358. Spice Wars: The Rise of the Dutch East India Company (Ep 1)

0:00If you want access to bonus episodes, reading lists for every series of Empire, a chat community, discounts for all the books mentioned in the week's podcast, ad-free listening and a weekly newsletter, sign up to Empire Club at www.empirepoduk.com. Edwina Mountbatten died in the jungles of Borneo. The year was 1960 and she was all alone. Well, alone, I say, except she was surrounded by letters. And they weren't letters, as you might think, from her husband, Louis Mountbatten, the last viceroy of India. No, these were letters from the man that she truly loved. The scourge of the British Empire, the first prime minister of a free India.

0:46His name was Jawaharlal Nehru. Now, this fascinating love triangle is so pertinent when it comes to pre-partition India politics. And we're going to be delving right in in a mini series, a four-parter for you. And it's only available to members of our club. So if that isn't you, what you need to do is right away get to empirepoduk.com. That's empirepoduk.com. And for the price of a coffee, come join our club. And as if you needed any more incentive, let me tell you, our very special guest is the marvellous Alex von Tunzelman, who is the author of Indian Summer. So what are you waiting for? Come on.

1:29Ready to soundtrack your summer? With Red Bull Summer All Day Play, you choose a playlist that fits your summer vibe the best. Are you a festival fanatic, a deep end DJ, a road dog or a trail mixer? Just add a song to your chosen playlist and put your summer on track. Red Bull Summer All Day Play. Red Bull gives you wings. Visit redbull.com slash bright summer ahead to learn more. See you this summer. Now at McDonald's, a McDouble is$2.50, so you can get your gym gains on or just get lunch for only$2.50. Get more value on the under$3 menu. Limited time only. Prices and participation may vary. Prices may be higher for delivery.

2:21Today, we are talking about a company so powerful it could wage war, execute criminals, establish its own colonies, and govern entire continents. And so wealthy that in today's money, at its peak, it was worth more than twice the combined value of Apple and NVIDIA in market capitalization. The story will take us through some extraordinary 17th century financial espionage, the colonization of Indonesia, and Anglo-Dutch wars in which the English will end up ruling the seas, but not before the Dutch have kicked them out of Indonesia and they have ended up with the consolation prize of New York. Just me today, I'm afraid, and Nita has another project, but I am here with one of my great friends, Harold van der Linde.

3:09Harold, welcome to Empire. Well, thanks for having me on the podcast, Will. First of all, we need to talk about the VOC. And I can't even pronounce it in Dutch. I'll have a go. We're not an East Indian company. How was that? Yeah, that's a decent try for an Englishman, I would say. It's on Dutch. I'm a Scot. I'm a Scot, Aaron. Oh, Scot. Yeah, that's a decent try for a Scot, I'd say. In Dutch, it is Verenigde Oost-Indische Compagnie. VOC. VOC. I myself know far less about it than I should do, considering that I've been writing about its great rival for 20 years. And I'm very, very happy that Harold is going to be guiding us through the founding of it.

3:52Something which Harold is particularly well qualified to do, since he's not only Dutch, he works in Asia in finance and is in many ways the kind of inheritor of this tradition. So that's right, Will. I'm at HSBC, one of these financial institutions here, predominantly in Asia. We run a podcast, by the way, as well, Under the Banyan Tree, because in Asia, when people spoke about markets and economics, they did so under the tree. You can actually see the tree behind me. I have an interest in Indonesia, as you know. We've been in Sumatra together. We've been in Java together as well. Wrote a book about the history of Jakarta, amongst others.

4:30And a wonderful history of Majapahit, which is, again, one of the subjects that people don't know about. It's one of the great Hindu empires of Asia and one that many people in India will never have heard of. No, absolutely. That's a sort of an extension of your golden road. And that goes into Indonesia. That's the making of Indonesia. And there's a lot of Indic sort of influences, Hindu and Buddhist, that are in there. That's the Majapahit Empire. That's correct. We should also say that you are married to a lovely lady from Indonesia who you've just been reunited with after our Subacan trip. That's right.

5:02So my wife is Indonesian. I speak Indonesian. But yeah, Indonesia is very close to me. I've lived there for a long time. It's a place I love and I try to understand by reading up and writing about its history to a large extent. Harold, let's paint the very wide canvas before we close in on the VOC itself. The first thing to say is that, as I expect most people who are listening to this don't know their Dutch history as well as they might. When the story opens in the 16th century, Holland is a new country. It's only just got its liberty, hasn't it? Different provinces in the Netherlands that are coming together.

