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Capitalism and the Dutch East India Company: Crash Course World History #229
Capitalism and the Dutch East India Company: Crash Course World History #229
For a time, the Dutch East India company dominated the spice trade in southeast Asia, using some clever financial innovations. But was this capitalism or something else?
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Key Ideas
As this video progresses, key ideas will be introduced to invoke discussion.
Think about the following questions as you watch the video
- What was the VOC and why was it formed? What powers did it have?
- Why was it easy for Dutch citizens to invest?
- What were some important financial technologies used by the Dutch?
- What key advantage did the VOC have over British companies?
- How did the Dutch control trade in Southeast Asia?
- What caused the VOC to decline and eventually go bankrupt?
: Hi, I'm John Green, this is Crash Course World History,
: and today we're going to talk about
: our old friend trade and also corporations.
: Oh great, another Marxist rant
: from my union-loving public-school teacher
: about how capitalism is destroying the world.
: You know, Me from the Past,
: all the capitalists call me Marxist,
: all the Marxists call me capitalist, I-I can't win!
: Here's the thing, Me from the Past,
: I am grateful that there is a market
: for people to, you know, sell books and make YouTube videos,
: and capitalism does a pretty good job of making goods
: and services available to large groups of people.
: Plus how else am I going to turn sweat of the proletariat
: into delicious Diet Dr. Pepper?
: Not a sponsor-- I wish they were a sponsor.
: I'll tell you what, Me from the Past,
: I've enjoyed a cup or two of the sweat of the proletariat
: over the years and it just doesn't have
: that carbonated "pop" of Diet Dr. Pepper.
: What were we talking about? Oh right, capitalism.
: I like capitalism,
: what I don't like are monopolies and violence,
: and those are both aspects
: of one of the first capitalist enterprises
: and the subject of today's episode,
: the Vereenigde Oostindische Compagnie--
: and I will remind you
: that mispronouncing things is my thing.
: In English of course
: that's the Dutch East India Company.
: I'd like to use the Dutch, though,
: but I can't pronounce it, so we're just going to compromise
: and call it the V.O.C.
: (music playing)
: (horse whinnying)
: So you probably remember from our first series
: that trade in the Indian Ocean had gone along swimmingly
: for hundreds of years until the Portuguese tried and failed
: to dominate it in the 15th and 16th centuries.
: And you may also remember that in between the Portuguese
: and the massively powerful British Empire,
: there was another European power: the Dutch.
: At the time, the Netherlands was a country of 1.5 million people,
: about as many people as currently live
: in greater Indianapolis.
: Now, admittedly, they'd already accomplished
: some impressive things-- for instance,
: they'd dug most of their country out from the ocean--
: but how they came to
: thoroughly dominate world trade for 50 years
: tells us a lot about capitalism, technology, and also violence.
: I suppose we could start with the revolt
: of the United Provinces and the Union of Utrecht in 1579,
: which created the Netherlands;
: or perhaps the decision by the Catholic Duke of Parma in 1585
: to let Protestants leave captured Antwerp
: and set up shop in Amsterdam;
: or we could start in 1595 with the creation
: of the first Amsterdam-based investment syndicate,
: the Company for Far Lands,
: which is what I call my Minecraft server.
: So the founder of the Company for Far Lands
: published this report called "The Itinerario"
: that excited dreams of vast wealth and spices
: from Southeast Asia.
: There's a key passage in the report
: that explains the riches available
: in the islands east of Malacca:
: "In this place of Sunda, there is much pepper,
: "and it is better than that of India or Malabar,
: "whereof there is so great quantity
: "that they could lade yearly from thence 500,000 pounds.
: "It hath likewise much frankincense, camphor,
: "and diamonds, to which men might very well traffic
: "without much impeachment,
: "for that the Portugals come not thither,
: "because great numbers of Java come themselves
: unto Malacca to sell their wares."
: You'll note there that the initial idea
: was to break into this already-existing trade system
: and displace the Portugals.
