The first Multinational

When the route to the Indies was established companies began to crop up quickly. Many entrepreneurs favoured the idea of investing in the trade with Asia to make it rich. The consequence was that Dutch companies started to see each other as competitors in the spice trade and this allowed Asian merchants to play the Dutch at their own game.

The Dutch statesman Johan van Oldenbarneveldt delivered a masterly performance by founding the United East-Indian Trading Company. He succeeded in getting the cities that already traded in Asia (Hoorn, Enkhuizen, Amsterdam, Delft, Rotterdam, and a little group of cities from the province of Zeeland), together. He promised them that through their participation, no other cities would be given permission to join the Company. A unique structure was formed, which consisted of six “Chambers’’, almost like independent companies, who sent delegates to the bi-annual meetings in Amsterdam. In total there were 17 men, who formed the committee and so they were given the title “De Heren Zeventien,’’ which is the Dutch name for the seventeen gentlemen.  To set up the capital of the company, stocks were sold. The VOC was the first company to work with stocks. The oldest stock in the world is a VOC stock. It is kept in “De beurs van Amsterdam’’ (The Amsterdam Stock Exchange).

The idea of working with stocks originated in the fishing industry. In the Middle Ages, the Zuider Zee (The Southern Sea) was a rich fishing source of herring, so much so that you could easily lift herring with your bare hands from the water. Fishing boats were everywhere, hauling as much catch as they could. Paying for a new ship was costly, shares were sold in boats, so that shareholders owned part of the boat and its catch, for example one person would pay for the keel, another for the rigging, a third for the fishing nets. From the profit, everyone got the same pay-out for what they had paid in. So if they paid 25% of the costs, they’d get 25% of the profit as well. At the beginning of the VOC, the stocks weren’t just bought by entrepreneurs but also by pastors, servants and craftsmen. At the foundation of the VOC, a colossal sum of 6,424,588 Guilders had been collected. The biggest stockholder was the, Isaac le Maire, born in Flanders, with 97,000 Florins. After a while, the small stocks were bought up by the bigger stockholders.

Although in the time of the VOC (1602-1799), there were some 4721 ships in total at sea and more than a million people went to Asia, the trade made with Asian products was pretty spectacular and mostly in the first years huge profits were made on products like pepper and nutmeg, but in general the economy of the Netherlands was based upon the trade on the Baltic sea and the Levant (Modern day Syria and Israel).

Although they were united in a company, that didn’t stop the different cities from competing with each other. On the contrary, there was no national interest. Every city tried to profit the most out of the enterprise and invested money was used to build their own ships. The meeting of the Heren XVII was in agreement with the initial capital that was invested and split the representation as follows: 8 councillors from Amsterdam, 4 from Zeeland and one representative from each of the smaller chambers in Hoorn, Rotterdam, Delft and Enkhuizen were sent to the meetings. The seventeenth representative was very important because his vote was decisive if Amsterdam wouldn’t corporate. This person alternated between Zeeland and the smaller chambers. The significant influence of Amsterdam was disadvantageous for the VOC because it would have been wiser to have had larger and more ships to depart from Zeeland. The port of Amsterdam was situated very unfavourably, only reachable via the dangerous Zuider Zee and the narrow, almost impassable passage by Texel, and to make matters worse, the Pampas waters were extremely shallow leading up to the river Ij. This resulted in ghastly delays between Texel and Amsterdam. Large ships couldn’t reach Amsterdam at all and were forced to transfer their cargo onto smaller vessels to continue the journey to Amsterdam.

 

text: Ruud Spruit
translation: Pieter Degeling, RSG Enkhuizen, tto-junior