Vocabulary

 

tiny	arguably	invariably
tie (4)	swampy	backwater
empire	transform	powerhouse
vast	domain	in any case
fund	virtual (2)	on average
gain	repression	run into (2)
victim	break free	unwittingly
spice	seafaring	mercantile
slavery	back then	of their own
route	major (2)	coordinate
profit	seafaring	chapter (2)
absorb	cut off (2)	decentralize
voyage	smoothly	mission (2)
effort	conquest	expedition
fleet	establish	suffice to say
legacy	monopoly	permanent
various	patronage	band together
require	sovereign	bankruptcy
restore	fight off	motivation
hope	war torn	monopoly
grant	share (2)	permanent
occupy	negotiate	declare war
enforce	artery (2)	permission
mass	figure out	reclamation
crucial	sea-level	effectively (2)
claim	matters	publically-traded company
initial	guilders	pretty much
drain	equivalent	keep in mind
a third	favorable	circumstance
allow	sweep (2)	at the time
fabrics	kick out	establishment
local	slaughter	plantation
spread	exquisite	headquarters
silk	ambition	band together
dyke	funnel (2)	stock market
unique	capital (2)	out of the way
flat (2)	extremely	cornerstone
prone	flooding	profit margin
invade	existence	run at full force
suffer	scar (2)	oppression
chance	compete	resting station
land	territory	ingenious
ideal	stuck (2)	circumstance
end up	destroy	perfect storm
disrupt	influence	disastrous
status	discover

 
 
 
 

Video

 

 
 
 
 

Transcript

 
The Netherlands: a tiny European country that is actually one of the wealthiest and most important economic centers of the continent.

The surprising success of the Dutch is invariably tied to one company, which was arguably the greatest and most successful one in history.

Today, we’ll see how the Netherlands transformed from swampy backwater into a global trading empire, thanks to the Dutch East India Company.

The Netherlands today might be an economic powerhouse, but back in the sixteenth (16th) century, well, it wasn’t doing too great.

To start things off, it wasn’t even independent: instead it was under the domain of the Spanish Empire.

As one of the earliest European colonizers, the Spanish Empire controlled vast territories across the world and used the money it gained from slavery and trade to fund numerous wars of conquest and suppression.

The Netherlands ultimately became victim of one such war: they had become part of the Empire unwittingly due to marriage, and spent the next eighty (80) years trying to break free.

But the Dutch independence effort ran into a big problem very early on. You see, the Dutch were a seafaring people: fishing and mercantile shipping was their thing — and they had been doing that for centuries.

The main goods they shipped were spices coming from the Far East; but this was before the Dutch had any colonies of their own.

Back then, Portugal held a virtual monopoly on the spice trade, controlling all the major trade routes to Asia and back.

Thus, what the Dutch did was to buy all their spices from Lisbon, and then ship them around Europe, to sell them at a profit.

But Portugal was absorbed into the Spanish Empire in 1580 and, of course, the first thing the Spanish did was to close off Lisbon to the Dutch merchants.

Suddenly, the main artery of the Dutch economy had been cut off, and there was really only one thing the Dutch merchants could do: they had to sail to the Far East and build their own trading network.

At first, this effort was very decentralized: merchants from various Dutch cities would establish companies for single voyages.

Essentially, they would fund a few ships and their sailors, and they would send them off to find a new trade route to the Far East.

Some missions were successful, and came back with lots of spices, but most did not go very smoothly.

During the first six years of the expedition effort, a total of sixty-five (65) ships were sent out. One in ten never made it back. And those that did, came back with only a third of their crew on average.

Suffice to say, being a sailor in these early fleets wasn’t a very safe job. Nevertheless, these early voyages gave the Dutch the knowledge and experience on how to establish a more permanent trading network.

But coordinating individual merchants, each of whom was competing with the rest, is difficult, to say the least. And with the English, Spanish and Portuguese all trying to create their own trading empires, the Dutch knew that they had to band together.

In 1602, under the patronage of the Prime Minister of Holland, the various expedition companies united into a single company with vast sovereign power.

It’s name wasn’t the Dutch East India Company, even though that’s how we call it today. It was actually called the United East India Company, or VOC for short. And its creation marked a new chapter n the history of the Netherlands.

The political motivations were clear: the Dutch needed a new economic engine to fight off the Spanish and to restore their war torn country.

The VOC was their only hope, which is why it was granted not only a monopoly on trade, but also the ability to train its own army, to negotiate and declare war, to occupy land, and even to enforce slavery.

But just getting permission to do all these things meant nothing if the VOC couldn’t actually do them, and to conquer the Far East would require a lot of capital.

The VOC, however, figured out an ingenious solution, which would later on become the cornerstone of modern capitalism.

