Foundation of the VOC - the Charter
F.S. Gaastra
he
VOC was born in 1602 from
a fusion of six small companies. Directly after the eerste
schipvaart (first fleet) of 1595-1597, which had been
organized by the Compagnie van Verre
of Amsterdam, had demonstrated the possibilities of Asian
trade, companies were set up in Amsterdam, Rotterdam and in
Zeeland(3). These
companies accumulated capital for one expedition at a time.
Nonetheless, there was continuity in the board of directors;
the merchants in charge or the bewindhebbers
(directors) sponsored successive expeditions. Each time the
ships returned from Asia the investors, who included not only
the board but also other shareholders or participanten,
got back the capital they had subscribed, naturally augmented
by a share in the profit. These companies competed fiercely
with each other, which put pressure on the profit margins.
The dwindling returns threatened to frighten off investors
and to endanger the future of the trade with Asia.

The first charter
of the VOC ("Octrooi"), 1602.
(click image to enlarge)
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The directors
were by no means blind to this development and co-operation
rapidly took place on a local level. In 1600 the Amsterdam
companies amalgamated into one Geünieerde
Amsterdamse Oostindische Compagnie (Unified Amsterdam
East India Company), which was granted a monopoly on the trade
from Amsterdam to Asia by the Amsterdam burgomasters. Concerted
action was also taken in Zeeland. But co-operation did not
extend beyond this. The people in Zeeland, for instance, had
little stomach for a fusion with companies in Holland; they
were afraid that Amsterdam would wield too much power in one
united company. Moreover, new companies were being established
in other cities - Hoorn, Enkhuizen and Delft. Therefore it
seemed as if this mutual rivalry was to continue on into the
seventeenth century.
The eventual unification into
one company did not happen spontaneously, but was enforced
by the government. The Dutch Republic was at war with the
king of Spain and Portugal. The existing companies, now mainly
referred to as the voorcompagnieën
(pre-companies), were unable to play any role in the conflict
against Spain and Portugal. One united Company could be a
powerful military and economic weapon in the struggle. The
States of Holland under the guidance of Johan van Oldenbarneveldt
and, in their footsteps, the States General paved the way
for a fusion. Eventually, after the intervention of the stadhouder,
Prince Maurits, the Zeelanders were no longer able to hold
themselves aloof. On 20th March 1602 the States General granted
the charter by which the Generale
Vereenichde Geoctroyeerde Compagnie (General United
Chartered Company) was created(4).
The charter (octrooi) was
valid for 21 years. Rivalry was now out of the question: the
charter laid down that nobody except the VOC
could send ships from The Netherlands to or conduct trade
in the area east of the Cape of Good Hope and west of the
Straits of Magellan. This area was called the octrooigebied
(trade zone).
Many of the other clauses in
the charter referred to the organization of the Company, the
position of the board of directors and the shareholders, and
to the way in which capital could be acquired. These clauses
bore the traces of the laborious negotiations which had preceded
the realization of the charter. The content and elaboration
of the terms will be discussed in the sections below. Before
this attention will be drawn to the compromising nature of
the charter and to the federal structure, which was so characteristic
of the Dutch East India Company.

Chamber Hoorn
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Under the charter the voorcompagnieën
became departments or kamers
(chambers) in the united Company. There were six of them:
Amsterdam, Zeeland (which had its seat in Middelburg), Delft,
Rotterdam, Hoorn and Enkhuizen. Agreement about the share
of the chambers in the joint shipping and trade to Asia was
reached fairly quickly. The Amsterdam Chamber was apportioned
half of all operations, Zeeland a quarter and each of the
four remaining smaller chambers were allocated one-sixteenth
each. The Zeelanders were reassured by this system of distribution
which was laid down in the charter; they had feared that,
should the capital deposited by the chambers have been taken
as the basis for the share in the management of the business,
Amsterdam would have won more than half.
The directors of the voorcompagnieën
became the directors of the chambers as a matter of course.
