In 1595, after vainly endeavouring to discover a passage to India and China by the north-east and the frozen ocean of Siberia, the Dutch essayed the passage to India by the Cape of Good Hope, and shortly afterwards that of Southern America by Cape Horn. A century before, Alexander the Sixth had granted in the fulness of his power the whole of the New World to Spain, and the whole of the Indies to Portugal. Spain and Portugal were united by Philip the Second, and in theory, the Atlantic, Pacific, and Indian Oceans, became the private property of the King of Spain, from all commercial intercourse with which all nations indiscriminately were warned. For a long time the Dutch had limited their trade to Europe, but as time went on they attempted, at first only by private ventures, to give effect to the information which Linschoten had given them.
The English queen had chartered the English Company on December 3 1, 1600. On March 20, 1602, the States-General granted a charter with the sole right of trading by the Cape of Good Hope, and the Straits of Magellan. The existing traders were invited to associate themselves with the new company, whose privileges were allowed to them for twenty-one years. They had no option. For the time the capital was enormous, and according to the policy of the States-General, the capital stock was distributed through the several cities, for half was to be supplied by Amsterdam, a fourth by Zeland, and the residue by four other cities. The affairs of the Company were regulated by a board of seventeen directors, and the Company had large powers, in the name of the States-General, of making war and peace, of building forts and factories, and of entering into treaties with native powers. The first two fleets sailed in 1602 and 1603, on each occasion towards the end of the year.
This was the beginning of the Dutch East India Company, supposed and with reason to be the cause of the downfall of Portuguese supremacy in India and the Spice Islands. Its career was similar to, and only less remarkable than that of the institution chartered by Elizabeth in 1600, and reconstructed in 1708. It founded an empire as the English Company did, the extent of which was greater than that of the country in which its chief office was. But the Dutch East India Company was from the beginning far more under the control of the States-General, and became more immediately related to the Dutch Government, than the English Company was to the British Parliament or Administration. In the end, though the possessions of the Dutch company still belong to Holland, their intimate relations were destructive to the credit of the Bank of Amsterdam, for when Holland was overrun by the French at the commencement of the great continental war, the treasure of the Bank was gone, having been lent to the East India Company in defiance of the Bank's charter and the oaths of the Amsterdam Council.
The object of the Dutch company was first to procure a monopoly of the trade, next to keep up the prices of East India produce, i.e., the spices which were procurable from that part of the world only. We cannot, in our day, quite understand how eagerly our forefathers desired to procure Eastern spices. Cinnamon, ginger, pepper, mace, nutmegs, and most especially cloves, were in universal demand. The profit on the trade was enormous, for in the home of their origin they were cheap enough. They were to be obtained nowhere else, and some of them were found in only a few islands. A pound of these spices was often, before the Cape Passage was discovered, worth as much as a quarter of wheat, and at feasts, a seat near the. spice box was more coveted than one above the salt. I have noticed sometimes that when a considerable guest is entertained by an Oxford or Cambridge College, and the college happens to be out of spice, they are obliged to give an enormous price for such a scanty supply as the local grocer could furnish them with.
For a century this trade was in the hands of the Portuguese. Then the Dutch dispossessed the Portuguese, and took effectual means for maintaining their monopoly, for they bribed the natives to destroy all trees, except those whose produce was sold to the Dutch factors, and having thus limited the supply, they fixed the price at their own discretion. The policy was in the end ruinous, and for two reasons. In the first place, the Dutch East India Company was doing that to other nations, which they resented and refused to submit to when it was the policy of Spain. Hence they invited, and could hardly complain of, rivalry and even active hostility. The quarrels of the English and Dutch, continued for generations, were the outcome of the spice monopoly. In the second place, trade did not under these artificial restraints, increase as rapidly as capital did, Hence at a very early date the interest of money was absurdly low in Holland. It may be added that in order to defend this system by all the means in their power, the East India Company borrowed largely from the deposits of the Bank of Amsterdam, and while they were getting a miserable rate of profit on a restricted trade, they were plunging hopelessly into debt in order to strengthen their policy.
