.

Clive of India

In 1757, an East India Company civil servant turned military man, Robert Clive, defeated the Nawab of Bengal at the Battle of Plassey. From then on, the British presence in India grew spectacularly. From this point, the East India Company took over the administration of large parts of the country and established a direct military operation. British communities were established around the three presidency towns of Bombay, Calcutta and Madras. Farmers were taxed off their land, and their plight became desperate when they were hit by the severe famine of 1769-70, which caused many deaths.


Despite the fact that its revenue was increasing, the East India Company was burdened with massive expenses. Not only was military protection for Britain's trade and possessions in India extremely costly, but so too were the 'nabobs' of the East India Company themselves. They lived in self-contained Anglicised settlements and adopted the extravagant lifestyle of the Mughals, with servants at their beck and call. The nabobs were criticised back in Britain for their extravagant ways and, as a result of its financial troubles, the Company had to ask for government help.

Conquering India

By the end of the 18th century, Britain ruled about two-thirds of India. Its dominance was sealed by the defeat of the southern ruler Tipu Sultan, who had allied with the French to counter the power of the Raj. In 1799 the British took Tipu's capital, Seringapatam, thus securing the state of Mysore and ending effective French influence in India. Further conquests in the south followed until effective opposition had been quelled - at least for the present.

Anglo-Indian relations

The Raj could not function without the cooperation of millions of Indians. Many filled the Indian army in senior ranks and as foot soldiers. Others served in the navy or the undermanned police force.

In the countryside, where most Indians lived and worked on the land, local village headmen kept the machinery of government working. According to the historian Lawrence James, they were the bedrock upon which British rule rested.

The End of the Raj

For two centuries, the East India Company and the Indian Raj underpinned Britain's status as a global power and provided it with markets, the profits from which helped to build the Britain we live in today. Protest against British rule did not go away, however. A nationalist movement emerged and the struggle for self-government was successful in 1947, when India and Pakistan became independent.

References and Further Reading

Bayly, C. A. (ed.), The Raj: Indian and the British 1600-1947 London, 1990

Chaudhuri, K. N., The English East India Company, London, 1965

Dalrymple, W., The White Mughals: Love and Betrayal in Eighteenth Century India, London, 2002

James, L., Raj: The Making and Unmaking of British India, London, 1997

Nightingale, P., Trade and Empire in Western India 1784-1806, London, 1970

The British in India by David Gilmour review – three centuries of ambition and experience

O n 24 September 1599, while William Shakespeare was mulling over a draft of Hamlet in his house downriver from the Globe in Southwark, a mile to the north a motley group of Londoners were gathering in a half-timbered Tudor hall. The men had come together to petition the ageing Elizabeth I, then a bewigged and painted sexagenarian, to start up a company “to venter in a voiage to ye Est Indies”.

The East India Company quickly grew into the world’s first and most powerful multinational corporation, and the one that, more than any other in history, would transform not just patterns of global trade but the globe itself. Before long a mere handful of businessmen from a distant island on the rim of Europe had made themselves masters of a subcontinent whose inhabitants numbered 50 to 60 million. They succeeded the mighty Mughal empire where even minor provincial nawabs and governors ruled over vast areas, larger in both size and population than the biggest countries of Europe, so reversing the balance of trade that from Roman times on had drained western bullion eastwards.

Over the course of three and half centuries, a whole British colonial world was founded to exploit and administer these conquests, a world with its own peculiar argot, its own institutions, its idiosyncratic snobberies and social hierarchies, its own educational establishments and career paths – an empire within an empire. When the British finally left India in 1947, nearly 350 years after the founding of the East India Company, that world dissolved overnight. Perhaps it is only possible now, more than 70 years later, in an age when the imperial British feel almost as distant a part of history as the imperial Romans, for this expatriate society to receive the particular attention that its idiosyncrasy deserves.

It is no easy task that David Gilmour’s magisterial The British in India has taken on. The world of the high Victorian Raj was hugely different from that of the early East India Company, and almost anything said about one is untrue of the other, making generalisations highly suspect.

View of Calcutta from the Esplanade, c1860. Photograph: Print Collector/Getty Images

The early military adventurers, for example, were often dissolute ne’er-do-wells like George Thomas, “the Rajah from Tipperary”, a poor Irish mercenary who in the 1760s was press-ganged into the British navy and jumped ship in Madras. He eventually carved out his own state in the badlands west of Delhi, built himself a palace, minted his own coins and collected a harem, but in the process forgot how to speak English when asked at the end of his career to dictate his autobiography, he said he would be happy to do so as long as he could speak in Persian as “from constant use it was become more familiar than his native tongue”. In contrast, the military recruits of the early 20th-century Raj were clubbable public school types such as Hilary Hook, who said that he “joined the military so I could play polo, go pig-sticking, shooting and hunting and have a jolly time with a lot of jolly fellows”.

