Dutch East India Company

The Dutch East India Company (abbreviated to^[각주:1] VOV in Dutch), was a publicly tradable corporation that^[각주:2] was founded in 1602 and became defunct in^[각주:3] 1799. It was originally established as a chartered company to^[각주:4] trade with India and Indianized^[각주:5] Southeast Asian countries when the Dutch government granted it a 21-year monopoly on^[각주:6] the Dutch spice trade. The VOC was an early multinational corporation in^[각주:7] its modern sense^[각주:8]. In the early 1600s, by widely issuing bonds^[각주:9] and shares of stock to the general public^[각주:10], the VOC became the world's first formally listed public company^[각주:11]. In other words, it was the first corporation to be ever actually listed on an official stock exchange^[각주:12]. The VOC was influential in the rise of corporate-led globalization in the early modern period. With its pioneering^[각주:13] institutional innovations^[각주:14] and powerful roles in world history, the company is considered by many to be the first major modern global corporation, and was at one stage the most valuable corporation ever. 

In 1619 it forcibly established a central position in^[각주:15] the Indonesian city of Jayakarta, changing the name to Batavia (modern-day Jakarta). Over the next two centuries the Company acquired additional ports as trading bases and safeguarded their interests by^[각주:16] taking over surrounding territory^[각주:17]. To guarantee its supply it established positions in many countries and became an early pioneer of outward^[각주:18] foreign direct investment^[각주:19]. In its foreign colonies the VOC possessed quasi-governmental powers, including the ability to wage war, imprison^[각주:20] and execute convicts^[각주:21], negotiate treaties^[각주:22], strike its own coins^[각주:23], and establish colonies. With increasing importance of foreign posts, the company is often considered the world's first true transnational corporation. Along with the Dutch West India Company (WIC/GWIC), the VOC became seen as the international arm of the Dutch Republic and the symbolic power of the Dutch Empire. To further its trade routes, the VOC-funded exploratory voyages such as those led by WIllem Janszoon, Henry Hudson and Abel Tasman who revealed largely unknown landmasses to the western world. In the Golden Age of Netherlandish cartography (c. 1570s-1670s), VOC navigators and cartographers helped shape geographical knowledge of the modern world as we know them today. 

Socio-economic changes in Europe, the shift in power balance, and less successful financial management resulted in a slow decline of the VOC between 1720 and 1799. After the financially disastrous Fourth Anglo-Dutch War (1780-1784), the company was first nationalized in 1796, and finally dissolved in 1799. All assets were taken over by the government with VOC territories becoming Dutch government colonies. 

Historical roles and legacy

With regard to the VOC's importance in global corporate history, Australian journalist Hugh Edwards (1970) writes, "The Vereenigde Oost-Indische Compagnie was the most powerful single commercial concern the world has ever known. General Motors, British Tobacco, Ford, The Shell Company, Mitsubishi, Standard Oil - and of the other giant holdings of today are on the level of village bootmakers compared with the might and power and influence once wielded by the VOC." In his book Amsterdam: A History of the World's Most Liberal City (2013), Russell Shorto summarizes the VOC's greatness: "Like the oceans it mastered, the VOC had a scope that is hard to fathom. One could craft a defensible argument that no company in history has had such an impact on the world. Its surviving archives - in Cape Town, Colombo, Chennai, Jakarta, and The Hague - have been measured (by a consortium applying for a UNESCO grant to preserve them) in kilometers. In innumerable ways the VOC both expanded the world and brought its far-flung regions together. It introduced Europe to Asia and Africa, and vice versa (while its sister multinational, the West India Company, set New York City in motion and colonized Brazil and the Caribbean Islands). It pioneered globalization and invented what might be the first modern bureaucracy. It advanced cartography and shipbuilding. It fostered disease, slavery, and exploitation on a scale never before imaged. 

