The Dutch East India Company: A History From Beginning to End (The East India Companies Book 2) by Hourly History

Author:Hourly History [History, Hourly]
Language: eng
Format: epub
Publisher: Hourly History
Published: 2017-10-17T00:00:00+00:00

Chapter Five

Reorientation and the Expansion Age

“Competition is always a good thing. It forces us to do our best. A monopoly renders people complacent and satisfied with mediocrity.”

—Nancy Pearcey

Like every Golden Age and empire before them, the VOC and the Dutch Empire would face struggles that would force them to readjust their policies to maintain their momentum. By 1670 the VOC had experienced the greatest stable profitability that the world had ever seen. Two major events began to press on the brakes; one was that the exorbitantly profitable trade from Japan started to wither. Simultaneously, the silk trade in China began to shrink due to political upheaval.

This issue with the silk trade started in 1666, and though the VOC quickly resourced their silk supply from Bengal, it was not enough to detour the changing climate in profitability from Japan. The silver and gold that had been so useful in procuring the myriad of other Asian resources had come from Japan. However, growing tensions and new policies from the Shogun in Japan demanded a limit to the export of such precious metals. Because this had become the beginning link in the Asiatic trade system, it caused the VOC strain that they hadn't faced before. Without the flow of precious metals from Japan, the trade network they had set up became more complicated.

Further tensions from conflicts like the Third Anglo-Dutch War threatened and stalled trade with Europe for a time, causing prices of pepper to soar. For the entire time that the Dutch had maintained a monopoly over the pepper trade, they had artificially kept the price low enough to detour interest from other parties in entering the market. This move to keep stable long-term profits over short-term gains was a boon to the Dutch in the pepper trade. However, when the war caused the pepper price to spike, it encouraged the English East India Company to pursue a niche in the market.

After 1672, the English East India Company or EIC made inroads into the pepper trade, but a price-war ensued between the two, and due to the VOC’s larger financial resources, they were able to bankrupt the pepper trade of the EIC temporarily. While this seemed like a victory in the short-term, it enticed a number of other companies to attempt to break into the VOC’s markets. Both the French and the Danish East India Company decided to move in and add pressure.

At the same time, the demand for pepper in Europe began to decrease drastically. In addition, negotiations with the local ruler in Bantam forced the VOC to abandon its pepper emporium there in 1684. The decline in demand and profitability of the pepper market caused an audit within the VOC. It became clear that maintaining the monopoly through military force would not be worth the cost. Thus, the lucrative pepper monopoly folded. Though the VOC attempted to improve their position by boxing out their competitors on the Malabar Coast, the long-term strategy failed when political pressure from the EIC pushed the sultan to rescind on the treaty the VOC had forced on him.

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