In between these two poles, the flagrant and wanton corruption of the East India Company gave way to the famously incorruptible Indian Civil Service or ICS, while the selling of merchandise – the entire raison d’etre of the company – came to be regarded as socially gauche: “boxwallahs” were automatically excluded from the better clubs and the top tier of Raj society. The modest institution that 100 years after founding still had only 35 permanent staff grew into the Raj – in many respect’s Britain’s most prestigious organisation, and without which, Lord Curzon (the Edwardian viceroy) believed, a post-imperial Britain would descend into little more than “a glorified Belgium”.

Gilmour, author of biographies of Rudyard Kipling and Curzon, in this book draws on more than 30 years of research in the archives, and presents an astonishing harvest from diaries, memoirs, letters and official documents of the era, many previously unused: punkah wallahs and sex workers, pagoda hunters and viceregal palaces. All British colonial life in India is here presented in elegant prose, 350 years of battles and durbars, maharajahs’ balls, viceregal tiger shoots and Shimla shenanigans telescoped down into telling anecdotes and witty, skilfully sketched vignettes. The only problem is what the book fails to address.

Gilmour has chosen to write about the extremely diverse lives of British colonials in India. It is emphatically a social history, not an economic or political one and, as he writes, he “has not tried to … make a particular argument”. I found the decision not to engage in the current debate on empire frustrating, and it is a book that contains far fewer Indians and far fewer Indian perspectives than it should.

The British in India has been published only one year after Shashi Tharoor’s wonderfully accessible Inglorious Empire popularised three decades of postcolonial criticism of empire, making compelling the argument that the whole enterprise of the Raj was a vast British-run exercise in loot and plunder that reduced a previously great and wealthy nation to beggary and despair. This debate has now bounced back to the ivory towers of our universities, where passions are running high over the legacy of Cecil Rhodes and over often uncritical teaching of British imperialism.

Gilmour does not refer to Tharoor’s book, nor does he directly answer its charges indeed it is notably absent in Gilmour’s extensive bibliography. But the fact remains that Tharoor, a politician and former diplomat, has completely reframed the popular perception of the Raj. Despite all the charm and scholarship of this book, Tharoor stands accusingly as the ghost that lingers at the end of Gilmour’s feast, giving a bitter aftertaste to this magnificent spread of Raj nostalgia.

The Gateway of India, Mumbai. Photograph: Ed Smallwood

In many ways the two books are polar opposites of each other. Gilmour’s draws on his decades in the archives Tharoor’s was written in 12 days, involved no personal archive research and contains some serious factual errors. But Tharoor’s is unquestionably the more hard-hitting, and its case is persuasive. One wishes that Gilmour, who clearly disagrees fundamentally with the Tharoor line, had made the counter case, but he seems to decline the challenge. These are simply individual lives, he writes they are the stuff of history and deserve to be recorded and chronicled as such.

This may well be so but it raises questions that hang heavily over Gilmour’s text. We are introduced, for example, to one of the hard-working and idealistic Edwardian ICS officers “running a subdivision consisting of a million people in 2,000 square miles”, operating “not for himself but for the good of large numbers of subjects to his administration”. Though Gilmour writes about such men admiringly, we are left wondering whether these lives, even if led with moral probity, were in fact guilty of slowly ruining India.

You do not have to be a paid-up Tharoorian or radical anti-Rajist to make this case: the economist Tirthankar Roy, for example, who has argued convincingly against Tharoor on questions of economics, still believes that the British were guilty of massive negligence in rural development. That one brilliant officer surrounded by a million Indians never had the resources to irrigate or develop peninsular India south of the Punjab, which is why it was possible for the governments after independence to quickly double India’s agricultural production and so bring an immediate end to the famines that swept away millions of lives right up until 1947.

Within 20 years of the end of the Raj almost all major indices of human development – lifespan, sanitation, literacy and child mortality, access to clean water and education – had all immeasurably improved indeed average lifespans had increased by as much as a decade. This is vital context for Gilmour’s chronicle of colonial British lives, and however remarkable his achievement within the limits he sets himself, you still end up wishing, in the words of EM Forster, perhaps the best of all British novelists on India, that he would “only connect”.