A pioneering early model of the multinational corporation in its modern sense, the company is also considered to be the worlds first true transnational corporation. In the early 1600s, the VOC became the world's first formally listed public company because it was the first corporation to be ever actually listed on a formal stock exchange. The VOC had a massive influence on the evolution of the modern corporation by creating an institutional prototype for subsequent large-scale business enterprises (multinational / transnational corporations in particular) and their rise to become a highly significant socio-politico-economic force of the modern world as we know it today. In many respects, modern-day publicly-listed global companies (including Forbes Global 2000 companies) are all the "descendants" of a business model pioneered by the VOC in the 17th century. During its golden age, the company played crucial roles in business, financial, socio-politico-economic, military-political, diplomatic, ethnic, and exploratory maritime history of the world. In the early modern period, the VOC was also the driving force behind the rise of corporate-led globalization, corporate power, corporate identity, corporate culture, corporate social responsibility, corporate ethics, corporate governance, corporate finance, and finance capitalism. 

With its pioneering institutional innovations and powerful roles in world history, the company is considered by many to be the first major, first modern, first global, most valuable, and most influential corporation ever seen. The VOC was also arguably the first historical model of the megacorporation. 

Institutional innovations and impacts on modern business practices and financial system

The VOC played a crucial role in the rise of corporate-led globalization, corporate governance, corporate identity, corporate social responsibility, corporate finance, modern entrepreneurship, and financial capitalism. During its golden age, the company made some fundamental institutional innovations in economic and financial history. These financially revolutionary innovations allowed a single company (like the VOC) to mobilize financial resources from a large number of investors and create ventures at a scale that had previously only been possible for monarchs. In the words of Canadian historian and sinologist Timothy Brook, "the Ductch East India Company - the VOC, as it is known - is to corporate capitalism what Benjamin Franklin's kite is to electronics: the beginning of something momentous that could not have been predicted at the time." The birth of the VOC is often considered to be the official beginning of the corporate globalization era with the rise of large-scale business enterprises (multinational/transnational corporations in particular) as a truly formidable socio-politico-economic force that significantly affect humans lives in every corner of the world today. As the world's first publicly traded company and first listed company (the first company to be ever listed on an official stock exchange), the VOC was also the first permanently organized limited-liability joint-stock company, with a permanent capital base. The VOC shareholders were the pioneers in laying the basis for modern corporate governance and corporate finance. The VOC is often considered as the precursor of modern corporations, if not the first truly modern corporation. It was the VOC that invented the idea of investing in the company rather than in a specific venture governed by the company. With its pioneering features such as corporate identity (first globally recognized corporate logo), entrepreneurial spirit, legal personhood, transnational (multinational) operational structure, high and stable profitability, permanent capital (fixed capital stock), freely transferable shares and tradable securities, separation of ownership and management, and limited liability for both shareholders and managers, the VOC is generally considered a major institutional breakthrough and the model for large corporations that now dominate the global economy. 

The VOC was the driving force behind the rise of Amsterdam as the first modern model of (global) international financial centres that now dominate the global financial system. During the 17th century and most of the 18th century, Amsterdam had been the most influential and powerful financial centre of the world. The VOC also played a major role in the creation of the world's first fully functioning financial market, with the birth of a fully fledged capital market (including the bond market and the stock market) to finance companies (such as the VOC and the WIC). It was in the 17th-century Dutch Republic that the global securities market began to take on its modern form. And it was in Amsterdam that the important institutional innovations such as publicly traded companies, transnational corporations, capital markets (including bond markets and stock markets), central banking system, investment banking system, and investment funds (mutual funds) were systematically operated for the first time in history. In 1602 the VOC established an exchange in Amsterdam where VOC stock and bonds could be traded in a secondary market. The VOC undertook the world's first recorded IPO in the same year. The Amsterdam Stock Exchange was also the world's first full-fledged stock exchange. While the Italian city-states produced first formal bond markets, they didn't develop the other ingredient necessary to produce a fully fledged capital market: the formal stock market. The Dutch East India Company (VOC) became the first company to offer shares of stock. The dividend averaged around 18% of capital over the course of the company's 200-year existence. The launch of the Amsterdam Stock Exchange by the VOC in the early 1600s, has long been recognized as the origin of 'modern' stock exchanges that specialize in creating and sustaining secondary markets in the securities (such as bonds and shares of stock) issued by corporations. Dutch investors were the first to trade their shares at a regular stock exchange. The process of buying and selling these shares of stock in the VOC became the basis of the first official (formal) stock market in history. It was in the Dutch Republic that the early techniques of stock-market manipulation were developed. The Dutch pioneered stock futures, stock futures, stock options, short selling, bear raids^[각주:24], debt-equity swaps^[각주:25], and other speculative instruments. Amsterdam businessman Joseph de la Vega's Confusion of Confusions (1688) was the earliest book about stock trading. 