: So in the same way that trade in the western Indian Ocean
: was flourishing before the arrival of Europeans,
: the South China Sea region and eastern Indian Ocean
: was a trade hotbed, perhaps even more valuable
: because of the riches of China.
: And it seems that the Dutch originally planned to try
: to break into that existing trade network on equal terms,
: like, according to Jacob van Neck,
: the captain of the first successful expedition
: to Indonesia, the plan was, "not to rob anyone of their property,
: but to trade uprightly with all foreign nations."
: But pretty soon that idea of free trade gave way
: to the hard reality that competition meant,
: you know, lower prices,
: and by 1601 there were enough successful trade companies
: that the cost of buying spices in Indonesia was going up.
: And also there was suddenly tons of pepper in Amsterdam,
: which meant the price that could be charged for that pepper
: was going down-- clearly, something had to be done.
: Ideally that something
: would have been lower prices for everyone,
: and an efficient marketplace,
: but the something that happened instead was the V.O.C.
: Let's go to the Thought Bubble.
: In 1601 the United Provinces, aka the Netherlands,
: were governed nationally by a representative body
: that met at The Hague, called the States General--
: although each of the individual provinces
: was largely self-governing--
: and the leader of the States General
: was able to convince all the provinces
: to accept a single entity
: to monopolize the East Indies trade.
: This new company, the V.O.C.,
: was run by a 17-member board called the Heeren XVII,
: and these directors supposedly had control over a company
: that was chartered with the power to hire its own people
: and also to wage war.
: I say supposedly because, you know,
: it took a year for communications
: from the Netherlands to reach the East Indies,
: and another year for company officers to respond,
: so the V.O.C. basically operated as its own sovereign nation,
: with the power to use as much violence as it needed
: to build and maintain its trading power.
: Like according to author Stephen Bown,
: "The V.O.C. would essentially operate
: as a state within a state."
: And the V.O.C., together with its sister company
: the West India Company, did use violence,
: attacking Portuguese and Spanish settlements in Chile, Brazil,
: East and West Africa, the Persian Gulf,
: India, Sri Lanka, Indonesia, China, and the Philippines
: between 1602 and 1663,
: in what you could think of as an early world war.
: The V.O.C. was also different from a lot of corporations,
: because it was initially funded with 6.5 million guilders,
: about $100 million in today's money,
: and that capital was expected to fund business ventures
: for a long time going forward,
: not just for, like, one initial trade mission.
: And this long-term business thinking was unique,
: especially compared to the funding strategies
: of the V.O.C.'s biggest competitor,
: the British East India Company,
: and it reflected the advanced financial acumen
: of the Dutch model generally.
: Thanks, Thought Bubble.
: So, we've got this company
: that's basically also a country.
: And it's not a particularly good country,
: because it doesn't have, like,
: any of the responsibilities of government,
: nor does it have to answer to the people it's governing.
: All it has to do is make money.
: And it was really good at making money, like by 1648
: the United Provinces were in better financial shape
: than every other nation in Europe.
: You can tell this partly just by looking at interest rates.
: Now admittedly, interest rates are only one measure
: of financial health and power,
: but they're an important indicator, even today.
: So, Dutch businesses could borrow at a rate
: of four percent annual interest, and that's pretty cheap
: compared to the ten percent it cost corporations
: to borrow money in England
: or the 24.99 percent it costs me
: to borrow money on my credit card.
: And because Dutch debt was so much cheaper,
: they could invest two and a half times as much
: in pretty much anything than the English could,
: including, like, an army and a navy,
: and this gave the Dutch a huge head start over their rivals.
: So one reason the interest rates were low is because
: the companies were healthy and they tended to pay people back.
: But another is that normal Dutch people were already used
: to investing their money in bonds that had been issued
: for land reclamation projects,
: the famous dikes and windmills
: that turned land below sea level into fields
: where you could grow tulips, or maybe something else,
: but all they ever grow is tulips.
