Dutch East India Company began when Dutch Republic was at war with Spanish Crown in and needed funding for the military expense as well as for commercial profit. During those times spice trade was the way to gain profit among the countries. In 1602, State General of the Netherlands granted Dutch East India Company (VOC) a 21 years charter over the Dutch traders in Asia and quasi-governmental powers like authority over trade defense, war armaments, freedom to wage wars and political endeavors.
Originally, Dutch East India company was called United East India Company as it was a monopoly, was made up of all the individual ship owners who were united under the VOC. VOC full form was Vereenigde Oostindische Compagnie.
ESTABLISHMENT OF STOCK EXCHANGE
The idea of trading company shares existed even before in the Ancient Rome but exact date could not be found. In 1300 Venetian lenders would carry slates and attract clients with the information displayed. Moneylenders traded debts with each other.
The first stock exchange in the world was founded in 1602, created in Amsterdam when the Dutch East India Company (VOC) set up the exchange to sell shares of the company and this way became the first publicly traded company. The stock market was step up and the shares were sold to many investors who will get profit in return.
At that time it was custom to fund the single voyage and to be liquidated upon the return. The expedition were considered high-risk venture because most of the voyage ended in failure, also because of inelastic demand and elastic supply. This also made less wealthy people unable to invest.
In 1600, the East India Company were the first to adopt budling the resources. Dutch East India Company followed the pattern. The jointly-ownership allowed the investors to distribute the risk and also lowered the financing of the expensive voyage.
It had a private ownership and joint-stock structure.
VOC had two types of shareholders- the participanten, who could be seen as the non-managing and bewindhebbers, who acted as the managing directors, following the same pattern as most Dutch joint-stock companies.
What made VOC different was that liability of both the participanten and bewindhebbers were limited to paid-in capital (usually bewindhebbers had unlimited liquidity). VOC was a limited liability company. When the investors wished to liquidate their interest, they could only do it by selling their share to others on the Amsterdam Stock Exchange.
The transfer of shares to a third-party was also offered the investors to. At secondary market rose for the resale of the stock through the official bookkeeping, Securities market was born through this type of speculative trading.
In 1623, after 21 years were over and the shares were needed to be liquified and the profit should be distributed, but the trade did not showed any sign to slow down. State General issued second charter, granting VOC additional years with no period of liquidation instead dividends were to be paid to the shareholders.
What VOC changed thorough the stock market was that the easy buying and transfer of shares allowed normal people to enter the stock market, making the stock accessible for all.
WINNING THE TRADE WAR
There was high demand for spices in Europe at that time. VOC focused on trading spices, silk, tea, grains, rice, soybeans and sugarcane. They brought spices and grains from countries like Indonesia, India, Sri Lanka, China, etc. They discovered new trade routes and gained control over trade in Southeast Asia.
The large amount of VOC success came from Dutch forcefully monopolizing the nutmeg and colonizing Indonesia. They also battled Portuguese and took over port of Galle, monopolizing cinnamon.
Because of the charter, VOC held a significant amount of power over military and they used it to expand their power. The large amount of fleet helped them carry out multiple of trades lowering the risk of failure.