Impacts on social, economic, political, and military history of the Netherlands

In the early modern period, the VOC was the largest private employer in the Low Countries. The company was a major force behind the financial revolution and economic miracle of the nascent Dutch Republic in the 17th century. During their Golden Age, the Dutch Republic in the 17th century. During their Golden Age, the Dutch Republic (or the Northern Netherlands), as the resource-poor and obscure cousins of the more urbanized Southern Netherlands, rose to become the world's leading economic and financial superpower. Despite its lack of natural resources (except for water and wind power) and its comparatively modest size and population, the Dutch Republic dominated global market in many advanced industries such as shipbuilding, shipping, water engineering, printing and publishing, map making, pulp and paper, lens-making, sugarcane refining, overseas investment, financial services, and international trade. The Dutch Republic was an early industrialized nation-state in its Golden Age. The 17th-century Dutch mechanical innovations/inventions such as wind-powered sawmills and Hollander beaters helped revolutionize shipbuilding and paper (including pulp) industries in the early modern period. The VOC's shipyards also contributed greatly to the Dutch domination of global shipbuilding and shipping industries during the 1600s. "By seventeenth century standards," as Richard Unger affirms, Dutch shipbuilding "was a massive industry and larger than any shipbuilding industry which had preceded it." By the 1670s the size of the Dutch merchant fleet probably exceeded the combined fleets of England, France, Spain, Portugal, and Germany. Until the mid-1700s, the economic system of the Dutch Republic (including its financial system) was the most advanced and sophisticated ever seen in history. From about 1600 to 1720, the Dutch had the highest per capita income in the world, at least double that of neighbouring countries at the time. However, in a typical multicultural society of the Netherlands, the VOC's history (and especially its dark side) has always been a potential source of controversy. In 2006 when the Dutch Prime Minister Jan Pieter Balkenende referred to the pioneering entrepreneurial spirit and work ethics of the Dutch people and Dutch Republic in their Golden Age, he coined the term "VOC mentality". It unleashed a wave of criticism, since such romantic views about the Dutch Golden Age ignores the inherent historical associations with colonialism, exploitation and violence. Balkenede later stressed that "it had not been his intention to refer to that at all". But in spite of criticisms, the "VOC-mentality", as a characteristic of the selective historical perspective on the Dutch Golden Age, has been considered a key feature of Dutch cultural policy for many years. 

Roles in the history of the global economy and international relations

The VOC was a transcontinental employer and an early pioneer of outward foreign direct investment at the dawn of modern capitalism. In his book The Ecology of Money: Debt, Growth, and Sustainability (2013), Adrian Kuzminski notes, "The Dutch, it seems, more than anyone in the West since the palmy days of ancient Rome, had more money than they knew what to do with. They discovered, unlike the Romans, that the best use of money was to make more money. They invested it, mostly in overseas ventures, utilizing the innovation of the joint-stock company in which private investors could purchase shares, the most famous being the Dutch East India Company." Wherever Dutch capital went, there urban features were developed, economic activities expanded, new industries established, new jobs created, trading companies operated, swamps drained, mines opened, forests exploited, canals constructed, mills turned, and ships were built. In the early modern period, the Dutch were pioneering capitalists who raised the commercial and industrial potential of underdeveloped lands whose resources they exploited. This paved the way to the Dutch Republic's prosperity, as it could awaken socio-economic dynamism elsewhere. 

