Going Dutch_ How England Plundered Holland's Glory - Lisa Jardine [152]
The beginnings of those distinctive and much-emulated Dutch mechanisms governing trade and finance are to be found in arrangements put in place in the founding charter of the Dutch East India Company (VOC). ‘The origin of modern stock exchanges that specialise in creating and sustaining secondary markets in the securities issued by corporations goes back to the formation of the Dutch East India Company in the year 1602.’ So writes one of the foremost authorities on Anglo–Dutch economic history.23
The immediate motive for the formation of the VOC was twofold: to avoid the strain on financial resources caused by competition between commercial trading ventures operating independently, and to consolidate profit in order to finance the military objectives necessary to withstand the expansionist ambitions of France and Spain.24 The founders of the VOC took advantage of the fact that a willingness to pool resources against weighty outside odds was a deeply ingrained Dutch habit. Taxation on a per capita basis, to raise the money to repair dykes, or to secure vulnerable borders against foreign aggressors, was a standard Dutch practice – one for which successive English administrations expressed envy down to 1688, after which similar taxes were levied in England.
Bottle cabinet containing decorated Japanese porcelain bottles, decorated with tendril and plant motifs, each base marked with the initials of the Dutch East India Company.
Economic historians today on the whole agree that the activities of the VOC and its English competitor, the East India Company, in the seventeenth century established the conditions for and management of international trade which have endured to the present day. Fundamental to these were the innovative arrangements for distributing risk evenly among investors.
Under the charter of the VOC, the States General empowered the new company to build forts, maintain armies, and conclude treaties with the rulers of the Asian territories with which it traded. To this end, the charter of the Company provided for a venture which would continue for twenty- one years, with a financial accounting only at the end of each decade (instead of following each completed voyage). All investors would be responsible for the Company’s debts, in proportion to their investment. This made the VOC what we now call a limited liability company.
It was further decided that the capital invested at the beginning of the venture would be fixed, and that investors who wished to liquidate their interest in the VOC could sell their share to a buyer at the Bourse, as if it were a physical commodity. In the early years, a large number of small founding shareholders exercised this option.25
While the WIC had sole charge of the New Netherland colony, and administered it on behalf of the States General, until forced to relinquish some control to local residents, the VOC was enormously successful in trade in Indonesia, the Moluccas and around the coast of India, where it maintained virtual commercial monopolies against the English and Portuguese who also traded in the region. At the end of its first ten-year trading period, during which the original trading capital had been enlarged by more than 40 per cent, dividends were paid to shareholders in the form of a distribution of pepper and mace. By the Company’s calculation, the value of the distributed spices amounted to a 125 per cent dividend – though many shareholders doubted whether they could actually realise that return in cash. Later returns settled down, and after 1650 they ran at about 4 per cent per annum.
After the mid-seventeenth century the VOC’s importance to the