5:44They're Protestants. To a certain extent, I lied maybe in that sense with the English as well. and they are revolting against the Spanish overlords that have a claim on the lands. And out of that sort of revolt, new leaders emerge. William of Orange is one of them, his son Maurits later as well. And they move away from royalty. They set up a republic. And it's in that sort of environment where the VOC starts to emerge. And just as they are fighting the Catholic Spanish in Europe, when they begin to cast their eyes overseas and begin to think of expanding into Asian waters and to carry their trade beyond Europe, they bump into the Catholic Portuguese.

6:34Give us a picture of the Portuguese empire that they are beginning to infringe on at the beginning of the story. Yeah, we almost have to go back about 100 years. So in 1498, Vasco da Gama goes around the Cape of Good Hope, the southern point of South Africa, and discovers Asia, you could say. He sails and goes into India. And the Portuguese now have access to these Asian markets, and they import all the spices we know from the cloves and nutmeg and cinnamon and porcelain. Making vast fortunes in the process. making vast fortunes in the process. And the Dutch trade with the Portuguese for a long time.

7:12So they bring herring and beer over to Lisbon and buy these guts. And this is how these spices end up in the rest of Europe. Presumably, the spices are rather more expensive than the herring and the beer. Yeah, large quantities of herring and beer for a little bit of spices in those days. Absolutely. I mean, some of that just in weight. These spices were more expensive than gold would be now. So they were very highly priced. Now, the problem then for the Dutch emerged is when in 1580, Spain takes control over Portugal. And therefore, access to that market is cut off. And the Dutch have got to find their own way to Asia and to these prices.

7:53And that's not easy because they don't know where to go. Yes, we kind of assume that, you know, that you just got sort of maps. Even if you haven't got Google Maps, then you probably presume that you've got something. But that is not the case. the Dutch simply do not have maps of Asia, that there are none in Western Europe beyond the very secretively kept Portuguese maps. Absolutely. So the Portuguese know where to sail. And it's not even sometimes maps, it's descriptions like you go two days south from this particular port and then you end up on an island and you go in this direction and there are lots of birds here and there's lots of animals and there's a mountain here.

8:29So it's these descriptions that are important as well. And the Dutch have no knowledge of this. And they need that knowledge now. And they try to get through it through espionage. So we are opening this series with one of the great stories of industrial espionage in history. It is an absolutely world-changing story because the results of this are not only that the Dutch get access to India and the Indies, by which they mean modern Indonesia, but also the English, because English get their hands on these maps as a result of the story. So take us to Harlem in 1563 and introduce us to Jan Heugen van Linschoten.

9:13How is that? Oh, that's very well pronounced. Very, very good for a Scot. So in 1563, a boy is born, Jan Heugen van Linschoten. And his father has got a job in Einkhuizen, which is currently about an hour's drive north of Amsterdam. And he's an innkeeper there. And the boy grows up there. and of course he hears the stories from the sailors that are in the inn sailing far away and fantastic stories and he gets excited about this he wants to go on an adventure as well and his later books and there's a nice quote i have here he says something there's no time more wasted than for a young fellow to stay in his mother's kitchen like a dimwit knowing neither what property is nor luxury nor what the world contains an ignorance which is often the course of his own ruin.

9:59You get a picture of the man there too, that's sort of impatient and sort of... I think he looks a little bit like Van Gogh, the painter Van Gogh, who comes, of course, much later. We in Scotland would call Van Gogh. Yeah, Van Gogh. And the Americans call it Van Gogh or something like that. So Jan van Linschoten, he departs, he goes to his stepbrother in Seville, in southern Spain. And from there on, he gets to Portugal. And this is important because somehow, either through his clever or his lucky, He becomes the secretary to the archbishop, the newly appointed archbishop of Goa, a man called Dom Vicente de Fonseca.

10:35And my Portuguese is probably not so good. This archbishop is sailing to Goa and Goa at the time is the epicenter of the Portuguese empire. We should explain that it's not at this period a center for trance music or for sort of stag nights or stag holidays and beaches. is Goa is the great metropolis of the of the east it's a million people at this point it's an absolutely vast city that has grown incredibly fast on the profits of the Portuguese spice trade and all the knowledge about how to sail and all these sort of things is there so Jan van Linschouten lives there for about six years from 1583 to 1589 are the Portuguese not suspicious of him, the fact that he is Dutch and that he is a Protestant?

