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VOC and India

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India was at the heart of the Dutch East India Company’s trading operations in Asia.

In the public mind, a reference to the Dutch East India Company chartered by the States-General in March 1602 often evokes images of the Indonesian Archipelago and of exotic spices like pepper, clove, nutmeg and mace that were grown. The Indian Subcontinent however, hardly comes to mind as we always associate it almost exclusively with the English East India Company chartered by Queen Elizabeth in 1600. This is understandable from the perspective of a common man. The reality has been rather different. Of all the trading companies of the seventeenth and eighteenth centuries, the Dutch United East India Company was the most successful.

The Indian subcontinent attracted merchants from both within and without the old Indian Ocean trade network. The VOC (Vereenigde Oost-Indische Compagnie) exchanged silver and gold here for silks, textiles, and pepper. Trading posts were set up in the Bay of Bengal (Hooghly), including the Coromandel Coast (Pulicat, Nagapattinam, and farther along the Malabar Coast (Cochin), the Konkan and in Gujurat (Surat). Therefore, in each coastal region of India, detailed records of social, political, and economic dealings were kept.

It all began with the spices. Euro-Asian trade had traditionally been ruled by trade in spices, most importantly pepper, cloves, nutmeg and Cinnamon. Pepper was grown in Southwest India and in the Indonesian Archipelago. Cloves, nutmeg and mace were grown entirely in the Spice Islands in the archipelago. Cinnamon was grown in Ceylon, now Sri Lanka. The VOC acquired all its spices in the Indonesian archipelago and in Ceylon. Although it took some years, The VOC acquired monopoly with respect to trading Cinnamon. Pepper was the premier product of western India’s Malabar Coast during the early seventeenth century. It was also the backbone of the Portuguese Asian spice trade. In 1663, the decline of Portuguese in Cochin was a great blow to the Indo-Portuguese spice trade. But for the VOC, Cochin never became profitable, despite the conclusion of several pepper contracts with local princes and the equipping of cruisers to combat smuggling by sea.

During the first three quarters of the seventeenth century, Spices dominated the major proportions of Dutch imports from Asia. Meanwhile, from 1675 onwards, a radical change took place due to the result of a fashion revolution in Europe, where Asian textiles and silks suddenly became a fad. The Indian Sub-continent became the greatest manufacturer of textiles and silk in Asia. From the early 1640s, Bengal emerged as a major supplier of raw silk for Japan. The Bay of Bengal was situated, both geographically and commercially, at the heart of the vast intra-Asian trade network. It’s trading ports flourished by their South China Sea connections on the one hand, and their Indian Ocean connections on the other. Southeast Asian producers had long demanded quality Indian textiles in return for their spices. As a distinct trading zone with its specific cultural characteristics, the Bay of Bengal was thus of huge importance for any European trading enterprise. To successfully develop its spice trade in island southeast Asia, the VOC needed to take part on this essential axis of intra-Asian trade, the Maluku – India connection. It is surprising to know that Bengal alone, at the end of the 17th century was accounted for 40 percent of the total value of Asian goods imported by the Dutch East India Company in Europe. The figure as a whole for the Indian subcontinent was much larger.

Trade settlements along the Hooghly River and throughout the Ganges Delta drew Asian and European traders to participate in the trade in raw silk and textiles, saltpetre, opium and slaves. In the 1630s the VOC began opening trading posts along the Ganges, eventually centering itself at Chinsura on the right bank of the Hooghly. With no fewer than a dozen trading posts along the Ganges from Agra to Patna, the VOC was the most important foreign commercial presence in Bengal until the British took over in the 18th century. A factory was established in Hariharpur in Orissa in 1633, and another at Hugli in 1635. Bengal raw silk was included in the Dutch cargo for Japan for the first time in 1640 and soon became a major constituent item of this cargo.

