Dutch East India Company

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The Dutch East India Company, created in 1602, was the first major multinational company and the first to make its accounts public. This large multinational corporation came to have a monopoly on Dutch trade in Asia.

The main activity of the Dutch East India Company was trade, although such was its power, that it had powers of a state, since it was empowered to declare war, negotiate treaties and even had the power to coin its own currency.

Creation, operation and commercial strategy

In 1602 the Dutch East India Company (Vereenigde Oostindische Compagnie or VOC in Dutch) was founded. The creation of this society responded to the need for intermediaries in trade between Europe and America. Such was its commercial power that for approximately 200 years, the Dutch East India Company carried out merchandise exchanges estimated at 2.5 million tons.

The great objective of the Dutch East India Company and other similar large corporations such as the British East India Company or the North Company was not to gain control of vast tracts of land, but to achieve a monopoly on trade. Among those who made up this type of society were great merchants, members of the nobility and high officials.

As in today's public limited companies, the capital of the Companies was divided into shares. In the case of the Dutch East India Company, the capital was determined by the Amsterdam Stock Exchange, which was precisely the first to operate with financial assets.

At its peak, this powerful corporation was valued at a total of 78 million guilders, which is now $ 7.9 trillion. So buoyant was this business that its shareholders received a dividend of 18%.

The Company was much more than a large multinational company, since its power attributed functions of a state to it. And it is that the Dutch corporation came to have its own army, which consisted of 10,000 men and 40 warships, not to mention a commercial fleet of 150 ships and a staff of 50,000 people at its service.

By maintaining a slight oversupply of spices, the Company managed to keep prices at low levels and thus drive away competition, to which it must be added that they managed to create their own markets in scenarios such as Japan, China or present-day Indonesia. However, the outbreak of war with England in 1672 was an obstacle to the trade in spices such as pepper and their price increased, which brought English competition into play.

The decline of the Dutch East India Company

Reasons for the downfall of the Dutch East India Company

  • Fall of trade in Asia, which caused the Company to limit itself to trading exclusively in those territories that were under its control.
  • The company ran all its operations from Batavia (Indonesia). The fact that all goods had to go through Batavia for redistribution ended up causing logistical problems.
  • Company employees were poorly paid, resulting in demotivation. All this led to corruption among its employees, who looked more for their personal interests than for the interests of the company.
  • High dividends were distributed as the Company's profits plummeted. When liquid assets dwindled, those who ran the corporation turned to short-term loans.

The excessive indebtedness of the Dutch East India Company and the armed conflicts with England reduced its fleet and the company ended up going bankrupt, being finally nationalized in 1796.

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