Historically, Dutch were considered to be the experts of sea trade. Not only did Dutch break the monopoly of Portuguese in the East but also remained dominant player of trade during the early phase of European Colonialism. The presence of Dutch on the Indian soil lasted from 1605 to 1825.
Key highlights of the blog are:-
- A Sneak Peak Into The Past
- Dutch Rule In India : Arrival, Objective And Commodities Traded
- Dutch East India Company : Formation, Growth and It’s Downfall
- The Decline Of Dutch
A Sneak Peak Into The Past
Netherland gained it’s independence from Spanish empire in 1581. However, due to war of independence the ports in Spain were closed for the Dutch. This forced them to find a route to India and to the East to enable trade directly.
Dutch Rule In India : Arrival, Objective And Commodities Traded
The Arrival Of Dutch In India
In 1604, the Dutch came to India and after they signed a treaty with Zamorin of Calicut they started to trade in India. However, when the Dutch failed twice to drive out Portuguese from Malabar, they got attracted by the textiles of Coromandel Coast and decided to mark it’s presence on the East Coast of India. As a result, the Dutch set up its first factory in Masulipattanamin 1605, followed by Pulicat in 1610, Surat in 1616, Bimlipatnam in 1641, and Chinsura in 1653.
Their Prime Objective
Although, Dutch came to India looking for textile so that they can exchange it with spices as they traded in the East Indies, their prime objective was to break into the monopoly of the Portuguese and drive them out of the Indian Subcontinent.
Although textile remained the prime trading commodity, other commodities included items such as precious stones, Indigo and Silk across the Indian Peninsula, Salt Pepre and Opium from Dutch Bengal and pepper in Dutch Malabar. Apart from this, the slaves from India were also imported to work on Spice Islands and in the Cape Colony.
Despite the quick spread of Dutch in India, it took 57 years for them to defeat the Portuguese and get trading rights in the Malabar region. The defeat of Portuguese meant that Dutch were the new masters of Pepper trade and their monopoly over this commodity enabled them to earn huge profits as it was known as black gold in Europe.
The Dutch East India Company : Formation, Growth And Downfall
Formation Of Dutch East India Company
- Formed in the year 1602, the Dutch East India Company (known as Verenigde Oost-Indische Compagnie in Dutch) was the first global multi-national company (MNC).
- Formed to cater the growing demand of Indian Spices, the Dutch East India Company was the primary trading as arm of the Dutch.
- Although the company was labelled as a trading company, the VOC was a proto conglomerate and diversified into multiple commercial as well as industrial activities.
- The company was a trans continental employer and a corporate pioneer of Foreign Direct Investment ( FDI) at the dawn of modern capitalism.
Growth Of Dutch East India Company
As the influence of Dutch was increasing slowly and gradually in India, the Dutch East India Company was making a history back in Amsterdam.
- Established in the year 1602, it became the first limited liability company to be listed on the stock exchange.
- In the same year, the company offered it’s share for subscription to the public through the Initial Public Offer (IPO) and the IPO was a complete sellout at the newly formed Amsterdam stock of exchange.
- Impressed by the company’s remarkable milestones, not only Dutch but even German and Belgian merchants vied to buy it’s shares.
- The shares of the company were so heavily priced and quickly traded that it became a major multinational company and stock market darling within a short span of time.
- The huge demand for it’s shares led to a number of stock market innovations such as future contracts, short selling options etc.
Downfall Of Dutch East India Company
Despite touching new heights, the good days did not lasted long for the company. In the year 1622, it saw the first “shareholder revolt” who complained that the balance sheet of the company was cooked up and demanded a proper audit for the same. This led to government intervention.Unfortunately the company fell as fast as it rose and mid 18th century witnessed the decline of the Dutch East India Company.
The various reasons responsible for the downfall of the company are:-
- Insufficient Cash Reserves
As a public listed company, the VOC was consistently offering higher dividends to its shareholders year on year. While this looked good for the shareholders, the company wasn’t able to maintain sufficient cash reserve to tide over the bad days. There were times when the dividends offered by the company was higher than the income of the company.
Posted far away and with difficulties in communication, the employees of the company made vast fortunes by indulging in private trade and started passing on the losses to the company. The corruption of the employees was one of the prime reason responsible for the downfall of the company.
- Political Changes
The political changes also affected the fortunes of the company. Till the early 18th century, the Dutch always relied on the might of military to ensure their dominance in trade. However, after facing a crushing defeat at the hands of Marthanda Varma, the ruler of Trivancore, the Dutch never gained it’s influence in the Malabar region and the power of the military also began to shrink.
- Fourth Anglo Dutch War ( 1780-1784)
The Fourth Anglo Dutch War proved to be the last nail in the company’s coffin. During this period, a number of ships of the company were sunken by the British and the ports in India were also captured. The losses were valued at millions of pounds and with loans taken to run the company, the value of the company was reduced to zero which ultimately lead to bankruptcy in 1799.
The Decline Of Dutch
The rise of the British power in the East posed serious challenges to the commercial interest of the Dutch. However, the decline of Dutch in India can be explained as a series of events:-
- Amboyna Massacre
In the year 1623, twenty men were tortured and killed on Ambon Island by the agents of The Dutch East India Company on the accusations of treason. In this incident 10 personnel’s serving in the East India Company and Japanese and Portuguese Traders were killed and this intensified the rivalry between the two which remained a source of tension until the late 17th century.
- Battle Of Colachel
Amidst the Dutch-Anglo rivalry, Trivancore King Marthanda Varma gave a serious blow to the Dutch East India Company in the Battle Of Colachel in the year 1741, forcing them to drive out of the Malabar region.
- Downfall Of The Dutch East India company
Unfortunately, the Dutch East India company fell as fast as it rose. Wars, corruption, insufficiency in maintaining cash reserves were the prime reason for its downfall which ultimately lead to its bankruptcy.
Adding to these woes, the British continued to capture the strong holds of Dutch one after the other. The defeat from the British reduced the influence of Dutch on the Indian subcontinent and finally on March 1st ,1825 all the Dutch possessions were transferred to British under the Anglo Dutch Treaty which marked the end of the Dutch Colonial Rule in India.