: Like according to business historian William Bernstein,
: the tradition of investing in bonds,
: "carried over into trade:
: "after 1600 Dutch citizens would consider it just as natural
: "to own a fractional share in a trading vessel
: to the Baltic or the Spice Islands."
: And a fractional share is another really interesting idea
: embraced by the Dutch,
: that allowed merchants to bear greater risks
: by purchasing smaller-percentage shares in business ventures.
: Like, it's much better to own a tenth of ten ships
: than it is to own all of one ship,
: because the loss of a single trading ship
: won't, like, ruin you.
: And Dutch businesspeople also enthusiastically invested
: in futures markets,
: guessing what the price of pepper would be
: six months or a year from now,
: and they created new financial instruments
: that could be bought and sold,
: and merchants purchased maritime insurance,
: which further lowered their risk.
: And lower risk means you could invest more of your capital
: until eventually you have a completely efficient market
: and everything is perfect-- until the 2008 crash.
: Wait, what were we talking about?
: The Dutch financial system and its corporations
: were simply better than their competitors,
: and that's why they seized the lion's share
: of the trading business-- but that isn't the whole story.
: Like, one reason the V.O.C. was so successful
: was government sponsorship and centralization.
: The V.O.C. had been chartered by the States General,
: and it could count on the Dutch government to back it up
: with money and military support.
: There's another benefit to being sponsored by your government,
: which is that it's very hard for competition to emerge,
: because it isn't sponsored by your government.
: For instance, in Indonesia
: the V.O.C. had a single governor general managing operations,
: while the British East India Company
: was more of like a collection of trading posts,
: each competing with each other for a share of the spices.
: Competition may bring down prices for consumers,
: but it also brings down profits for businesses.
: In 1605 the V.O.C. realized that
: if it really wanted to maximize its profits,
: it would need a monopoly of the world's spice trade,
: and to do that, they would need permanent bases in Indonesia.
: Initially, they got spices by trading for them
: with the people who grew them,
: especially with the inhabitants of the Banda Islands,
: which was the only place where nutmeg was grown.
: But again, like, trading in a fair and equitable manner
: is no way to maximize profits.
: So at first the Bandanese welcomed the Dutch,
: because they were much more laid-back in terms of religion
: than the Portuguese, but very quickly the Dutch tricked them
: into signing exclusive trade agreements,
: which the Bandanese were almost certain to violate,
: and then when they did violate them,
: (groans) it didn't go well.
: In 1609 the Bandanese were like,
: "No, you don't understand, like, we need trade for food,"
: and the Dutch were like, "But you promised!"
: And the islanders killed 47 Dutch soldiers and officers
: in the ensuing fight.
: The Dutch killed far more Bandanese,
: who were eventually subdued
: and agreed to a nutmeg monopoly with the Dutch,
: although they continued to secretly trade with the English.
: And after all this, by 1612,
: Jan Pieterszoon Coen became the dominant force
: in Dutch Indonesia.
: He was an accountant by training
: but also a ruthless military leader
: who is largely responsible
: for the Dutch monopoly of the spice trade
: and also for its really terrible relations with the British
: and also for, like, you know, certain crimes against humanity.
: Coen brought about the shift in V.O.C. policy,
: away from straightforward trade and toward monopoly
: of both shipping and production of spices.
: He also made it clear that
: this trade needed to be based on military force.
: He wrote, "Your Honors should know by experience
: "that trade in Asia must be driven and maintained
: "under the protection and favor of your Honors' own weapons,
: "and that the weapons must be paid for
: "by the profits from the trade,
: "so that we cannot carry on trade without war,
: nor war without trade."
: There is no trade without war, nor war without trade--
: that's something to think about.
: Anyway, Coen did make a lot of war,
: mostly on the English, despite the fact
: that the Netherlands and England were engaged
: in trade negotiations between 1613 and 1619.
: And in fact fighting between the V.O.C. and the English continued
: even after an agreement was signed.
: By using force-- which included capturing
: and torturing English traders--
: Coen was able to run off the English
: and secure the V.O.C. monopoly over the spice trade.
