Japan's Economy by Proxy in the Seventeenth Century: China, the N ...

In other words, rather than liquidating the company after a single voyage and dividing the profits and assets among investors, the VOC used the profits from one voyage to outfit the next one, using the remaining profits to cover operating expenses and, of course, to pay dividends to the investors.³⁷ The company ostensibly paid a five percent dividend over ten years; very early on, however, it was all but apparent that this would be almost impossible to maintain. This dilemma arose because of the very nature of the company: the VOC was not simply a trading company bent on the pursuit of profit, but it was also a quasi-governmental agency with the ulterior motive of carrying the war for independence against Spain (and Portugal) into the Indian Ocean. Therefore, investing in the VOC, while certainly not unprofitable, did not yield the dividends originally promised; rather, profits were used to support the apparatus of war in the East Indies with the full backing of the state. Furthermore, one of the reasons that the state did not aggressively interfere in company business when it was unable to pay its dividends was that the company was a source of revenue for the state, since in return for having its charter renewed, the directors made a generous “donation” to the coffers of the States General.³⁸

In the words of Niels Steensgard, “The formation of the VOC can be regarded as an important activity of war, and in contrast with its predecessors, the United Company soon developed a war-like policy in close cooperation with the States General.”³⁹ In the very charter of the company it was stated that the VOC had the sovereign right to make treaties with foreign rulers in Asia, to build fortifications and recruit soldiers, and to wage war against the enemies of the United Provinces. Undoubtedly this was a reflection of the vast distances involved in the Indian Ocean trade as well as the fact that with the Dutch, Portuguese, and Spanish all active in the Indian Ocean, there were bound to be frequent run-ins with the Spanish. Even so, however, the VOC enjoyed a great deal more autonomy in this respect than did any other European company. The simple fact that the VOC was born in a time of war against an exceedingly powerful sea-borne enemy is the true reason behind these broad powers of war being given the company.