11:26It doesn't seem so much. Actually, Jan van Linschouten writes in his own book that he wants to stay in Goa forever. He changes his mind later. I know that feeling very well. Every time I go there, I want to stay in Goa forever. Yeah, exactly. He thinks it's a lovely place, but he writes about Italians that are walking around. There's another Dutch guy, a few Dutch people he actually meets. One is called Dirk of China because it's a Dutch guy that went to China, had come back. So it seems to be that there were a lot of portuguese but seems to be a fairly sort of cosmopolitan place as well there's one englishman and he ends up in prison almost immediately and he has to be rescued by another englishman who is a jesuit it turns out that there are english jesuits of course being a jesuit priest is a highly risky thing in england at this point because you're considered to be like a member of mossad or something you are a member of a kind of foreign intelligence network in the eyes of the Elizabethan state.

12:19All sorts of people walk around in Goa. And Jan van Linschoten has unique access to Vars because he's the secretary of the archbishop. And that's basically what the viceroy is there. That's the number one or two in town. And maybe it was easy access. Maybe it was midnight and candles or something like that. But he starts to copy all the information. And that's maps. And that's the ports that they have. And that's how to get to sail there and the winds and details on who to bribe and not to bribe and these sort of details. I think it is literally candles at midnight. I remember reading that he that after the archbishop goes to bed and he's an early bedder, Linshoten is up and about, you know, because his job is to clear up after the archbishop.

13:05And so he has every reason to be in his study. And there, I think one day he sees a map and realizes this is absolutely priceless if he could somehow find a way of getting it out. Anyway, carry on. Absolutely. So he copies all of this. So we're now talking about the late 1580s when he's doing that. He was initially thinking about staying in Togol, but eventually he changes his mind because his brother has died, his family is sick. And he thinks, well, I need to see him again. And he decides to sail back. In the meantime, in the Netherlands, they don't notice, of course, that this Dutch guy is copying priceless sort of maps and details about traveling to the east down.

13:48They are doing their own sort of espionage thing with another guy called Cornelis Hauptmann. Cornelis Hauptmann, he will later become the first kind of guy who runs the first voyage, as they call it, the first expedition by the Dutch to Asia. But he goes to Lisbon as a merchant and tries to talk to sailors and captains to get all of that information as well. He's a really good navigator, but he's a horrible spy because the Portuguese see that immediately and arrest him. And the Dutch have to pay for the guy to be released and to return. So they are hungry of this knowledge. And then suddenly, Jan van Linschouten comes back into the Netherlands with all of that information.

14:28Do we know how he smuggled it out? I mean, did he sort of wrap it in, you know, pretend it was something else? What was the... I think he put it in some sort of cupboard lately and took it with him. He went on a boat that sailed back and it was a boat with spices. They made a stop to make some additional cinnamon and then they sail back and they stop in the Azores. He goes to Lisbon and from Lisbon pretty much immediately he goes back to his hometown. He goes to Amsterdam and then Enghuysen where his family lives. And then he writes it down. the Dutch hear about this and say, listen, in particular that stuff about how you get to the East, can you publish that as soon as possible?

15:03Because he writes three books, two of them being published in 1596, but one of them in 1595, a year earlier. And with maps in it, the maps are in the book. Yeah, there's maps in it, there's drawings in it, there's all sorts of other funky details in it, like if you are at the Azores, watch out for the black and white birds and these sort of things. There's bushes in the water close to Cape Town. I'm not quite sure how relevant that is. I'm not a real sailor. But anyway, he writes all of these details, but you can see the amount of detail that goes into it, right? And one thing that happens immediately is that the English, who are also hungry for this sort of information, translate van Linschoten's book within a year.

15:40It's in English. And this, as we'll see, will soon lead to the English making their own way to these. But anyway, the Dutch first. So the Dutch first. So the first book that he then finishes with all these details is given to Canelis Houtman, who is then appointed to bring four ships to the east. And this guy sets off with 278 sailors and with that book is able to go around Cape Town and sail towards Indonesia. And the most important detail that he learned from Jan van Linschoten is that if you go around Cape Town, go around the Cape, good hope, you go to Madagascar, but do not go to India and then follow the coast to the Malacca Strait because there you're going to run into the Portuguese.

