Long before there was Apple, Google or Amazon there was a company far more rich and powerful than all of them combined: The Dutch East India company. Officially founded in 1602 as The United East India Company, or Vereenigde Oost Indische Compagnie (VOC), it was unmatched in profit and power compared to every single company of its own time and would even eclipse all multinational conglomerates today. By today’s standards, its wealth would amount to 7.9 trillion US dollars – more than the GDP of every modern country, with the exception of the US and China. The current largest company in the world, Apple, is worth less than half that.
But what did they do and how were they so good at it? The Dutch East India company was essentially a shipping company that transported all manner of exotic goods from the highly profitable Far Eastern market. The Age of Exploration saw an explosion in Western desire for spice, and common spices like cloves, mace, and nutmeg were worth more than their weight in gold. When the company was founded in the 17th century, the race to dominate the spice trade was in full swing, and the Dutch intended to step out of the shadow of the three biggest Western powers- the Spanish, the Portuguese and the English to fully capitalise on this lucrative market.
The Dutch needed to innovate if they wanted to match their competitors, and the VOC was without a doubt, one of the most innovative companies to ever exist. In fact, modern corporations as we know them are based on the Dutch East India trading company. The VOC was divided into separate committees each with a specialised task, such as bookkeeping, or keeping an eye on employment. These committees answered to 17 men known as the Heren xvii- essentially a modern day board of directors. This hierarchy was a complete break in tradition during the 17th century, as typically companies like the English East India trading company (VOC’s biggest rival) would have set up trading stations. These contained merchants that operated for the company but without corporate structure, often resulting in internal competition. Traders would often undercut each other in order to procure products for their personal trading station. The VOC went as far as to disallow any of their employees to trade privately, ensuring maximum profit. With this new tight grip over the shipping process, the company seemed to earn more from less and had a stark advantage over their competitors. But the problem remained that the VOC lacked the funds of its bigger, wealthier rivals and would have to raise a lot of capital if they wanted to truly conquer the market.
The Dutch East India Trading Company needed funding and they found a uniquely Dutch way to do it. The Netherlands is unusual due to the fact that some areas of its land were once covered by the sea. Dutch citizens therefore used to engage in investing into joint projects of land reclamation (the process of retrieving and creating new land from the sea). In return, they were given ‘bonds’ which allowed investors to receive a portion of land that became usable after the reclamation process. Because people were used to investing their money in this way it wasn’t a stretch for the Netherlands to think a trading company could operate the same way.
The VOC set up a trading house in Amsterdam where anyone could invest in the company by buying “bonds” and, in return, were promised that they would see a share of the Dutch East India companies’ profits every year in form of dividends. If this sounds familiar it’s because this is essentially how most large corporations work today. The trading house was the first stock exchange, and the Dutch East India company became the first public limited company. They were wildly successful. The company raised a huge sum of 16 million guilders, which is the equivalent of $110 million US dollars today. Now with deep pockets to draw from, The VOC set their sights on owning the entirety of the trading process on every level.
The Dutch East India company owned not only the ships needed for their voyages to the East, but also the plantations where goods were made and even the ports they were eventually delivered to. This is a business strategy now called vertical integration and is practised by modern companies like Tesla. Not only do Tesla manufacture parts often outsourced to other companies, but they also own every single dealership that sells their cars. This involvement in production makes their cars unique and ensures maximum profit through the control of each stage in the process.
So that the Dutch could put this vertical integration into effect, they began to take land to build factories on and to use as trade stations. In 1611, a permanent base in modern day Jakarta, Indonesia was established, and this central position enabled them to profit off anything they could get their hands on. Indian silks, Japanese silver, Chinese porcelain, all of these products were transported across both Asia and Europe. This multi continental setup was almost unheard of at the time, but now the VOC is what we have come to know as a multinational corporation.
The Dutch East India trading company was clearly a trendsetter, but these trends are now adopted by most modern companies. So why then, has it remained unmatched in power for over 200 years? Well, despite some commonalities between the VOC and the modern corporation, the VOC is far from what we’d expect from a modern shipping company. Initially set up by the Dutch government itself, the company was uniquely positioned to thrive through support from the government. In fact, the company was designed to be an extension of the Dutch Republic itself. It was a company that had an explicit political purpose, and the Netherlands had a very good reason for wanting the company to be as profitable as possible. When the company was started, the Dutch Republic was in open rebellion from their Spanish overlords, who also controlled Portugal. By dominating the spice trade, the Dutch would be taking away this crucial market from the Portuguese and therefore the Spanish, leaving the Spanish less resources to enable the subjugation of the Dutch. To achieve this, the Dutch Republic was prepared to make the VOC as rich as possible, whatever the cost, and allowed them the license to wield an absurd amount of power equal to that of a country. This includes allowing the VOC its own private army, a navy that matched the English Royal Navy, and even the ability to write their own laws. This was all done with complete autonomy from the Dutch government.
With an unprecedented amount of support and freedom, the Dutch East India company tore across Asia creating their own empire. At the height of its power, the Dutch East India company controlled the entirety of modern Indonesia, the Moluccas, Sri Lanka, Malacca and a number of smaller ports on the Indian subcontinent, as well as a settlements like cape town in South Africa that were designed as a resting station for Dutch traders. All these countries were not subject to the Netherlands but to a single company, a company that operated as a country, but one that had no obligation to any citizens, only to the relentless pursuit of profit.
The company was ruthless towards their competitors. They began attacking and stealing Portuguese ships, which pushed them towards a war that lasted 60 years, giving the VOC the opportunity they needed to break Portugal’s monopoly over the region. This would be immediately followed by four separate wars against England that would last until the company’s final days. But worse were their crimes against the people of Southeast Asia. Back in its early days, the VOC initially seemed content to trade with the indigenous traders of the region, however they quickly learned that while this might be good for locals and consumers- it wasn’t for profit. To maximise their own profits, the Dutch would need a complete monopoly on all the spice produced in the area and they did this by giving local merchants no other choice. When the people of the Banda Islands would not accept an exclusive trade agreement, the Dutch massacred thousands and enslaved or displaced the survivors. Yet the Dutch East India company considered this a great success, the islands were conquered, and the company built vast spice plantations over which they had complete control. This led to huge profit margins of 1500%. Determined to maintain this monopoly, the company would massacre thousands of Chinese migrants in 1740 in an attempt to maintain order in Jakarta. For 200 years, the Dutch East India company’s presence in southeast Asia was characterised by a brutal form of colonialism and the violent extortion of its native people.
Ultimately however, the company was not too big to fail. The cost of upholding this trade empire was massive and kept growing, all the while the English navy had surpassed the Dutch and keeping Asian nations from trading with other Europeans became increasingly hard to prevent. To add to this, European demand began to shift to other luxuries such as sugar and cotton which were more commonly found in the Americas. The company fell into steep decline in 1784, when the Dutch lost a disastrous war to the British, crippling the VOC’s fleet and leaving the company a financial wreck. The situation worsened less than a decade later when Britain occupied the company’s colonial possessions during the Napoleonic wars and an invasion from France led to the collapse of the Dutch Republic. Finally, the excessive costs of maintaining the Dutch monopoly were simply no longer worth the costs. The new Dutch government nationalised the company making all VOC colonial possessions property of the Netherlands itself and the company collapsed less than 10 years later.