The VOC existed for almost 200 years from its founding in 1602, when the States-General of the Netherlands granted it a 21-year monopoly over Dutch operations in Asia until its demise in 1796. During those two centuries (between 1602 and 1796), the VOC sent almost a million Europeans to work in the Asia trade on 4,785 ships, and netted for their efforts more than 2.5 million tons of Asian trade goods. By contrast, the rest of Europe combined sent only 882,412 people from 1500 to 1795, and the fleet of the Englis (later British) East India Company, the VOC's nearest competitor, was a distant second to its total traffic with 2,690 ships and a mere one-fifth the tonnage of goods carried by the VOC. The VOC enjoyed huge profits from its spice monopoly through most of the 17th century. By 1669, the VOC was the richest company the world had ever seen, with over 150 merchant ships, 40 warships, 50,000 employees, an private army of 10,000 soldiers, and a dividend payment of 40% on the original investment. 

In terms of military-political history, the VOC, along with the Dutch West India Company (WIC/GWIC), was seen as the international arm of the Dutch Republic and the symbolic power of the Dutch Empire. The VOC was historically a military-political-economic complex rather than a pure trading company (or shipping company). The government-backed but privately financed company was effectively a state in its own right, or a state within another state. For almost 200 years of its existence, the VOC was a key non-state geopolitical player in Eurasia. The company was much an unofficial representative of the States General of the United Provinces in foreign relations of the Dutch Republic with many states, especially Dutch-Asian relations. The company's territories were even larger than some countries. 

The VOC had seminal influences on the modern history of many countries and territories around the world such as New Netherland (New York), Indonesia, Malaysia, India, Sri Lanka, Australia, New Zealand, South Africa, Mauritius, Taiwan, and Japan. 

VOC world as a knowledge network in the Dutch maritime world-system

During the Dutch Golden Age, the Dutch - using their expertise in doing business, cartography, shipbuilding, seafaring and navigation - traveled to the far corners of the world, leaving their language embedded in the names of many places. Dutch exploratory voyages revealed largely unknown landmasses to the civilized world and put their names on the world map. The Dutch came to dominate the map-making and map printing industry by virtue of their own travels, trade ventures, and widespread commercial networks. As Dutch ships reached into the unknown corners of the globe, Dutch cartographers incorporated new geographical discoveries into their work. Instead of using the information themselves secretly, they published it, so the maps multiplied freely. For almost 200 years, the Dutch dominated world trade. Dutch ships carried goods, but they also opened up opportunities for the exchange of knowledge. The commercial networks of the Dutch transnational companies, i.e.^[각주:26] the VOC and West India Company (WIC/GWIC), provided an infrastructure which was accessible to people with a scholarly interest in the exotic world. The VOC's bookkeeper Hendrick Hamel was the first known European/Westerner to experience first-hand and write about Joseon-era Korea. In his report (published in the Dutch Republic) in 1666 Hendrick Hamel described his adventures on the Korean Peninsula and gave the first accurate description of daily life on Koreans to the western world. The VOC trade post on Dejima, an artificial island off the coast of Nagasaki, was for more than two hundred years the only place where Europeans were permitted to trade with Japan. Rangaku (literally 'Dutch Learning', and by extension 'Western Learning') is a body of knowledge developed by Japan through its contacts with the Dutch enclave of Dejima, which allowed Japan to keep abreast of Western technology and medicine in the period when the country was closed to foreigners, 1641-1853, because of the Tokugawa shogunate's policy of national isolation. 