A general board, which was to be put in charge of the general
management and was to consist of representatives of the directors
of the chambers, was placed above the chambers. One great
problem was how the proportional relationships between the
chambers, which had now been settled, were to be reflected
in the general board. Because Zeeland wanted the vote on the
general board to be taken according to Chamber - so that each
Chamber could have as much say as any other Chamber - agreement
initially miscarried. Finally the Zeelanders consented to
a head count in a board which was to consist of seventeen
members. In it Amsterdam would be represented by eight directors,
Zeeland by four and the smaller chambers would have one each,
while the seventeenth member would be appointed in turn by
one of the chambers other than Amsterdam. The Amsterdammers
had assumed that this board, the Heren
XVII, would meet in Amsterdam, but a concession was
made to the Zeelanders on this point. It was decided to introduce
an eight year cycle. For six consecutive years Amsterdam was
to be the meeting place and during this time this chamber
would also function as the presidential Chamber; after this
for two years Middelburg was to be the seat of the Heren
XVII and then the presidency would fall to the Zeeland
Chamber.
Now, on paper at least, it
was possible to set down in the charter exactly how much influence
and say each chamber would have, however, practice was to
show how this complicated structure would take shape. During
the seventeenth century the same administrative practices
with which the directors, often as regent, were familiar in
the Dutch Republic gradually developed. The relationship between
the boards of directors of the chambers and the meetings of
the Heren XVII, who after
all consisted of delegates from these boards, was in many
respects comparable to the meetings of the States of Holland
and Zeeland and the cities who delegated their administrators
to the sessions of the States. Before each meeting of the
Heren XVII the chambers were
sent an agenda by the presidential Chamber. Thereupon their
delegates were given instructions for voting. When important
matters which had not been included in the agenda were brought
up before the Heren XVII,
consultations were held.
There was yet another aspect
on which the charter was a compromise. This was in the matter
of capital. Because the charter was to be valid for twenty-one
years, the VOC was no makeshift
organization which, as had been the custom of the voorcompagnieën,
had been set up just for one expedition. Nonetheless, no-one
had wanted or dared to tackle the consequences of this for
the regulations regarding the accumulation of capital. Even
before the founding of the united Company, the voorcompagnieën
had collected money to finance the outfitting of ships for
Asia. These ships were now amalgamated into one fleet; this
vloot van veertien schepen
(fleet of fourteen ships) was thus the first that was equipped
by the VOC for an expedition
to Asia. Hereafter, the charter proclaimed, opportunities
would be offered for the depositing of new capital, not just
for one expedition, but for a term of ten years, in which
period several fleets would be equipped for Asia. The shareholders
or participanten would get
their money back in 1612, plus the profit which had accrued
up to that moment, and there would be a fresh opportunity
to subscribe capital for the next ten years. Moreover, it
was laid down that as soon as five per cent of the original
investment had been returned to the Company immediately after
the return wares brought back from Asia had been sold, there
would be a distribution of dividends to the shareholders.
These stipulations made the
accumulation of capital impossible. This did not tally with
the aim which had featured prominently in the foundation of
the VOC: the provision of
a firm and solid basis for trade with Asia. Therefore this
provision was more honoured in the breach than in the observance
by the directors. The shareholders had to wait a very long
time for a distribution of dividends and there was no restitution
of capital after ten years. The original investment remained
unchanged throughout the entire life of the Company. The States
General, who had issued the charter, supported the directors
in their non-observance of these stipulations(5).
In 1622/23 the charter was
renewed for twenty-one years. After the shareholders had lodged
a complaint, they were allowed a little more say, but there
were no real changes accomplished. Later renewals of the charter
often gave rise to political entanglements: various towns
and provinces seized the opportunity to bargain for privileges,
such as places for extraordinary directors in one of the chambers,
in return for support of the renewal. On these occasions in
wartime the States General sometimes asked for money or naval
support. It was only late in the eighteenth century that any
doubts arose about the methods employed by the Company and
the situation in Asia was brought into the discussions held
at the time of the renewal. But even then this did not amount
to any real criticism: in general the Company enjoyed the
support of the States General and the government strictly
maintained the monopoly of the VOC.
(See the webpage with a
list of the charters.)
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