Dutch East India Company

Reproduction of a map of the city of Batavia c. Investment in these expeditions was a very high-risk venture, not only because of the usual dangers of piracy, disease and shipwreck, but also because the interplay of inelastic demand and relatively elastic supply [67] of spices could make prices tumble at just the wrong moment, thereby ruining prospects of profitability. To manage such risk the forming of a cartel to control supply would seem logical. The English had been the first to adopt this approach, by bundling their resources into a monopoly enterprise, the English East India Company in , thereby threatening their Dutch competitors with ruin. For a time in the seventeenth century, they were able to monopolize the trade in nutmeg, mace, and cloves and to sell these spices in Europe and India at fourteen to seventeen times the price they paid in Indonesia; [69] while Dutch profits soared, the local economy of the Spice Islands was destroyed. With a capital of 6, , guilders , [70] the charter of the new company empowered it to build forts, maintain armies, and conclude treaties with Asian rulers. It provided for a venture that would continue for 21 years, with a financial accounting only at the end of each decade. The Governor General effectively became the main administrator of the VOC’s activities in Asia, although the Heeren XVII, a body of 17 shareholders representing different chambers, continued to officially have overall control.

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Dutch East India Company

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This Kraak porcelain dish in a museum in Malacca was emblazoned with the V. Around , two events caused the growth of VOC trade to stall. In the first place, the highly profitable trade with Japan started to decline. The loss of the outpost on Formosa to Koxinga in the Siege of Fort Zeelandia and related internal turmoil in China where the Ming dynasty was being replaced with the Qing dynasty brought an end to the silk trade after The shogunate enacted a number of measures to limit the export of these precious metals, in the process limiting VOC opportunities for trade, and severely worsening the terms of trade.

This caused a spike in the price of pepper, which enticed the English East India Company EIC to enter this market aggressively in the years after Previously, one of the tenets of the VOC pricing policy was to slightly over-supply the pepper market, so as to depress prices below the level where interlopers were encouraged to enter the market instead of striving for short-term profit maximisation. The wisdom of such a policy was illustrated when a fierce price war with the EIC ensued, as that company flooded the market with new supplies from India.

Indeed, by , the latter came close to bankruptcy; its share price plummeted from to ; and its president Josiah Child was temporarily forced from office. The VOC therefore closed the heretofore flourishing open pepper emporium of Bantam by a treaty of with the Sultan. Also, on the Coromandel Coast , it moved its chief stronghold from Pulicat to Negapatnam , so as to secure a monopoly on the pepper trade at the detriment of the French and the Danes.

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