1. abbreviate ; [타동사][VN] [주로 수동태로] ~ sth (to sth) (단어・구 등을) 줄여 쓰다[축약하다] ;; 미국∙영국 [ə|bri:vieɪt] [본문으로]
2. tradable ; [형용사] (전문 용어) 쉽게 매매할 수 있는, 시장성이 높은 ;; 참고 ; marketable [본문으로]
3. defunct ; 법, 문어 1. 죽은, 고인이 된(dead, deceased) ;; 2. 없어져 버린, 현존하지 않는(extinct) ;; 3. 효력을 잃은, 폐지된 [본문으로]
4. chartered ; [명사 앞에만 씀] 1. (英) 면허[인가] 받은, 공인된 [본문으로]
5. indianize ; 1. <성격·습관·외모 등을> 인도인화하다 [본문으로]
6. grant ; 1. [흔히 수동태로] ~ sth (to sb/sth) | ~ (sb) sth (특히 공식적・법적으로) 승인[허락]하다 ;; 2. (내키지 않지만) 인정하다 [본문으로]
7. multinational corporation ; [명사] (경영) 다국적 기업[회사](MNC). [본문으로]
8. modern sense ; 현대적 의미 [본문으로]
9. bond ; 6. (금융) 공채(公債), 사채(社債); 채권(債券)(무담보 채권은 debenture). [본문으로]
10. general public ; (the general public) 일반 대중, 공중(公衆). [본문으로]
11. public company ; (약어:plc, PLC) (주식) 공개 기업 ;; opp. private company [본문으로]
12. stock exchange ; (the stock exchange) 증권 거래소; 주식 중매인 조합; 주식 거래. [본문으로]
13. pioneering ; [형용사] (주로 명사 앞에 씀) 개척[선구]적인 [본문으로]
14. institutional ; 1. 제도(상)의, 규정의; 관례적인, 습관상의. ;; 5. 사회[자선, 교육] 사업적인. [본문으로]
15. central ; 1. 중심되는, 가장 중요한 ;; 3. (지역・사물의) 중심[중앙]인 ;; 4. (거리상으로) 중심가의 [본문으로]
16. safeguard ; [동사] ~ sth/sb (against/from sth) | ~ against sth (격식) (분실・손상 등에 대비하여) 보호하다 [본문으로]
17. surrounding ; [형용사] (명사 앞에만 씀) 인근의, 주위의, 부근의, 근처의; 둘러싸는 [본문으로]
18. outward direct investment ; An outward direct investment (ODI) is a business strategy in which a domestic firm expands its operations to a foreign country. This can take the form of a green field investment, a merger/acquisition or expansion of an existing foreign facility. Employing outward direct investment is a natural progression for firms if their domestic markets become saturated and better business opportunities are available abroad. [본문으로]
19. foreign direct investment ; Broadly, foreign direct investment includes "mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations, and intra company loans". In a narrow sense, foreign direct investment refers just to building new facility, and a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor.[2] FDI is the sum of equity capital, long-term capital, and short-term capital as shown in the balance of payments. FDI usually involves participation in management, joint-venture, transfer of technology and expertise. Stock of FDI is the net (i.e., outward FDI minus inward FDI) cumulative FDI for any given period. Direct investment excludes investment through purchase of shares FDI, a subset of international factor movements, is characterized by controlling ownership of a business enterprise in one country by an entity based in another country. Foreign direct investment is distinguished from foreign portfolio investment, a passive investment in the securities of another country such as public stocks and bonds, by the element of "control". According to the Financial Times, "Standard definitions of control use the internationally agreed 10 percent threshold of voting shares, but this is a grey area as often a smaller block of shares will give control in widely held companies. Moreover, control of technology, management, even crucial inputs can confer de facto control." [본문으로]
20. imprison ; [타동사][VN] [흔히 수동태로] 투옥하다, 감금하다 [본문으로]
21. convict ; 1. 유죄로 입증된 피고, 기결수; 수형자(受刑者), 죄수 [본문으로]
22. treaty ; (pl. -ies) 조약 [본문으로]
23. strike[mint] coins ; 화폐를 주조하다, 만들다 [본문으로]
24. bear raids ; [명사] (주식) 매도 사태(약세의 투기가 그룹이 시세를 떨어뜨리고 팔아서 강세측을 공격해 팔도록 몰아세우는 것) [본문으로]
25. debt-equity swap ; [명사] (금융) (대외) 채무의 주식화. [본문으로]
26. i.e. ; [약어] 즉(라틴어 id est에서) ;; 미국·영국 [|aɪ|i:] [본문으로]