VOC Policy in the Economic Sector – Of course, Sinaumed’s is no stranger to hearing the word VOC. A trading partnership institution from the Netherlands which has a very wide monopoly in the Asian region. VOC itself stands for Vereenigde Oostindische Compagnie in Dutch.
Even though it was only a trade partnership institution, the VOC had privileges and was facilitated by the state. This became natural when the VOC was able to compete with trade unions from Portugal and England. In addition, several VOC policies helped the development of this trading partnership very rapidly. Many policies are made in various fields, but the main policies focus on the economic sector.
So, for more details, let’s see the discussion below!
Formation of the VOC
The formation of the VOC began after the Dutch succeeded in organizing their first expedition to Asia in 1595-1597 by Compagnie van Verre . This proves that the Dutch were able to make voyages in Asia while simultaneously controlling several existing fleets. This was the beginning of the formation of the VOC, which was a combination of six small companies.
The VOC was formed in 1602. The existence of the VOC was part of the expedition’s mission, because it was this trade partnership that bore all the expenses of a voyage. The VOC then grew rapidly to form trading institutions similar to the VOC in Amsterdam, Rotterdam and New Zealand.
The VOC trade partnership would carry out transactions in the form of investment and shares every time ships sailed to Asia. Therefore, in a short time the VOC was able to do a lot of cooperation with local traders. Until his territory expanded.
After the rapid development of the VOC, the Dutch formed a central institution called Geunieerde Amsterdam Oost Indische Compagnie. Furthermore, various countries apart from Asia collaborated with the VOC. By 1600 the VOC’s power was increasing.
However, the expansion of the territory of the VOC made it necessary to face new, controversial problems with Spain and Portugal. It was from this problem that the Staten General finally issued an oktroi which discussed several points of limitations and new regulations from the Dutch government. Apart from that, the octroi also discusses the procedures for managing partnerships, the position of directors and members and how to raise capital.
Behind the success of the VOC, there were many people in Asia who experienced a cruel trade monopoly. However, the VOC’s power continued until it was extended. This is because the Dutch Government fully supports and maintains the existence of such trading partnerships as the VOC.
VOC As The Richest Company Of All Time
Many sources say that the VOC was the richest company in the world at that time. What is even more surprising is that the VOC’s vast net worth may make it the richest company of all time. Yes, all the time. he said.
How come? The VOC’s wealth at its heyday, namely around the beginning of 1600, reached 78 million guilders. It should be noted that the guilder currency is no longer valid because it has been replaced by the euro since 2002. According to this information, if converted to the current value, a nominal value of 78 million guilders is equivalent to $7.9 trillion or 113,627,280,000,000,000 rupiah. For ease of reading, the VOC’s wealth is equivalent to 1.1 quadrillion.
This figure is certainly fantastic. That said, to achieve this value requires a combination of the twenty largest companies today. Call it Apple, Microsoft, Alphabet, Amazon, Facebook (meta), Alibaba, Exxon Mobil, Berkshire Hathaway, Wells Fargo, Samsung, and so on.
However, there are corrections that need to be made to ensure the correctness of this data. A study by Aria W. Yudhistira at Kata Data states that 78 million guilders are equivalent to $1.1 billion in 2020. This value is equivalent to 15.2 trillion rupiah.
This value certainly has a very large difference from the many articles on this issue. When compared to Apple’s capitalization value, which reached 33,600 trillion rupiah (October 2021), this is certainly very far away. Even VOC capitalization is not a very fantastic figure in this era.
Origin of VOC Wealth
The question that often arises is where did the VOC get this fantastic wealth? Unfortunately, until now there has been no authoritative study that states how the VOC had such a large capitalization value. So far, this is still speculative.
The argument in the article published by the Motley Fool stated that the VOC experienced a surge in capitalization when a bubble occurred in the European stock market, namely in 1632. It is said that at that time the valuation of VOC companies skyrocketed by 1200% in an event known as the “Tulip Mania”. The incident was reminiscent of speculation over the price of tulip bulbs and it sparked a scandal on the Dutch financial markets.
However, this opinion was refuted by Jan De Vries and Ad Van der Woude. In their scientific studies, they stated that the VOC’s share price was actually declining in the 1630s. This information seems to give a signal that a 1200% spike could be in error.
VOC Policy in the Economic Sector
Even though there are studies that show contrariness with most references, it cannot be denied that the VOC was a large company in its era. In fact, because it was too superior, the VOC had its own armed forces to secure its business activities. Therefore, it is important for you to know the VOC’s policies in the economic field.
The following are the policies implemented by the VOC in the economic field:
1. Right of Extirpation
In social science, the right of extirpation is the right to clear vegetation and cut down forests. In this case the VOC had the right to slash and cut down the spice plants when the yield was excessive. The VOC made rules as well as agreements with kings and country leaders to destroy excess spices, especially nutmeg and cloves.
The VOC did this not without intent. The main purpose of the right of extirpation is to prevent a decline in the price of spices on the international market when crops are abundant. This step was detrimental to the people who grew spices because there was no compensation payment system and of course it only benefited the VOC.
Contingenten can be interpreted as imposing an obligation on the people to pay taxes in accordance with the nominal determined by the VOC. This tax is paid in the form of agricultural produce. Unfortunately, there is no compensation system in place.
The purpose of the VOC in implementing this policy was clear, namely so that their financial cash was guaranteed. The amount of tax that must be paid by the people is adjusted to the nominal value set by the VOC. This policy is certainly detrimental to the people.
3. Verplichte Leverantie
The next policy that is no less detrimental to the people is Verplichte Leverantie . This policy obliged the people to hand over their crops only to the VOC. Sales of spices to non-VOC is not permitted.