What are the origins of the East India Company?

Shortly after the defeat of the Spanish Armada in 1588, various merchants sought permission from Queen Elizabeth I to sail the Indian Ocean towards the East Indies after gaining approval, the first ships set sail.

Over the next decade different voyages were attempted with varying results, but one group’s exploration proved successful enough to be granted a royal charter from the Queen under the name Governor and Company of Merchants of London trading with the East Indies.

Indentured Servants to the West Indies

As the sugar and tobacco trade developed in the West Indies, English plantation owners were in dire need of manual laborers to work in the fields and harvest the crops. The native Caribbean people had been suppressed, thus, planters were forced to look further afield for the needed workers.

Thus began the (often forced) migration of Irish and English workers to the island plantations of the West Indies. In the brief period between 1652 and 1659, tens of thousands of men, women and children were transported to British colonies in Antigua, Montserrat, Barbados, and other locations throughout the Caribbean Islands.

Some of the migrants were willing participants in the process, and worked as indentured servants on the island plantations. They sold their labor for periods of five to ten years, and in return received ownership of a small plot of land.

These indentured workers signed unique legal contracts. Terms of agreement were written up in duplicate on a single sheet of paper, and then cut with a jagged edge (thus, the term “indenture”). One half was given to the laborer and the other was held by the owner. At the end of the agreed-upon term of service, the two parts of the contract would be brought together and matched to prove authenticity.

The practice of indentured servitude was widely used throughout the plantations in the West Indies, and many chose it of their own free will. However, while there were many “freewillers” who willingly sold their service for a chance at a new beginning, others were sadly exploited. “Redemptionists” were duped into signing a contract of indentured service yet on arrival, they were sold into slavery. Still others were simply “spirited” to the Caribbean by gangs in Ireland. The kidnapped workers would be loaded onto slave ships in Bristol or Liverpool and shipped off to plantations on the islands.

Unfortunately, whether they served by choice or not, the conditions endured by the Irish workers were appalling. They were regarded as property, and were bought, sold, traded, and mistreated at the whims of their owners. In fact, throughout much of the 17th century, the white slaves were inexpensive compared to their black counterparts thus, they were considered a practically disposable commodity, and were often subjected to inhumane working conditions and exceptional cruelty.

A chilling account was recorded by the governor of Barbados in 1695. He describes the labor of the slaves, “in the parching sun, without shirt, shoes or stocking,” detailing how they were, “domineered over and used like dogs.”

In many cases, white workers were supervised by black or mulatto overseers, who treated the slaves with particular cruelty. Overseers used their whips liberally to reinforce the “slave” status of the workers. Rape was common – and even encouraged by plantation owners, who saw the unwilling union as opportunity to breed future generations of slave labor free of charge. An estimated 50% of the Irish workers died before finishing their terms of servitude.

Many of the first workers were sent or sold to plantations in Antigua or Montserrat in 1632. By 1660, between 50,000-100,000 Irish workers had been sent to work on the islands. Most of those had not chosen a life of servitude, but had been forcibly sold into slavery.

At the same time, the British Civil War had just come to a close and Oliver Cromwell was in power. Cromwell saw the British sugar trade as a practical solution following his great land clearances in the 1640s. Cromwell deported many thousands of Irish slaves to Barbados, which was a hub of British sugar production at that time.

The Barbados Irish soon became known as “Red legs” – a racial slur resulting from the constantly sunburnt legs of the pale-skinned Irish workers. By the mid-1600s, Irish slave workers made up nearly 70% of the population. Eventually, however, black slave labor increased, and the white population of the islands began to dwindle due to high rates of Irish death and racial intermixing.

Today there remains a tiny population of approximately 400 souls descended from the Irish slaves. The modern Red Legs have vigorously rejected racial mixing, and carry the Celtic names of their ancestors. Unfortunately, this small community lives in deep poverty, scratching out a living from fishing and subsistence farming.



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In which John Green teaches you about the Vereenigde Oostindische Compagnie, doing business as the VOC, also known as the Dutch East India Company. In the 16th and 17th centuries, the Dutch managed to dominate world trade, and they did all through the pioneering use of corporations and finance. Well, they did also use some traditional methods like violently enforced monopolies, unfair trade agreements, and plain old warfare. You'll learn how the Dutch invented stuff like joint stock corporations, maritime insurance, and futures trading. Basically, how the Dutch East India Company crashed the US economy in 2008. I'm kidding. Or am I?