: With the English out of the picture,
: Coen could get down to the business of using violence
: to dominate not only the trade,
: but also the production of spices.
: His initial plan, to quote Stephen Bown,
: was to depopulate the island
: to replace their inhabitants with imported slave
: and indentured labor under V.O.C. control,
: and he proceeded to carry out
: what amounted to ethnic cleansing of the Banda Islands.
: In about 20 years, the Dutch managed to acquire
: an almost complete monopoly on cloves, nutmeg, and mace.
: In 1658 they added cinnamon by taking control of Sri Lanka.
: And after 1638 they became the only Europeans
: allowed to trade in Japan.
: Now, we tend to think that the heart of the spice trade
: was between Indonesia and Europe, but it really wasn't.
: Like, the V.O.C. capital at Batavia
: became the most important port in all of southeast Asia,
: where spices from Indonesia
: and gold and copper and silver from Japan
: and tea and porcelain and silk from China
: all passed through to India,
: where they were traded for cotton,
: which was used to buy more Asian goods.
: And that was the real money-maker for the V.O.C.
: By the middle of the 17th century,
: only the highest-value luxury goods from the region
: even made it to Europe,
: because that's where the margins were the highest.
: So the middle of the 17th century
: was the golden age for the Dutch;
: it was the one the brought us Rembrandt and Vermeer
: as well as all the wealth and finery
: that was depicted in their paintings.
: When you go to Amsterdam, which you should,
: and you walk along the canals
: and see the beautiful row houses,
: you'll note that many of them were built in the 17th century.
: And much of that was based on the success of the V.O.C.
: and the commerce in spices.
: But eventually Europeans' tastes changed,
: and the desire for nutmeg was supplanted
: by a hunger for sugar.
: Of course, the sugar trade would be known
: for its righteousness and fair trade--
: just kidding, it would be known for slavery.
: Also the woolens produced by the Dutch
: were being replaced by the market for cotton.
: Britain proved better positioned to dominate the trade
: in production in these new and more profitable commodities,
: and they eventually copied the centralized corporate governance
: and finance capitalism
: that had helped make the V.O.C. so successful.
: According to Stephen Bown,
: "Ultimately, maintaining the monopoly
: cost more than the spices were worth,"
: and the company went bankrupt in 1799.
: So the V.O.C. were pioneers of finance,
: and their relentless pursuit of profits
: made them the richest company in the 17th century,
: but we need to be careful about celebrating them
: as, like, a harbinger of modern capitalism.
: For one thing, it wouldn't have succeeded
: without government support,
: especially if it had engaged just in free trade.
: The V.O.C. had an army and a navy
: that it used to attack and intimidate,
: which is, you know, not free trade.
: I think there's a lot to take away
: from the story of the V.O.C.
: One thing that I like to remember is that
: this was all about nutmeg.
: We need to think carefully about what we value
: and why we value it and what we lose by valuing it,
: in the same way that I kind of wish people in Europe had
: about nutmeg in the 17th century.
: And the second thing is that
: while the V.O.C. did eventually disappear
: and its control over Indonesia changed into Dutch colonization,
: the V.O.C. provides a chilling example
: of what has happened in the past
: when corporations become more powerful than states.
: Good governments fulfill their responsibilities
: to the people they govern, and even bad governments, you know,
: are afraid of the people they govern,
: and neither of those things happened in Indonesia
: when it was under the control of the Dutch East India Company.
: Thanks for watching, I'll see you next week.
: Hi, Crash Course is filmed here
: in the Chad and Stacey Emigholz studio in Indianapolis,
: it's made with the help of these nice people,
: and we have a special announcement today
: that's very important,
: at least to the future survival of Crash Course.
: Thousands of you have helped us to keep Crash Course free,
: for everyone, forever, through your support at Subbable,
: but now Subbable has merged with Patreon.
: Patreon's an awesome company run by creators
: that allows you to be much more flexible
: in your support of Crash Course.