16:25He says, go straight basically east. And this is a very long journey all across the Indian Ocean till you get to the southern port of Sumatra. It's the Strait of Sunda. And there's a town called Banten at the moment, Batam at the time, but Banten at the moment. And that's where the port is, where you trade spices. And that's exactly what he does. He goes over that route and other Dutch ships follow that route as well. Actually on the second trip, second voyage, Some of them fear off a little bit and end up in Mauritius or an island. They call Mauritius after the Prince Mauritsch, which is then ruling the Netherlands at the time.

17:01So that's where the name Mauritius comes from. I didn't know that. It's a Dutch prince, Mauritius. Exactly. It's named after the Dutch royal family at the time. But anyway, he ends up there, Cornelius Hauptmann, in Indonesia. He buys the spices. He's also pretty much immediately maybe a Dutch good fashion at the time to upset the locals there. He's very blunt and not so diplomatic, it seems. But he's able to get some of these spices and bring them back to Amsterdam. And the profits are beyond imagination, aren't they? Actually, no. At that time, not. No. No. Actually, on the first trip, they break even.

17:37They don't make a lot of money. And it's a humanitarian disaster because out of the 278 people that sail off, only about, I think it's 78, come back alive. I mean, a lot of them die of scurvy and all sorts of diseases that they get. So 70 % of the people that departed Amsterdam, they don't return. But the big thing is that they now know where to go. And the voyages thereafter, the second one via Mauritius and other trips, they are incredibly profitable. And in Holland, all sorts of cities, Enghausen, Amsterdam, southern part of Zealand, they all want to do this and set up their own expeditions.

18:12We call them the Four Companions. It's just before the VOC has been established. And they go on their own, even competing with each other to get to the east. So there's very important chronology to get right here. So it's the first Dutch voyage is which year, Harold? The first one is in 1595 and arrives in Indonesia, what is now Indonesia, in 1596. And they get back in? And they get back the year after, so 1597, if I'm not mistaken. And then 1599, there's a meeting in London to form the Company of London Merchants Trading with the East Indies, is the initial title of the English company. And that sails in 1600, by which stage the Dutch have already done how many voyages?

18:58I don't know how many they've done, but they were already sailing for about five years. So they had, by that time, probably a regular flow of ships going there. but the English at that time did that on the one company. The Dutch had different cities who did it independently and they competed with each other as well because it was not a fully united country as it is at the moment. So it's 1602 in March that the idea for founding a single Dutch company to take on these English who jumped on the bandwagon belatedly comes to be. But there is an important difference between the English company and the Dutch company, or certainly how it is financed, because the English have got the idea of a company whereby anyone can put in money and get a share of the profits.

19:53But they haven't got the idea of tradable shares. Tell us the difference between this and why it's important. So before the 20th of March, 1602, what everybody did is you put a bit of money together with a couple of friends, rich merchants. You finance a captain and a ship, send them off, wait for three years. And when they come back, you're making an enormous amount of money. You divide that amongst yourselves. That's the dividends. And that's what the English were doing as well. But the Dutch then set up a company similar to what the English did, the Verenigde Oost-Indische Company. But they make two big differences.

20:26The first one is everybody can subscribe. So we got rich merchants, we got priests, we got teachers, we got all sorts of people coming in. That's true in London too. London, you have, and I've looked at the list, I've got the list. You can actually call up the list of subscribers just as a library item if you've got a British library ticket. And I've done this, it's wonderful. And this extraordinary document, this historic document, turns up on your desk an hour later. And there is the list of subscribers to the East India Company in 1599 at this first meeting, the same year that Shakespeare is writing Hamlet.

20:58The shame that Shakespeare's writing Julius Caesar, indeed, if Shakespeare got stuck in the middle of Hamlet and turned right over London Bridge, you could have walked to where the meeting was taking place in just about 15 minutes from the Globe Theatre. Anyway, so at the top of that list is the Lord Mayor of London, who puts in£2 ,000, and then the other grandees. But what's really interesting is that halfway through the list, it turns out to people who describe themselves as leather workers or domestic helps or bottlers or vintners. and they're putting in, you know, five shillings, two pence, three pence, and they're all allowed to do this.