Citation 1: William J. Bernstein, A Splendid Exchange: How Trade Shaped the World. Grove Press. 2008. p. 218
Citation 2: Stephen R. Bown. Merchant Kings: When Companies Ruled the World, 1600-1900. New York. St. Martin’s Press. 2009. p. 28
Citation 3: Bernstein p. 223
Citation 4: Bernstein p. 228
Citation 5: Bown p. 53

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John: Hi, I'm John Green, this is Crash Course World History, and today we're going to talk about our old friend trade and also corporations.

John from the Past: Oh great, another Marxist rant from my union-loving public school teacher about how capitalism is destroying the world.

John: You know, Me from the Past, all the capitalists call me Marxist, all the Marxists call me capitalist, I--I can't win!

Here's the thing, Me from the Past, I am grateful that there is a market for people to, you know, sell books and make YouTube videos, and capitalism does a pretty good job of making goods and services available to large groups of people.

Plus how else am I going to turn sweat of the proletariat into delicious Diet Dr. Pepper? (Not a sponsor. I wish they were a sponsor.)

I'll tell you what, Me from the Past, I've enjoyed a cup or two of the sweat of the proletariat over the years and it just doesn't have that carbonated "pop" of Diet Dr. Pepper.

What were we talking about? Oh right, capitalism. I like capitalism, what I don't like are monopolies and violence, and those are both aspects of one of the first capitalist enterprises and the subject of today's episode, the Vereenigde Oostindische Compagnie (and I will remind you that mispronouncing things is my thing).

In English of course that's the Dutch East India Company. I'd like to use the Dutch, though, but I can't pronounce it, so we're just gonna compromise and call it the VOC.

So you probably remember from our first series that trade in the Indian Ocean had gone along swimmingly for hundreds of years until the Portuguese tried and failed to dominate it in the 15th and 16th centuries.

And you may also remember that in between the Portuguese and the massively powerful British Empire there was another European power: the Dutch.

At the time, the Netherlands was a country of 1.5 million people, about as many people as currently live in Greater Indianapolis. Now, admittedly, they'd already accomplished some impressive things, for instance, they'd already dug most of their country out from the ocean, but how they came to thoroughly dominate world trade for fifty years tells us a lot about capitalism, technology, and also violence.

I suppose we could start with the revolt of the United Provinces in the union of Utrecht in 1579, which created the Netherlands, or perhaps the decision by the Catholic Duke of Parma in 1585 to let Protestants leave captured Antwerp and set up shop in Amsterdam, or we could start in 1595 with the creation of the first Amsterdam-based investment syndicate, The Company for Far Lands, which is what I call my Minecraft server.

So the founder of The Company for Far Lands published this report called the Itinerario that excited dreams of vast wealth and spices from Southeast Asia. There's a key passage in the report that explains the riches available in the islands east of Malacca:

"In this place of Sunda there is much pepper, and it is better than that of India or Malabar, whereof there is so great quantity that they could lade yearly from thence 500,000 pounds. It hath likewise much frankincense, camphor, and diamonds, to which men might very well traffic without much impeachment, for that the Portugals come not thither, because great numbers of Java come themselves unto Malacca to sell their wares." (citation 1)

You'll note there that the initial idea was to break into this already existing trade system and displace the Portugals. So in the same way that trade in the western Indian Ocean was flourishing before the arrival of the Europeans, the South China Sea region and eastern Indian Ocean was a trade hot-bed, perhaps even more valuable because of the riches of China. And it seems that the Dutch originally planned to try to break into that existing trade network on equal terms, like, according to Jacob Van Neck, the captain of the first successful expedition to Indonesia, the plan was, quote, "not to rob anyone of their property, but to trade uprightly with all foreign nations."

But pretty soon that idea of free trade gave way to the hard reality that competition meant, you know, lower prices, and by 1601 there were enough successful trade companies that the cost of buying spices in Indonesia was going up, and also there was suddenly tons of pepper in Amsterdam, which meant the price that could be charged for that pepper was going down clearly, something had to be done. Ideally that something would have been lower prices for everyone, and an efficient marketplace, but the something that happened instead was the VOC.

Let's go to the Thought Bubble.

In 1601, the United Provinces, aka the Netherlands, were governed nationally by a representative body that met at the Hague, called the States General, although each of the individual provinces was largely self-governing, and the leader of the States General was able to convince all the provinces to accept a single entity to monopolize the East Indies trade.

This new company, the VOC, was run by a seventeen-member board called the Heeren XVII, and these directors supposedly had control over a company that was chartered with the power to hire its own people, and also to wage war.