: So if you like Crash Course, and you want to join
: the incredibly generous people who make it possible,
: please click here, or else check out the link in the doobly-doo.
: You can get lots of great perks.
: And we, in turn, promise to use that money
: to make educational content online
: and not-- we promise--
: to control the spice trade in Indonesia.
: Thanks again for watching,
: and as we say in my hometown,
: don't forget to be awesome.
: and today we're going to talk about
: our old friend trade and also corporations.
: Oh great, another Marxist rant
: from my union-loving public-school teacher
: about how capitalism is destroying the world.
: You know, Me from the Past,
: all the capitalists call me Marxist,
: all the Marxists call me capitalist, I-I can't win!
: Here's the thing, Me from the Past,
: I am grateful that there is a market
: for people to, you know, sell books and make YouTube videos,
: and capitalism does a pretty good job of making goods
: and services available to large groups of people.
: Plus how else am I going to turn sweat of the proletariat
: into delicious Diet Dr. Pepper?
: Not a sponsor-- I wish they were a sponsor.
: I'll tell you what, Me from the Past,
: I've enjoyed a cup or two of the sweat of the proletariat
: over the years and it just doesn't have
: that carbonated "pop" of Diet Dr. Pepper.
: What were we talking about? Oh right, capitalism.
: I like capitalism,
: what I don't like are monopolies and violence,
: and those are both aspects
: of one of the first capitalist enterprises
: and the subject of today's episode,
: the Vereenigde Oostindische Compagnie--
: and I will remind you
: that mispronouncing things is my thing.
: In English of course
: that's the Dutch East India Company.
: I'd like to use the Dutch, though,
: but I can't pronounce it, so we're just going to compromise
: and call it the V.O.C.
: (music playing)
: (horse whinnying)
: So you probably remember from our first series
: that trade in the Indian Ocean had gone along swimmingly
: for hundreds of years until the Portuguese tried and failed
: to dominate it in the 15th and 16th centuries.
: And you may also remember that in between the Portuguese
: and the massively powerful British Empire,
: there was another European power: the Dutch.
: At the time, the Netherlands was a country of 1.5 million people,
: about as many people as currently live
: in greater Indianapolis.
: Now, admittedly, they'd already accomplished
: some impressive things-- for instance,
: they'd dug most of their country out from the ocean--
: but how they came to
: thoroughly dominate world trade for 50 years
: tells us a lot about capitalism, technology, and also violence.
: I suppose we could start with the revolt
: of the United Provinces and the Union of Utrecht in 1579,
: which created the Netherlands;
: or perhaps the decision by the Catholic Duke of Parma in 1585
: to let Protestants leave captured Antwerp
: and set up shop in Amsterdam;
: or we could start in 1595 with the creation
: of the first Amsterdam-based investment syndicate,
: the Company for Far Lands,
: which is what I call my Minecraft server.
: So the founder of the Company for Far Lands
: published this report called "The Itinerario"
: that excited dreams of vast wealth and spices
: from Southeast Asia.
: There's a key passage in the report
: that explains the riches available
: in the islands east of Malacca:
: "In this place of Sunda, there is much pepper,
: "and it is better than that of India or Malabar,
: "whereof there is so great quantity
: "that they could lade yearly from thence 500,000 pounds.
: "It hath likewise much frankincense, camphor,
: "and diamonds, to which men might very well traffic
: "without much impeachment,
: "for that the Portugals come not thither,
: "because great numbers of Java come themselves
: unto Malacca to sell their wares."
: You'll note there that the initial idea
: was to break into this already-existing trade system
: and displace the Portugals.
: So in the same way that trade in the western Indian Ocean
: was flourishing before the arrival of Europeans,
: the South China Sea region and eastern Indian Ocean
: was a trade hotbed, perhaps even more valuable
: because of the riches of China.
: And it seems that the Dutch originally planned to try
: to break into that existing trade network on equal terms,
: like, according to Jacob van Neck,
: the captain of the first successful expedition
: to Indonesia, the plan was, "not to rob anyone of their property,
: but to trade uprightly with all foreign nations."
