Dutch East India Company
The 1602 Dutch trading company that invented the publicly traded corporation and used it to conquer the spice islands.
The Vereenigde Oostindische Compagnie, chartered by the Dutch States General on March 20, 1602, was the first company in history to sell tradable shares to the general public, and one of the last to be granted the powers of a state. Its charter gave it a monopoly on all Dutch trade east of the Cape of Good Hope and the right to raise armies, build forts, wage war, sign treaties, and execute prisoners. For nearly two centuries it exercised those powers across an arc from the Cape to Nagasaki. It is the ancestor of both the modern corporation and the corporate empire.
An invention in finance
The problem the VOC solved was risk. A voyage to the Indies took two or three years and might not come back at all, so Dutch merchants had been financing single expeditions and dissolving the partnership when the ships returned. The 1602 charter instead pooled six regional chambers into one company with permanent capital of 6.4 million guilders, raised from more than a thousand investors including artisans and servants, and locked in for ten years at a stretch. Investors who wanted out sold their share to someone else, and the place they did it, the Amsterdam exchange, became the first modern secondary market in equities, complete with speculation, short selling, and derivatives within a generation.
Governance sat with the Heeren XVII, the Lords Seventeen, delegates of the chambers who met a few times a year and set policy for operations six months of sailing away. In good decades the company paid dividends of 18 percent and occasionally far more. Over its life it sent nearly 5,000 ships east and shipped about a million Europeans to Asia, of whom a large fraction never returned.
Trade at gunpoint
The VOC's commercial model was not to compete in Asian markets but to own the source. Under Jan Pieterszoon Coen, who founded Batavia on the ruins of Jayakarta in 1619 and argued that trade could not be conducted without war, the company set out to monopolize the fine spices absolutely. In 1621 it took the Banda Islands, the world's only source of nutmeg and mace, and destroyed the population: of roughly 15,000 Bandanese, perhaps a thousand survived, the rest killed, starved, or enslaved. The islands were reissued as plantations worked by slaves. On Ambon the company extracted a clove monopoly and periodically sent expeditions to cut down unauthorized trees.
Around that core it built a trading network of great sophistication, taking Malacca from the Portuguese in 1641, running the only European trading post in Japan at Deshima, planting a refreshment station at the Cape of Good Hope in 1652 that grew into a settler colony, and profiting most reliably not from the Europe run but from carrying goods between Asian ports. At its height it was the largest commercial enterprise in the world.
Rot and dissolution
Decline came from the inside. The spice monopoly's margins eroded as textiles, tea, and coffee became the volume trades and competitors could not be excluded from them. Wars with England drained the treasury. The company's own servants, poorly paid and impossibly far from oversight, ran private trade on the side at the company's expense on such a scale that a joke had the initials VOC standing for perished under corruption. It borrowed to pay dividends it had not earned. When the French revolutionary armies overran the Netherlands, the game ended: the charter lapsed and the company was formally dissolved on December 31, 1799, its debts and its territories taken over by the state. Those territories became the Dutch East Indies and, in 1945, Indonesia.
The echo
The VOC established the template that the English East India Company would follow in India: a chartered company with sovereign powers, accountable to shareholders rather than to the governed, whose conquests eventually become too large and too expensive for a company to hold and are handed to a government. It also left the first full record of what happens when a corporation is given the right to kill. The Banda massacre was a business decision, made to protect a margin, minuted and reported home. That combination of ledger and violence is what people mean when they describe the era's empires as commercial ventures rather than national ones.