I say supposedly because, you know, it took a year for communications from the Netherlands to reach the East Indies, and another year for company officers to respond, so the VOC basically operated as its own sovereign nation, with the power to use as much violence as it needed to build and maintain its trading power, like according to author Stephen Bown, "The VOC would essentially operate as a state within a state." (citation 2)

And the VOC, together with its sister company the West India Company, did use violence, attacking Portuguese and Spanish settlements in Chile, Brazil, East and West Africa, the Persian Gulf, India, Sri Lanka, Indonesia, China and the Philippines between 1602 and 1663, in what you could think of as an early world war.

The VOC was also different from a lot of corporations because it was initially funded with 6.5 million guilders, about 100 million dollars in today's money, and that capital was expected to fund business ventures for a long time going forward, not just for, like, one initial trade mission. And this long-term business thinking was unique, especially compared to the funding strategies of the VOC's biggest competitor, the British East India Company, and it reflected the advanced financial acumen of the Dutch model generally.

So, we've got this company that's basically also a country. But it's not a particularly good country, because it doesn't have, like, any of the responsibilities of government, nor does it have to answer to the people it's governing. All it has to do is make money. And it was really good at making money, like by 1648 the United Provinces were in better financial shape than every other nation in Europe.

You can tell this partly just by looking at interest rates. Now admittedly, interest rates are only one measure of financial health and power, but they're an important indicator, even today. So, Dutch businesses could borrow at a rate of 4 percent annual interest, and that's pretty cheap compared to the 10 percent it cost corporations to borrow money in England or the 24.99 percent it costs me to borrow money on my credit card, and because Dutch debt was so much cheaper, they could invest two and a half times as much in pretty much anything than the English could, including, like, an army and a navy, and this gave the Dutch a huge head start over their rivals.

So one reason the interest rates were low is because the companies were healthy and they tended to pay people back. But another is that normal Dutch people were already used to investing their money in bonds that had been issued for land reclamation projects, the famous dykes and windmills that turned land below sea level into fields where you could grow tulips, or maybe something else, but all they ever grow is tulips.

Like according to business historian William Bernstein, the tradition of investing in bonds, quote "carried over into trade: after 1600 Dutch citizens would consider it just as natural to own a fractional share in a trading vessel to the Baltic or the Spice Islands." (citation 3)

And a fractional share is another really interesting idea embraced by the Dutch, that allowed merchants to bear greater risks by purchasing smaller percentage shares in business ventures. Like, it's much better to own a tenth of ten ships than it is to own all of one ship, because the loss of a single trading ship won't, like ruin you. And Dutch business people also enthusiastically invested in futures markets, guessing what the price of pepper would be six months or a year from now, and they created new financial instruments that could be bought and sold, and merchants purchased maritime insurance, which further lowered their risk. And lower risk means you could invest more of your capital until eventually you have a completely efficient market and everything is perfect-- until the 2008 crash.

Wait, what were we talking about?

The Dutch financial system and its corporations were simply better than their competitors, and that's why they seized the lion's share of the trading business--but that isn't the whole story.

Like, one reason the VOC was so successful was government sponsorship and centralization. The VOC had been chartered by the States General, and it could count on the Dutch government to back it up with money and military support.

There's another benefit to being sponsored by your government, which is that it's very hard for competition to emerge, because it isn't sponsored by your government. For instance, in Indonesia the VOC had a single Governor General managing operations, while the British East India Company was more like a collection of trading posts, each competing with each other for a share of the spices. Competition may bring down prices for consumers, but it also brings down profits for businesses.

In 1605, the VOC realized that if it really wanted to maximize its profits, it would need a monopoly of the world's spice trade, and to do that, they would need permanent bases in Indonesia. Initially, they got spices by trading for them with the people who grew them, especially with the inhabitants of the Banda Islands, which was the only place where nutmeg was grown. But again, like, trading in a fair and equitable manner is no way to maximize profits.

So at first the Bandinese welcomed the Dutch, because they were much more laid-back in terms of religion than the Portuguese, but very quickly the Dutch tricked them into signing exclusive trade agreements, which the Bandinese were almost certain to violate, and then when they did violate them, ehh, it didn't go well.

In 1609 the Bandinese were like, "No, you don't understand, like, we need trade for food," and the Dutch were like, "But you promised!", and the islanders killed 47 Dutch soldiers and officers in the ensuing fight.

The Dutch killed far more Bandinese, who were eventually subdued and agreed to a nutmeg monopoly with the Dutch, although they continued to secretly trade with the English.