: But pretty soon that idea of free trade gave way
: to the hard reality that competition meant,
: you know, lower prices,
: and by 1601 there were enough successful trade companies
: that the cost of buying spices in Indonesia was going up.
: And also there was suddenly tons of pepper in Amsterdam,
: which meant the price that could be charged for that pepper
: was going down-- clearly, something had to be done.
: Ideally that something
: would have been lower prices for everyone,
: and an efficient marketplace,
: but the something that happened instead was the V.O.C.
: Let's go to the Thought Bubble.
: In 1601 the United Provinces, aka the Netherlands,
: were governed nationally by a representative body
: that met at The Hague, called the States General--
: although each of the individual provinces
: was largely self-governing--
: and the leader of the States General
: was able to convince all the provinces
: to accept a single entity
: to monopolize the East Indies trade.
: This new company, the V.O.C.,
: was run by a 17-member board called the Heeren XVII,
: and these directors supposedly had control over a company
: that was chartered with the power to hire its own people
: and also to wage war.
: I say supposedly because, you know,
: it took a year for communications
: from the Netherlands to reach the East Indies,
: and another year for company officers to respond,
: so the V.O.C. basically operated as its own sovereign nation,
: with the power to use as much violence as it needed
: to build and maintain its trading power.
: Like according to author Stephen Bown,
: "The V.O.C. would essentially operate
: as a state within a state."
: And the V.O.C., together with its sister company
: the West India Company, did use violence,
: attacking Portuguese and Spanish settlements in Chile, Brazil,
: East and West Africa, the Persian Gulf,
: India, Sri Lanka, Indonesia, China, and the Philippines
: between 1602 and 1663,
: in what you could think of as an early world war.
: The V.O.C. was also different from a lot of corporations,
: because it was initially funded with 6.5 million guilders,
: about $100 million in today's money,
: and that capital was expected to fund business ventures
: for a long time going forward,
: not just for, like, one initial trade mission.
: And this long-term business thinking was unique,
: especially compared to the funding strategies
: of the V.O.C.'s biggest competitor,
: the British East India Company,
: and it reflected the advanced financial acumen
: of the Dutch model generally.
: Thanks, Thought Bubble.
: So, we've got this company
: that's basically also a country.
: And it's not a particularly good country,
: because it doesn't have, like,
: any of the responsibilities of government,
: nor does it have to answer to the people it's governing.
: All it has to do is make money.
: And it was really good at making money, like by 1648
: the United Provinces were in better financial shape
: than every other nation in Europe.
: You can tell this partly just by looking at interest rates.
: Now admittedly, interest rates are only one measure
: of financial health and power,
: but they're an important indicator, even today.
: So, Dutch businesses could borrow at a rate
: of four percent annual interest, and that's pretty cheap
: compared to the ten percent it cost corporations
: to borrow money in England
: or the 24.99 percent it costs me
: to borrow money on my credit card.
: And because Dutch debt was so much cheaper,
: they could invest two and a half times as much
: in pretty much anything than the English could,
: including, like, an army and a navy,
: and this gave the Dutch a huge head start over their rivals.
: So one reason the interest rates were low is because
: the companies were healthy and they tended to pay people back.
: But another is that normal Dutch people were already used
: to investing their money in bonds that had been issued
: for land reclamation projects,
: the famous dikes and windmills
: that turned land below sea level into fields
: where you could grow tulips, or maybe something else,
: but all they ever grow is tulips.
: Like according to business historian William Bernstein,
: the tradition of investing in bonds,
: "carried over into trade:
: "after 1600 Dutch citizens would consider it just as natural
: "to own a fractional share in a trading vessel
: to the Baltic or the Spice Islands."
: And a fractional share is another really interesting idea
: embraced by the Dutch,
: that allowed merchants to bear greater risks
: by purchasing smaller-percentage shares in business ventures.
