The Most Powerful Corporation In History

A+Dutch+East+India+company+ship+sailing+in+turbulent+waves.

via The Japan Times

A Dutch East India company ship sailing in turbulent waves.

The Trade Federation from Star Wars seems unrealistic, as no company would use military force to advance commercial interest.  Similarly, MegaCorp from Cyberpunk also seems impractical because a corporation can’t take over and run an entire country.  These powers seem impossible for a company to achieve these days.  Modern-day corporations like Google and Apple appear to have way too much power, but one company in history was on a whole different level.  This company is the Vereenigde Oost-Indische Compagnie VOC, or the Dutch East India Company.  

During the creation of the Dutch East India Company, the Netherlands was a country of about 1.5 million people living in 16,040 square miles, a little larger than the state of Maryland with the population of San Diego.  The Dutch Republic had been at war with Spain over its independence. With the unification of Portugal under the Spanish crown, Dutch merchants began to challenge the Portuguese monopoly in Asia since Netherland was now at war with them.  These voyages were quite successful, with some ships returning a 400% profit to their investors.  In 1601, the State General, or head of the Dutch government, compromised on a single company to monopolize the East India trade and stabilize profits.  The Dutch East India Company, or the VOC, was given a 21-year monopoly on the Dutch spice trade.  It was also given the power to wage war, imprison and execute convicts, enforce laws, negotiate treaties, strike its coins, and establish colonies.  This power made the VOC act as a “state within a state.”  Unlike Jeff Bezos, who started his company with $300,000 in a rented garage, the VOC was initially funded with 6.5 million guilders, which is about $100 million in today’s money.  This amount of money was expected to fund business ventures for a long time going forward.  The creation of the VOC helped hundreds of investors to fund multiple ships simultaneously to minimize the risk of losing all of their money if one ship failed to make it.  The VOC succeeded in colonizing Indonesia and trading along with the Malabar Coast in India, Sri Lanka, and Cape of Good Hope in South Africa. They were the only ones allowed to trade with Japan until 1853 when America forced them to open up.  They also later created the world’s first central bank and stock exchange.  The VOC would later be listed as the first-ever public company or a company whose ownership is organized via shares of stock.  By 1648, the Netherlands was in better financial shape than any other country in Europe because of the VOC.  The interest rate for Dutch businesses was 4% annual interest, which is cheap compared to the 15% it cost to borrow money from a credit card.  At the height of their power, they were able to almost completely monopolize cloves, nutmeg, mace, and cinnamon.  Monopolizing these products allowed them to charge any price they wanted since they were the only ones on the market who sold these products.  

At its peak, the VOC had over 200 merchant ships, each costing an estimated $300,000 and more money to maintain them.  It had a navy of 40 warships, which was a major deal since navies symbolized power during this time.  The exact cost of each warship is unknown, but by looking at the cost of the HMS Victory (The 1750s “first-rate ship of the line” essentially a battleship of the Royal Navy), each ship would at least cost millions of dollars to build.  Backed by the Dutch government, they could have called on the Dutch Navy for help in times of war in which they had around 100 warships.  They even have a private army of 10,000 private soldiers.  They could also call upon the Dutch Navy of around 100 warships and its army in times of war.  With this large army and navy, they used it to enforce their colonies, raid their competitors, increase their land, and defend their merchants.  The company had 50,000 employees working from their headquarters in Amsterdam to their colonies in Batavia, Indonesia.  The company’s wealth was probably worth around 30 billion dollars. This may seem low, especially compared to the billion-dollar companies we see today, but this was a time where the world was extremely poor.  The Fourth Anglo-Dutch War, corruption, and competition from other companies, mainly the British East India Company, forced the company into financial ruin. After the French Revolution, the VOC was nationalized on March 1, 1796, by the new Batavian Republic, and its charter was allowed to expire on December 31, 1799, and was officially declared bankrupt.

The VOC left behind many new business ideas and transformed capitalism into how it is today. Even with these successes, the Dutch East India Company is an example of a corporation becoming more powerful than the state.