In the center of Amsterdam, the VOC built a trading house, where every Dutch citizen could go and buy shares of the company, effectively giving the VOC money now in exchange for a claim of its profits in the future.

The VOC had effectively created the world’s first stock market, and the VOC itself had become the first publically-traded company in history.

Pretty much every rich main in the Netherlands invested in the VOC, and even many immigrants did so.

In total, the VOC’s initially public offering raised over six million guilders, which is equivalent to a hundred and ten million dollars, ($110 million) today.

And keep in mind, this is coming from a country that’s half-occupied by Spain and whose economy had been in the drain for a decade.

Of course, circumstances were favorable to the Dutch: the Spanish Empire was at war with England at the time, allowing the Dutch to sweep into the Far East, and kick out the Portuguese establishment.

The first victim of the VOC’s colonial ambitions was Indonesia: the Dutch conquered modern-day Jakarta in 1611, slaughtering the locals and building vast spice plantations on nearby islands.

With the island of Java as it headquarters, the VOC spread throughout the Far East.

Their factories in India produced exquisite silks and fabrics, which the VOC then shipped to Japan to trade for their famous and crucial supply of silver.

The VOC got silk from China as well, which also produced valuable porcelain.

What matters though, is that the profit margins the VOC earned by monopolizing these trade routes were as high as fifteen hundred percent (1,500%).

And all of this money was, of course, being funneled into the Netherlands.

They finally won their independence in 1648. And with that out of the way, the VOC’s profits were invested in one type of project unique to the Netherlands: land reclamation.

You see, the Netherlands is extremely flat and is below sea-level, which makes it prone to flooding; but if you build dykes and keep the water out, you can turn swamps into farmland.

And that’s exactly what the Dutch did with their VOC profits.

Just by looking at the geography, you can tell when the VOC was running at full force.

In total, over one-and-a-half thousand (1,500) ships sailed for the VOC during its two centuries of existence.

And its influence is still felt to this day. Many former Dutch colonies, for example, still bear the scars of the oppression they suffered.

But the VOC has other interesting legacies that few people know.

Cape Town, for instance, started out as a VOC resting station in 1652.

A decade earlier, a VOC merchant discovered two big land masses south of the Dutch Indies. He called them New Holland and New Zealand, and you can guess which name stuck and which one didn’t.

But in any case, just as the ideal set of circumstances gave the Dutch the opportunity to become a colonial empire, a perfect storm in the late eighteen (18th) century ended up destroying the VOC.

To start things off, the Dutch lost a disastrous war against the British in 1784, which disrupted the VOC’s network in Asia.

Then just a decade later, the newly-created French Republic invaded the Netherlands and conquered them.

With the British attacking in Asia, and the French attacking at home, the VOC really had no chance, and officially went into bankruptcy in 1799.

Without the spice trade, the Netherlands lost their status as a global power.

 

 

Questions

 
The Netherlands, Holland. Because the Netherlands is a small country, its economy, international trade and political clout are insignificant. Is this entirely true, mostly true, partially true, in the middle, yes and no, largely false, entirely false, it depends?

Belgium, Flanders, Walloon. Has the Netherlands always been a prosperous, wealthy nation? Which one enterprise played a big, decisive role?

England, Britain. The Dutch have always had a colonial empire. They were the first nation in Europe to create a colonial empire. Is this right or wrong? What was its status in the 1500s?

Portugal. What prompted them to begin long-distance trade and exploration?

Spain. How did the VOC or United East India Company (Dutch East India Company) come into being?

France. The VOC was largely financed by the Dutch King and Queen. Is this correct or incorrect?

Italy. Was the VOC able to establish trade and colonies in Asia entirely on its own? Were their methods (entirely) benevelant and peaceful?

Denmark. What were some its achievements?

Norway. Did the Dutch spend most of their profits from commerce building magnificent palaces, buildings and monuments?

Sweden. The Dutch East India Company declined and fell largely due to native uprisings and revolts. Yes or no?
 
 
 
New Netherlands (New York, NJ). I am from the Netherlands. I have lived in the Netherlands. I have visited the Netherlands. Yes or no?

Indonesia. Is there much trade and partnership between your country and the Netherlands?

Surinam. What do you associate with the Netherlands? What comes to mind when you think of the Netherlands? What are some stereotypes of the Netherlands?

Cape Colony, Cape Town, South Africa. Should the Netherlands be a role-model for other countries to follow?

Ceylon, Formosa. What will happen to the Netherlands in the future?

Aruba, Curaçao, Sint Maarten. (Dutch) colonialism was good and beneficial. Do you completely agree, mostly agree, yes and no, in the middle, it depends, mostly disagree or completely disagree?