: Like, it's much better to own a tenth of ten ships
: than it is to own all of one ship,
: because the loss of a single trading ship
: won't, like, ruin you.
: And Dutch businesspeople also enthusiastically invested
: in futures markets,
: guessing what the price of pepper would be
: six months or a year from now,
: and they created new financial instruments
: that could be bought and sold,
: and merchants purchased maritime insurance,
: which further lowered their risk.
: And lower risk means you could invest more of your capital
: until eventually you have a completely efficient market
: and everything is perfect-- until the 2008 crash.
: Wait, what were we talking about?
: The Dutch financial system and its corporations
: were simply better than their competitors,
: and that's why they seized the lion's share
: of the trading business-- but that isn't the whole story.
: Like, one reason the V.O.C. was so successful
: was government sponsorship and centralization.
: The V.O.C. had been chartered by the States General,
: and it could count on the Dutch government to back it up
: with money and military support.
: There's another benefit to being sponsored by your government,
: which is that it's very hard for competition to emerge,
: because it isn't sponsored by your government.
: For instance, in Indonesia
: the V.O.C. had a single governor general managing operations,
: while the British East India Company
: was more of like a collection of trading posts,
: each competing with each other for a share of the spices.
: Competition may bring down prices for consumers,
: but it also brings down profits for businesses.
: In 1605 the V.O.C. realized that
: if it really wanted to maximize its profits,
: it would need a monopoly of the world's spice trade,
: and to do that, they would need permanent bases in Indonesia.
: Initially, they got spices by trading for them
: with the people who grew them,
: especially with the inhabitants of the Banda Islands,
: which was the only place where nutmeg was grown.
: But again, like, trading in a fair and equitable manner
: is no way to maximize profits.
: So at first the Bandanese welcomed the Dutch,
: because they were much more laid-back in terms of religion
: than the Portuguese, but very quickly the Dutch tricked them
: into signing exclusive trade agreements,
: which the Bandanese were almost certain to violate,
: and then when they did violate them,
: (groans) it didn't go well.
: In 1609 the Bandanese were like,
: "No, you don't understand, like, we need trade for food,"
: and the Dutch were like, "But you promised!"
: And the islanders killed 47 Dutch soldiers and officers
: in the ensuing fight.
: The Dutch killed far more Bandanese,
: who were eventually subdued
: and agreed to a nutmeg monopoly with the Dutch,
: although they continued to secretly trade with the English.
: And after all this, by 1612,
: Jan Pieterszoon Coen became the dominant force
: in Dutch Indonesia.
: He was an accountant by training
: but also a ruthless military leader
: who is largely responsible
: for the Dutch monopoly of the spice trade
: and also for its really terrible relations with the British
: and also for, like, you know, certain crimes against humanity.
: Coen brought about the shift in V.O.C. policy,
: away from straightforward trade and toward monopoly
: of both shipping and production of spices.
: He also made it clear that
: this trade needed to be based on military force.
: He wrote, "Your Honors should know by experience
: "that trade in Asia must be driven and maintained
: "under the protection and favor of your Honors' own weapons,
: "and that the weapons must be paid for
: "by the profits from the trade,
: "so that we cannot carry on trade without war,
: nor war without trade."
: There is no trade without war, nor war without trade--
: that's something to think about.
: Anyway, Coen did make a lot of war,
: mostly on the English, despite the fact
: that the Netherlands and England were engaged
: in trade negotiations between 1613 and 1619.
: And in fact fighting between the V.O.C. and the English continued
: even after an agreement was signed.
: By using force-- which included capturing
: and torturing English traders--
: Coen was able to run off the English
: and secure the V.O.C. monopoly over the spice trade.
: With the English out of the picture,
: Coen could get down to the business of using violence
: to dominate not only the trade,
: but also the production of spices.
: His initial plan, to quote Stephen Bown,
: was to depopulate the island
: to replace their inhabitants with imported slave
: and indentured labor under V.O.C. control,
: and he proceeded to carry out
: what amounted to ethnic cleansing of the Banda Islands.