Another highlight of this story is the fact that out of all the European corporate enterprises functioning in Asia, from Portuguese to Dutch, the Danes to the French, The Dutch East Indian Company was the only to actively engage in a large scale official intra-Asian trade. This was the decisive element in its overall trading strategy. Before the Dutch, the spice growers in the Archipelago traded their wares for Indian cloth, rice and other necessities by Indian and other Asian merchants, as well as the Portuguese. Instead of following the old rule of thumb, the business instinct of The Dutch drove them to the Coromandel Coast on the South-East coast of India, where four factories were established between 1606 and 1610 covering both the northern and the southern stretches of the coast.  The chart shows the Coromandel Coast – the coast had attracted western traders from Roman times. Tamil maritime contacts with the Persians and Arabs were even stronger. Arab merchants sailed to Southeast Asia from the ports of Coromandel, carrying pearls, corals, arecanuts, cardamom, silk and cotton fabrics. The Europeans entered the scene at a time when the Vijayanagar kingdom, a Hindu kingdom that ruled Tamil Terriroty was in decline. There came a power power vacuum which allowed the Dutch to negotiate with the lesser lords directly who then began leasing entire villages to the VOC. Indian princes traded with the Europeans, taxed them, and employed their military prowess for their own ends, and in turn the Indian villages produced both fine and staple goods for VOC export. Pulicat became the main centre of VOC activities on the Coromandel Coast. Bimlipatam, Jagannathapuram, Masulipatnam, and Negapatnam were but a few of the other 17th VOC settlements dotting India’s eastern seaboard.

In 1618, The Dutch established a factory in Surat in Gujarat, on the west coast of India, the other major Indian region supplying textiles to the Indonesian archipelago. Within a few years, subordinate factories were established at Cambay and Broach, and at Agra in northern India. Surat, the Mughal port in the Indian Ocean – The heart of the Mughal Empire’s authority lay in Delhi, deep in India’s interior. Its outlets to the sea were Bengal in the east and Gujarat in the west. The Province of Gujarat was a shining gem in the Mughal crown. Its major port, Surat, represented an enormous source of wealth for Akbar and his heirs on the Mughal throne. In order to enjoy trading rights, the European trading companies had to make large tributary payments to the Mughal emperors on a regular basis. Throughout the seventeenth and eighteenth centuries, the ports at Surat, Ahmadabad, Cambay, and Broach were crucial connections within the Arabian seas and important markets for occidental and oriental goods. Here the westerners bartered European, African, and Japanese luxury goods for indigo, sugar, textiles and other goods from Gujarat and the interior. Beautiful and seemingly endless Sindhi textiles and other luxury exports were in demand in Iran, Basra and Hormuz, and elsewhere throughout the Indian Ocean trade network. The great maritime centre of Surat harboured an important merchant community. Their wealth was enormous, and some individual traders possessed as many as fifty ships. Others were engaged in high finance, extending credit to overseas enterprises. No surprise, then, that Surat became the centre of Dutch operations in the Arabian Sea region. From there the westerners expanded their interest to Bombay and further down the west coast.

This development gave rise to Intra-Asian trade that in turn provided a rich source of income for the company during the 17th and 18th century. The reason behind it was the ‘Japanese connection. After 1639, the Dutch Company was the only European trader with access to Japan. While all European merchants in Asia needed silver to buy materials in India and pepper in the Indonesian Archipelago, this Japanese connection proved extremely profitable as it provided the company a chance to buy silver cheaply. Between around 1635 and 1690 this income was greater than the expenditure; thus the Asian business of the VOC ran at a profit and the enterprise in the Dutch Republic also profited from this. Meanwhile, efforts to further widen the supply base of the raw silk and the silk textiles required for the Japan trade were made.