It didn’t stop there, in this policy, the selling price of spices was determined by the VOC. The crops sold by the people include pepper, wood, indigo, cotton, sugar, nutmeg, cloves, tobacco, coffee, and so on.
4. Oktroi rights
Oktroi rights are privileges owned by the VOC as a trading partner. This right aims to further strengthen the position of the VOC. The Octroi rights made the VOC like a state within a state.
The Oktroi rights set by the VOC were as follows:
- Formed an armed force by themselves.
- Doing a trade monopoly throughout its territory, including from the Cape of Good Hope to the Straits of Magellan. The Archipelago was one of the areas controlled by the VOC.
- Make agreements with the kings or leaders of the local country. Of course this agreement benefited the VOC.
- Doing war with other parties who are at odds with VOC policies.
- Issuing and printing VOC’s own currency.
- Appoint and assign their own employees.
- Hold the government in the colony.
5. Hongi Cruise
In order for the trade monopoly that had been practiced by the VOC to run smoothly, the VOC made the Hongi voyage. This policy, which is also called Hongi Tochten, is carried out by conducting shipping expeditions, especially in eastern Indonesia such as Ambon, Maluku, Seram Island, and Ternate-Tidore. Because the eastern part of Indonesia consists of many small islands, this expedition, which was carried out by Kora-Kora ship, could only be carried out by sea.
This policy aims to control the production of spices as well as supervise the operation of the trade monopoly. With Hongi’s voyages, the VOC could control and regulate who could grow and sell spices. The VOC carried out this policy with elements of confiscation, robbery, enslavement and even murder.
Traders from England, Spain and Portugal also operate in this area. So to ensure the operation runs safely, the Kora-Kora ship is equipped with military members with complete weapons and cannons. Kora-kora ships were provided by authorities in the Maluku and Ambon areas who had collaborated with the Dutch colonialists.
This policy was issued by the Dutch and the VOC to make huge profits in their colonies. This policy focuses on the Parahyangan or Priangan area to cultivate coffee commodities. The name preanger is taken from Priangan which is known as an area that can produce superior quality copri.
This policy obligated the Priangan people to plant coffee and hand it over to regional aristocrats who then traded the coffee to Europe by the Dutch. The nobles involved in the practice of this policy benefited in the form of a sizable commission. This is in contrast to the suffering felt by the people.
After this policy had been running for six years, the VOC became an important player in the coffee commodity. It is rumored that they can control half to three quarters of the world’s coffee trade. Preangerstelsel became the forerunner of the forced cultivation policy or cultuurstelsel implemented by the Dutch and the VOC later on.
7. Utilizing natives as extensions
In carrying out these policies, the Netherlands and the VOC often did not intervene directly. They often collaborated with local kings or officials who were obsessed with power and wealth. Through them, the Netherlands and the VOC made profits for their interests.
The Netherlands and the VOC used them with the lure of large commissions. It’s not enough to stop there, they are given a guarantee that their power will be guarded against political enemies or anyone who opposes it. Certainly an offer that is hard to refuse for people who are dazzled by wealth and thrones.
The policies implemented by the Dutch and the VOC made it clear to the Indonesian people that they were only being used by officials and colonialists. The produce they produce is bought at a low price. The sweat that pours out because of hard work is paid with minimal wages.
On the other hand, the trade carried out by the Dutch and the VOC was a great success. The European market enjoys products in the form of commodities from Indonesian soil. Exports from Indonesia to Europe experienced a rapid increase at that time, even though they were under the name of the Netherlands and the VOC.
Meanwhile, production costs, which consisted of low prices for raw materials and labor services, made the Netherlands and the VOC earn more and more money. So do not be surprised if the VOC was able to attract the interest of 1,800 investors spread across the Netherlands. And it’s no wonder that the VOC became the richest company of its time.
The end of the VOC’s position
The VOC’s power has long been felt by various countries, especially in Asia or the East Indies region. However, in December 1780 to be precise, the VOC experienced chaos due to the outbreak of war between the Netherlands and England. This resulted in the company experiencing a financial crisis, so that trading partners such as the VOC were no longer able to bear the proposed costs.
Borrowing money from outside was also carried out so that the credibility of the VOC began to be questioned. In addition, the government also insisted on maintaining the VOC by sending some of the existing assistance. Unfortunately, this made the VOC dependent on existing aid and loans.
The VOC continued to exist with several external loans. However, many directors have been laid off, employees have been reduced, offices have been dismantled and trade activities that require large funds have been minimized. Then the oktroi as the basis for VOC rule were no longer able to provide guidance and control over the VOC which had gotten out of control.
In addition to changes outside Asia, the VOC also experienced a downturn in Indonesia. Many VOC leaders were later replaced. In addition, the sending of two envoys from the Netherlands to stop the decline of companies in Indonesia also did not bring about significant changes.
Two years of that dark period, the Netherlands was dragged into the great war between England and France. As a result, many VOC offices were occupied by the British government. As a result of this chaos, shipping was disrupted, so that trade was not running effectively.
Apart from that, the Netherlands also had to face resistance from the Indonesian people. This added to the burden of costs and responsibilities of the VOC which could no longer be borne. Until there was a massive reorganization carried out by General HW Daendels as a sign of the end of the VOC’s reign in Indonesia, specifically Java.
Sinaumed’s , after discussing several points related to the VOC above, certainly makes us understand more, especially its policies in the economic field. In the past, the VOC was a successful trading partnership, and its wealth even rivaled that of the British and Portuguese trading partners. This is what made the VOC able to survive in the economic field for quite a long time.
Some of the policies made by the VOC also made it even more invincible. However, over time, this large trading partnership experienced a decline. The chaos arose from an unexpected direction so that the VOC was reported to be bankrupt.