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The First Multinational Joint-Stock Company in History

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By Akerele Christabel

November 30, 2022
2:13 pm
Los Angeles, CA

Also known by its native title, Verenigde Oostindische Compagnie (VOC), the Dutch East India Company or United East India Company was the undisputed hegemon of the trade world in the 16th to 17th century. In 1602, the States-General of the Netherlands amalgamated existing companies to form the first joint-stock company in the world. As a chartered company established by an act of state, it was granted 21 years of monopoly to carry out trade activities in Asia. Instead, the reign of the Dutch East India Company lasted till 1796, maintaining more than 194 years of economic dominance. During this time, the company was elevated to quasi-governmental status. It had the power to wage war, imprison convicts, establish colonies, and mint its own coins. In a world where slave trade

As a chartered company established by an act of state, it was granted 21 years of monopoly to carry out trade activities in Asia. Instead, the reign of the Dutch East India Company lasted till 1796, maintaining more than 194 years of economic dominance. During this time, the company was elevated to quasi-governmental status. It had the power to wage war, imprison convicts, establish colonies, and mint its own coins. In a world where slave trade was a lucrative market, VOC stood at the forefront. Statistically speaking, it outclassed every other company of its time; it was recorded to have sent over 2.5 million tons of Asian goods with over one million Europeans on 4785 ships. These numbers far surpassed the combined efforts of other trade companies, cementing VOC’s place as number one.

Before the advent of VOC, there was a race to discover more islands. Stirred up by the success of the Spaniards in the 15th century as they colonized new, richer territories and grew stupendously wealthy, the Dutch began their expeditions to the Indonesian islands. The expedition experienced heavy losses, but not without bringing back enough spices to prove the profitability of such ventures. Soon, more ships began to set out for the Indonesian islands. Each expedition was financed by a group of local companies based on agreed shares of the profit to come. Following the creation of the British East India Company, the Dutch also played their cards.

The Dutch government created their own company. This time, they amalgamated all the companies as part of the Dutch East India Company.

The new company enjoyed the rights to monopolize the Asian trade, build new forts, maintain armies, and negotiate treaties. With reserve powers of 6,440,200 gliders, the Dutch East India Company was soon able to dominate the trade in nutmeg, mace, and cloves. Profits rained in torrents as they were able to sell the commodities across Europe at 14-17 times their original price. A box of spices that originally cost 50 gold coins could be sold for 850 gold coins. Such was the windfall.

In 1619, Jan Pieterszoon Coen, a shrewd businessman, was set up as the governor general of the VOC. After a torrid war against the native inhabitants of the Banda islands, he founded Dutch plantations for the purpose of exporting nutmeg to Asia. This initiative failed because most Dutch were not willing to leave their lives of ease and pleasure behind to migrate to Asia. He also established inter-Asiatic trade to solve the problems of payment among the Asians. Through its trade with Asia, the Dutch East India Company set off an interchange of culture and cultural commodities. It also paved the way for Christian missionaries in Asia. By 1669, the Dutch East India Company was truly the richest trading company ever seen. It had 150 merchant ships, 40 warships, 50,000 employees, and a private army of 10,000.

However, as with every great organization at some point, the Dutch East India Company was saddled with bone-deep problems at the peak of its growth.

Due to changes in the political and economic environment, the scope of Asiatic trade began to shrink. The Dutch had not succeeded in making Chinese Ming dynasty submit, being defeated twice in two battles. Therefore, it had to limit its rule to the areas it physically controlled. The result was the fall in overall profits.

The company established its headquarters in Batavia, a shipping port which had significant benefits for gathering information. In the 18th century, it became unfeasible to channel goods to Batavia. For example, with the tea trade, competitors shipped from China directly into Europe.

In addition, the upper echelon of the VOC was fraught with vices, being plagued more deeply than the rest of their competitors. The workers were underpaid, while the employers and shareholders pilfered the company’s profit. It got so bad that the C in VOC was revised to mean corruptie or corruption. There were numerous cases of death among the workers, and these losses hit the company’s strength. Finally, their dividend policy proved detrimental to the company.

By the end of the fourth Anglo-Dutch war, the VOC was in a derelict state. In 1796, it was finally nationalized by the new Batavian Republic and its assets taken over by the British government.