21:33You can buy a single share. But the difference with the Dutch is that they can then sell their shares. Exactly. This is a really big difference because, and I'm going to write this out. So there's two articles of the VOC that's maybe important here. The first one, they say, all the residents of these lands may buy shears in the company. So it's publicly available. It's a public sort of thing. But then the next article, I believe it's number 11, it states that the convenience or transfer of shears may be done through the bookkeeper of each chamber. What that means is that if you had a stake in this enterprise, this VOC, but you, for whatever reason, needed money, you could find somebody.

22:15And they did this actually on a bridge in Amsterdam where people would meet and could say, listen, you can buy my stake. So you meet somebody says, OK, I'll buy your stake. You come to an agreed price. Then you go to the VOC building. There were two bookkeepers. They would go into the ledgers and say, okay, Harold, you got a stake, but you're going to send it to Will for this price. Okay, so Harold is crossed out. Will is now a shareholder. This is an investment. And there you go. And that, because people can get out, it makes it more attractive to participate. So it allows you to raise more capital.

22:48You're not waiting five, six years or the possible death of everybody, you know, on the way back through scurvy. Exactly. Or lose everything if these ships never come back, for example. So because they also participate in all the future sort of expeditions that they're going to do as well. So that's a very key difference as well. And they raise quite a lot, a big sum of money, 6 ,440 ,000 guilders. Just to compare, 2 ,000 guilds would give you sort of an average canal house in Amsterdam at the time. So that's a pretty decent amount of money. And this is considerably more than the East India Company, rather pathetic attempt at raising funds at the same time.

23:30Is it 10 times more? It's 50 to 100 times more, depending on what you're looking at. Yeah, but it's like 100 times more than what the English rate. So it's because that flexibility of trading that made people say, OK, I'll put something in. If it doesn't work, I can maybe sell it to somebody else. The biggest investor, and this is a guy who will come back a little bit, is a man called Isaac Lemaire. He is a Belgian, what we would call Belgian now. He's Dutch at the time. And he puts in 85 ,000 guilders. That's actually, at that point in time, a pretty large sum of money. And what's his motive?

24:03He just thinks he can make a huge, huge killing. Yeah, he thinks he makes, he's going to make a lot of money. That's his expectation. But he runs into a conflict with the people who run the VOC. We should quickly give a pen portrait of this guy. I'm just looking at a picture of him. And he looks a bit like sort of one of those King Charles Spaniels. He's got this kind of great sort of floppy mops of hair over both his ears. Yeah, I'm quite jealous of his hair. He's got nice big shiny locks. Those are long gone for me. For our shiny pates, Harold. Exactly. So this guy is the biggest investor in what is the kind of 17th century's first Kickstarter.

24:46It's also, and I think you make this point, the world's first IPO. Yeah. So in technical terms, this is the first initial public offering, an IPO, as we call it these days. And this leads to the foundation of the first bourse, which is a Dutch word. Is it originally or is it a French word? Yeah. So basically, the Dutch would meet on a bridge. If you know, if you come out of the train station in Amsterdam, it's actually the first bridge. The location is easy to identify. Now, as you're Scottish, I'm Dutch. You know how the weather is. The last thing you want to do is go haggle with somebody on an open bridge.

25:18It rains, it's cold, it's damp. So what do you do? You're going to go to the cafe nearby. And there's a street called the Warmoestraat in Amsterdam. That's where they get it. But eventually, these cafes were also chock full with people. So they needed the space. And eventually, they built the first purpose-built stock exchange, you could say. They traded spices and all sorts of other things, these things as well. It's right in the center of Amsterdam. The building doesn't exist anymore. It's now sort of a square and a new exchange building was later built. And they called it, you could call it the wallet, if you want to translate it, the burs.

25:49That's literally what a burs means. It just means a wallet. It means wallet. Burs is wallet. It's kind of an old word. Nobody would use it in the Netherlands anymore. But that's the meaning of it. I think we should take a break here, Harold. But we're at this crucial moment. So we've got a number of firsts here. We've got the first trips to the East Indies by Northern Europeans. We've got some of the very first public limited companies and this idea that you can buy a share in a company. And we've got the first IPO. That's quite a good start for a small, damp island in the North Sea under sea level.

26:25Absolutely. But there's a couple of other firsts as well that we need to talk about. But let's take a break first.