And after all this, by 1612, Jan Pieterszoon Coen became the dominant force in Dutch Indonesia. He was an accountant by training, but also a ruthless military leader, who is largely responsible for the Dutch monopoly of the spice trade, and also for its really terrible relations with the British, and also for, like, you know, certain crimes against humanity.

Coen brought about the shift in VOC policy, away from straightforward trade and toward monopoly of both shipping and production of spices. He also made it clear that this trade needed to be based on military force.

He wrote, "Your Honors should know by experience that trade in Asia must be driven and maintained under the protection and favor of your Honors' own weapons, and that the weapons must be paid for by the profits from the trade, so that we cannot carry on trade without war, nor war without trade." (citation 4)

There is no trade without war, nor war without trade--that's something to think about.

Anyway, Coen did make a lot of war, mostly on the English, despite the fact that the Netherlands and England were engaged in trade negotiations between 1613 and 1619.

And in fact fighting between the VOC and the English continued even after an agreement was signed. By using force, which included capturing and torturing English traders, Coen was able to run off the English and secure the VOC monopoly over the spice trade.

With the English out of the picture, Coen could get down to the business of using violence to dominate not only the trade, but also the production of spices. His initial plan, to quote Stephen Bown, was to depopulate the island to replace their inhabitants with imported slave and indentured labor under VOC control, and he proceeded to carry out what amounted to ethnic cleansing of the Banda Islands.

In about 20 years, the Dutch managed to acquire an almost complete monopoly on cloves, nutmeg, and mace. In 1658, they added cinnamon by taking control of Sri Lanka. And, after 1638, they became the only Europeans allowed to trade in Japan. Now, we tend to think that the heart of the spice trade was between Indonesia and Europe, but it really wasn't. Like, the VOC capital at Batavia became the most important port in all of Southeast Asia, where spices from Indonesia, and gold and copper and silver from Japan, and tea and porcelain and silk from China all passed through to India, where they were traded for cotton, which was used to buy more Asian goods.

And that was the real money-maker for the VOC. By the middle of the 17th century, only the highest-value luxury goods from the region even made it to Europe, because that's where the margins were the highest.

So the middle of the 17th century was the golden age for the Dutch it was the one the brought us Rembrandt and Vermeer as well as all the wealth and finery that was depicted in their paintings. When you go to Amsterdam, which you should, and you walk along the canals and see the beautiful row houses, you'll note that many of them were built in the 17th century. And much of that was based on the success of the VOC and the commerce in spices, but eventually Europeans' tastes changed, and the desire for nutmeg was supplanted by a hunger for sugar.

Of course, the sugar trade would be known for its righteousness and fair trade-- just kidding, it would be known for slavery. Also the woolens produced by the Dutch were being replaced by the market for cotton. Britain proved better positioned to dominate the trade in production in these new and more profitable commodities, and they eventually copied the centralized corporate governance and finance capitalism that had helped make the VOC so successful.

According to Stephen Bown, "Ultimately, maintaining the monopoly cost more than the spices were worth" (citation 5), and the company went bankrupt in 1799.

So the VOC were pioneers of finance and their relentless pursuit of profits made them the richest company in the 17th century, but we need to be careful about celebrating them as, like, a harbinger of modern capitalism. For one thing, it wouldn't have succeeded without government support, especially if it had engaged just in free trade. The VOC had an army and a navy that it used to attack and intimidate, which is, you know, not free trade.

I think there's a lot to take away from the story of the VOC. One thing that I like to remember is that this was all about nutmeg. We need to think carefully about what we value and why we value it and what we lose by valuing it, in the same way that I kind of wish people in Europe had about nutmeg in the 17th century. And the second thing is that while the VOC did eventually disappear and its control over Indonesia changed into Dutch colonization, the VOC provides a chilling example of what has happened in the past when corporations become more powerful than states.

Good governments fulfill their responsibilities to the people they govern, and even bad governments, you know, are afraid of the people they govern, and neither of those things happened in Indonesia when it was under the control of the Dutch East India Company.

Thanks for watching. I'll see you next week.

Hi, Crash Course is filmed here in the Chad and Stacey Emigholz studio in Indianapolis, it's made with the help of these nice people, and we have a special announcement today that's very important, at least to the future survival of Crash Course. Thousands of you have helped us to keep Crash Course free, for everyone, forever, through your support at Subbable, but now Subbable has merged with Patreon. Patreon's an awesome company run by creators that allows you to be much more flexible in your support of Crash Course.

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