: In about 20 years, the Dutch managed to acquire
: an almost complete monopoly on cloves, nutmeg, and mace.
: In 1658 they added cinnamon by taking control of Sri Lanka.
: And after 1638 they became the only Europeans
: allowed to trade in Japan.
: Now, we tend to think that the heart of the spice trade
: was between Indonesia and Europe, but it really wasn't.
: Like, the V.O.C. capital at Batavia
: became the most important port in all of southeast Asia,
: where spices from Indonesia
: and gold and copper and silver from Japan
: and tea and porcelain and silk from China
: all passed through to India,
: where they were traded for cotton,
: which was used to buy more Asian goods.
: And that was the real money-maker for the V.O.C.
: By the middle of the 17th century,
: only the highest-value luxury goods from the region
: even made it to Europe,
: because that's where the margins were the highest.
: So the middle of the 17th century
: was the golden age for the Dutch;
: it was the one the brought us Rembrandt and Vermeer
: as well as all the wealth and finery
: that was depicted in their paintings.
: When you go to Amsterdam, which you should,
: and you walk along the canals
: and see the beautiful row houses,
: you'll note that many of them were built in the 17th century.
: And much of that was based on the success of the V.O.C.
: and the commerce in spices.
: But eventually Europeans' tastes changed,
: and the desire for nutmeg was supplanted
: by a hunger for sugar.
: Of course, the sugar trade would be known
: for its righteousness and fair trade--
: just kidding, it would be known for slavery.
: Also the woolens produced by the Dutch
: were being replaced by the market for cotton.
: Britain proved better positioned to dominate the trade
: in production in these new and more profitable commodities,
: and they eventually copied the centralized corporate governance
: and finance capitalism
: that had helped make the V.O.C. so successful.
: According to Stephen Bown,
: "Ultimately, maintaining the monopoly
: cost more than the spices were worth,"
: and the company went bankrupt in 1799.
: So the V.O.C. were pioneers of finance,
: and their relentless pursuit of profits
: made them the richest company in the 17th century,
: but we need to be careful about celebrating them
: as, like, a harbinger of modern capitalism.
: For one thing, it wouldn't have succeeded
: without government support,
: especially if it had engaged just in free trade.
: The V.O.C. had an army and a navy
: that it used to attack and intimidate,
: which is, you know, not free trade.
: I think there's a lot to take away
: from the story of the V.O.C.
: One thing that I like to remember is that
: this was all about nutmeg.
: We need to think carefully about what we value
: and why we value it and what we lose by valuing it,
: in the same way that I kind of wish people in Europe had
: about nutmeg in the 17th century.
: And the second thing is that
: while the V.O.C. did eventually disappear
: and its control over Indonesia changed into Dutch colonization,
: the V.O.C. provides a chilling example
: of what has happened in the past
: when corporations become more powerful than states.
: Good governments fulfill their responsibilities
: to the people they govern, and even bad governments, you know,
: are afraid of the people they govern,
: and neither of those things happened in Indonesia
: when it was under the control of the Dutch East India Company.
: Thanks for watching, I'll see you next week.
: Hi, Crash Course is filmed here
: in the Chad and Stacey Emigholz studio in Indianapolis,
: it's made with the help of these nice people,
: and we have a special announcement today
: that's very important,
: at least to the future survival of Crash Course.
: Thousands of you have helped us to keep Crash Course free,
: for everyone, forever, through your support at Subbable,
: but now Subbable has merged with Patreon.
: Patreon's an awesome company run by creators
: that allows you to be much more flexible
: in your support of Crash Course.
: So if you like Crash Course, and you want to join
: the incredibly generous people who make it possible,
: please click here, or else check out the link in the doobly-doo.
: You can get lots of great perks.
: And we, in turn, promise to use that money
: to make educational content online
: and not-- we promise--
: to control the spice trade in Indonesia.
: Thanks again for watching,
: and as we say in my hometown,
: don't forget to be awesome.