The exploits, however, by which the Dutch secured their early conquests were almost as prodigious and against nearly as overpowering odds as the victories of Cortes and Pizarro. They were even more remarkable, because the combat was with Europeans, who were furnished with the same appliances for warfare as they were. The difference lay in the way in which the appliances were handled. For example, in 1602, the Portuguese admiral with more than twenty-five vessels sailed to Java, in order to punish the Eastern potentate who had allowed the Dutch to trade with him. There chanced to be a Dutch captain with five small trading vessels, the united crews of which did not equal those on board the Portuguese flagship. But he did not hesitate to attack and disperse the whole armada, sinking some, capturing others, and putting all to the rout. In the same year, Heemskerk, who had passed a winter in Nova Zembla, captured a Portuguese armed merchantman, with only a small vessel, and distributed a booty of a million florins among his comrades. These instances might be multiplied, and it is no wonder that the United Provinces convinced the princes and people of the Spice Islands that Holland could protect them against the Spaniards and Portuguese. By 1605, the Dutch had succeeded in expelling their enemies from the district which they coveted. It is no marvel that when the negotiations for peace began, they resolutely refused to relinquish their East India trade.
But the most remarkable naval battle during the whole war was that of the Bay of Gibraltar in 1607. Partly to protect their own commerce, partly to annoy that of the enemy, and in some degree to remove the consequence of a mischance which had occurred the year before, the States-General determined to send Heemskerk with twenty-six small vessels to the Spanish coasts, with general instructions. The Dutch admiral soon discovered that there was no immediate prospect of prizes, but an opportunity for measuring himself against the Spanish war fleet, then in the Bay of Gibraltar, and on the look-out for Dutch traders in the Levant. Heemskerk determined to attack the Spaniards in their own waters. The battle was joined on April 25th. The Spanish commander had fought with eminent success at Lepanto, nearly thirty-six years before.
When the Dutch vessels sailed into the bay, the Spanish admiral inquired of a Dutch prisoner, whom he had on board, what those vessels were, and was much amused when he was informed that they were certainly Dutch, and that they were coming to offer battle. The battle soon commenced and was soon over. Both the admirals were slain, but the Spanish fleet was totally destroyed, the crews, and the soldiers put to the sword, and Spain was pretty well convinced that the war, which had now lasted for over forty years, would not be crowned by any final victory of hers. Victories, so complete and crushing as these, made the reconquest of the Spice Islands, and the forcible extinction of the Dutch East India Company, and the restoration of Spanish influence in the Indian seas, more than ever a remote contingency. Holland swarmed with men of the stamp of Heemskerk, and when one of these sea kings met his death, there were dozens to take his room. Eagerly as the Spaniard might desire to recover the Empire of the Indies, the claim was an impossible dream. Besides the resources of Spinola began to fail. Nothing but victory could avert bankruptcy, and the victory did not come.
The real danger to Holland was from that Power whose future had not yet been discovered, which had hitherto done great services to the Republic, which already, as the United Provinces were approaching within measurable distance of their independence, was cooling towards them and was rapidly developing that bitter trade animosity which made the two great mercantile countries open or secret enemies for a century. Nor in the nature of things could such enmities be obviated. The United Provinces and England deliberately adopted monopoly as their principle. At first, and for a long time, it was difficult to discover any other form of trade. Private enterprise could not satisfy the conditions on which alone these mercantile relations could be successfully attempted. Only wealthy joint-stock companies could equip armed merchantmen, build forts and factories, and sustain by arms the settlements which they had made. To allow intruders, after such outlay was incurred, might be chivalrous, but was not, according to the ideas of the time, at all business-like. But in the end, settlements of this kind for mere business purposes are never successful. The Dutch East India Company became like the English company, an empire, with conquests, with revenues derived from taxes, with the mechanism of government, with rulers and subjects.