The most interesting story in the pages of Intra-Asian trade was about the person who designed the idea of extensive participation of Dutch in the trade.  Not the Heren XVII, instead the whole trading strategy was thought of during the times of the officials at the Company’s Eastern headquarters established at Bantam in 1609, and shifted in 1618 to Jacatra, renamed Batavia in 1621. In 1612, a future Governor-General of the East Indies named Hendrik Brouwer, had described the Coromandel Coast as the ‘left arm of the Moluccas and the surrounding islands because without textiles that come from there, the trade in the Moluccas will be dead’. The man behind the design was Jan Pietersz Coen, a 32 year young Governor-General of the East Indies in April 1618. Coen had a remarkable understanding of the realities of Asian trade. He devised a carefully worked out strategy and followed it up with great perseverance. In 1619, he sent across the blueprint of the Company’s intra-Asian trade to the directors. In addition to pepper and other spices, the key commodity in Coen’s blueprint was Indian textiles, which had to be paid for in Coromandel mainly in gold and in Gujarat mainly in silver. It was, therefore, necessary to build trade relations with Asian sources of precious metals, whether they were themselves producers of these metals or were obtaining them through trade. By far the most important Asian producer of precious metals at this time was Japan. The discovery and working of new silver mines in the sixteenth century had turned Japan into the second largest producer of silver in the world next only to the Spanish American mines in the New World. A factory was established at Hirado in southwestern Japan in 1609. Although items such as fine-quality cotton textiles, spices, sugar, lead, quicksilver and musk could be sold in Japan, the principal items in demand there during the early period of Dutch trade were Chinese silk, silk textiles and other Chinese goods. The Dutch initially tried to obtain Chinese goods in the Indonesian archipelago and the Malay Peninsula. But success was limited, and attempts were made almost from the very start of trading relations with Japan to establish a trading post, by force if necessary, on the coast of China or in the neighbourhood.  In 1624, the Dutch moved to Taiwan in return for an informal agreement that Chinese merchants would be allowed to go there to trade with them. The principal commodities procured by the Company in Taiwan were Chinese silk and silk textiles for the Japanese market. A part of the silver obtained from Japan in exchange for the Chinese goods was then invested in getting not only the next round of silk in Taiwan but also gold needed chiefly for the crucial Coromandel trade.

However, at the end of the seventeenth century there was an enormous expansion in trade and shipping between Europe and Asia. Textiles from India, coffee from Arabia and later also from Java, and tea from China captured the European market. This growth in trade was general; other European companies also profited from it. The VOC gradually lost its unique position. The monopoly on fine spices reduced to relatively limited importance. The income from the intra-Asia trade no longer compensated for the rising expenditure which mounted partly under the influence of the rising administrative costs. The result was that year after year throughout the eighteenth century the Asian business of the VOC made a loss. As the trade with Japan almost dried up; after 1700 this counted for only very little. Thus, the financial reserves began shrinking.

The result of these changes lead VOC to lean increasingly on sales results in the Dutch Republic. The funding of the business relied on these sales results and this put the Company in a vulnerable state: The Company lost its credit found itself deeply in debt after the outbreak of the Fourth Anglo-Dutch war in 1780, resulting in no return fleets sailed home and no auctions could be held. After this war the Company survived with government support until the invasion of the French and the collapse of the old Dutch Republic sealed the fate of the VOC. In 1796, after Batavian Republic was founded, the board of directors had to resign and the management was handed over to the Committee for Affairs relating to East India Trade and Possessions. The VOC had been nationalized. On 1st January 1800 the VOC charter, the legal foundation of the enterprise, was revoked. Although the state of war in Europe permitted no drastic changes in course as far as shipping and trade to Asia were concerned, it meant the end of the Company.

The figures for the two centuries of the Company’s operations, for trade turnover, shipping and personnel, in total are impressive. However, to summarise India was at the centre of the Dutch East India Company’s trading operations in Asia and the reason behind it was its central role in the Company’s intra-Asian trade, and thereafter its role in Euro-Asian trade as well.

-By Manasa Saarloos Rao with inputs from Sjoerd De Meer, Curator – Cartography, Rotterdam Maritime Museum

Photo Courtesy: Theo de Man

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