Posts Tagged ‘Stock Exchange’

Dutch Bavaria 17th CenturyWe have reached the early 1600’s on our journey in search of the Land Down Under…

No longer is Asia a lonely place for Europeans. The seas are gradually being tamed, but what of the locals and the competition?

The year 1602 is especially significant for it bought a new power into the Indian Ocean. And it came came forth with all the fury of an angry storm sweeping across the Indian Ocean..

This was the year the Dutch East India Company was created. This company was effectively granted what could be called “extra governmental authority”. It was a government within a government, created for national, political and economic purposes. Perhaps the first ever private army, fully owned and operated by the Dutch public.

The Dutch East India Company charter presented the company with a monopoly over trade in the Indian Ocean, with the rights to make war and peace, administer justice, coin money and levy troops. With huge profits to be made controlling the trade between East and West  (spices, opium, Chinese porcelain etc.) armed protection became a feature of the Dutch East India Company (and the British East India Company). Indeed,the company soon controlled an armed force that dwarfed the one back at home.

It was estimated that at its height the Dutch East India Company possessed some 50,000 civilian employees, an army of 40 warships, up to 20,000 sailors and perhaps 10,000 solders.

The Vereenigde Oost-Indische Compagnie, as it was known locally, was granted a 21 year monopoly on trade in the Indian Ocean. The rational for such a monopoly, it must be said, was sound. Single voyages were high risk, and such risks were best shared. Also, prices need to be managed. To much product at one time could see prices tumble. So supply and demand needed to be balanced.

So in 1602 stock was issued for the first time. This raised some 6.5m guilders from the public (a huge sum) with the company also able to issue bonds to finance its short term funding requirements (creating a template for the modern stock exchange) .

Within a few years Dutch Trading Posts began to be established across Asia. The first was in Indonesia.

By 1610 it was thought necessary to appoint a Governor General for Asia, and soon after the Dutch East India Company began to flex its muscle to achieve its economic ambitions.  In Jakarta they expelled Banten forces at gun point to establish Batavia and a centre for the companies activities in Asia. They also deported the native inhabitants of the Banda Islands (source of nutmeg) with an ambition of using slave labour.

By the mid 1600’s the Company was well on the way to dominating Indian Ocean trade, with trading posts established from Iran, to India, South Africa and Siam (Thailand), to name but a few…

With the scent of profit in the air, the waters north of the Great Southern Land were transforming into an economic and political battleground. Not a time for the faint hearted, nor for the locals, caught on the wrong side of the ledger…


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