DUTCH EAST INDIA COMPANY AND THE EARLY DUTCH PERIOD IN INDONESIA

DUTCH IN INDONESIA

The Dutch arrived in what is now Indonesia in the late 16th century and became a major force there in the 17th century. Winning independence from Spain in 1581, the Netherlands became a major seafaring power. During the seventeenth century, Amsterdam emerged as Europe's primary center for commerce and banking. Largely Protestant and Calvinist, the new state, unlike Portugal, did not reflect the crusading values of the European Middle Ages.

Much of the Dutch activity in Indonesia was initially chartered as the United East India Company (also known as the Dutch East India Company and the VOC), a government-run monopoly created from competing merchant companies that were encouraged by the Dutch government to unify in 1601. Ultimately with bigger ships, more powerful guns and better financial backing than their European rivals, Dutch were able to gain control of the East Indies.

With exception of two brief periods of English rule during the turn of the 19th century, Indonesia was under Dutch rule from 1627 to 1942. During that time Indonesia was know variously as the Dutch East Indies, Dutch East India, the Netherlands Indies, the Malay Archipelago, Malaysia, or the East Indies.

The Dutch were interested primarily in commerce and plantation agriculture and making money. The exploited commodities such as spices, teak, coffee and tea and ruled in such a way as to make a maximum profit. Their strategy was to monopolize trade, fix prices and exploit the local population as a labor force. They did relatively little to develop and modernize Indonesia and were largely unsuccessful spreading Christianity.

In Indonesia and elsewhere, the Dutch cobbled together an empire of far flung islands that were often as different from one another as individual nations and often had little to do each with each other than occasional trade. The Dutch control was never strong. They ruled trough a system of provincial administration ruled from Batavia (Jakarta) in cooperation with local sultans and other rulers and backed up their claims with superior weaponry and Bugi and Ambonese mercenaries.

The Dutch began shifting towards establishing colonial rule with the decline of the Mataram kingdom on Java after the death of the powerful Mataram leader Sultan Agung (1613-46). Employing superior weapons and technology, namely the musket and cannon, and using divide and rule strategies among Indonesia’s multitude of ethnic groups and political bodies, they kept the Muslim sultans and tribal chiefs from uniting against the Dutch by pitting them against each other and backing ambitious challengers in return for land and other concessions. The Dutch won some local princes over to Christianity by giving them cannons to use on their rivals.

Arrival of the Dutch in Indonesia

The Dutch began making moves on Indonesia once they mastered the route eastward to the Orient via Cape Horn. The Dutch began making moves on in present-day Indonesia after the Spanish Armada was defeated by the English in 1588, weakening Spain’s empire around the globe.

After the Spanish were thrown out of the Netherlands, the Dutch began looking beyond Europe to develop trade, harnessing their long-standing sailing tradition. The Dutch navigator Willem Schouten (1580-1625) rounded Cape Horn in 1616. Abel Janszoon Tasman was sent by the Dutch East India Company in 1642 and 1644 to find if New Guinea was attached to Australia. He instead found New Zealand, Tasmania and the Fiji Islands. The voyage was considered a failure because no ways of making money were discovered.

The first Dutch expedition to Indonesia—four ships led Cornelius de Houman— entered Indonesian waters in 1596, visiting Banten on the western tip of Java as well as north-coast Javanese ports. This first expedition was both a disaster and a success. One ship was sunk and half the crew and a Javanese prince were lost. The three remaining ships made it back to Holland with cargo holds filled with spices and earned huge profits for those that had invested in the expedition. There followed a few years of "wild" or unregulated voyages, when several Dutch trading concerns sent out ships to the islands.

Dutch Force Out the Portuguese in Indonesia

The Dutch later moved in and took possession of many of the Portuguese forts by force. Dutch trading ships were replaced by heavily armed fleets that were given orders to attack Portuguese forts. By 1605 the Dutch had defeated the Portuguese at Tidore and Ambon in the Spice Islands and outmaneuvered Spain by supporting Ternate against the Tidorese and claimed those territories for themselves.

By 1610, the Dutch had kicked out the Portuguese, who retained only the eastern half of Timor. In 1611, the United East India Company set up its capital in Jakarta (renamed Batavia by the Dutch). Jakarta was selected because its strategic location on the shipping on the Sundra and Melaka Straits. The local ruler of Jakarta gave trading rights to both the Dutch and the English. Tension arose and reached a head when the English and local Javanese laid siege to a Dutch fort. The Dutch retaliated and raised the town in 1619.

Netherlands in the Early 17th Century

The United Provinces of the Netherlands (the government in control of Holland in the early 17th century) was, in a sense, the world's first modern state. It was a republic dominated by middle class burghers rather than a dynastic monarchy. In the first half of the 17th century, the United Provinces grew in power and wealth. They possessed the largest merchant fleet in the world and over time opened up new trade began and acquired colonies. At one point the Dutch controlled half the world's shipping

After Spain absorbed Portugal in 1580 the Dutch seized Portuguese possessions and created a vast, though short-lived commercial empire in Brazil, the Antilles, Africa, India, Ceylon, Malacca, Indonesia and Taiwan and challenged Portuguese traders in China and Japan. Naval and land battle between colonial powers in Southeast Asia in the 17th century gave the English and the Dutch access to the lucrative spice trade route the Portuguese had established.

The Dutch had been traders a long time. The Bank of Amsterdam was founded in 1609, 85 years before the Bank of England. Some say the Dutch East India Company (see Below) was the first multinational corporation.

United East India Company (Dutch East India Company, VOC)

Recognizing the great potential of East Indies trade, the Dutch government amalgamated competing merchant companies into the Vereenigde Oost-Indische Compagnie (VOC; United East India Company) in 1602 under a charter issued by the Dutch parliament, the Staten-Generaal. This government-run monopoly soon became the main competitor in the spice trade.

The VOC, some say, was one of the world’s first join stock company and some credit it with creating the world’s first logo. Its eastern wing, later called the Dutch East India Company , traded with the Far East and controlled much of the trade between Europe and Persia, India, Java, the Spice Islands and Japan. The Dutch West India Company, founded in 1621, traded with Africa and America. It made a fortune selling gold, emeralds, sugar, slaves and ivory from West Africa, Mexico, Chile and Peru.

A common historical perspective on the seventeenth and eighteenth centuries is to portray the VOC as a uniquely powerful military and economic juggernaut that steadily and deliberately constructed the empire that came to be known as the Netherlands East Indies. In the twentieth century, such a view was frequently shared by Dutch colonial officials and Indonesian nationalists, who spoke of “350 years of Dutch rule” in the archipelago. The truth, however, was more modest. The VOC was neither the “first (modern) multinational corporation,” as has sometimes been claimed, nor the instrument of a state policy of colonial expansion. It was founded in the Netherlands in 1602 as an effort to manage the competition and risk of the growing number of Dutch expeditions to the Indonesian archipelago (10 companies, 10 voyages, and 65 ships between 1595 and 1601), and to compete with the East India Company, formed by the English two years earlier, for control of the Asian trade. [Source: Library of Congress *]

The VOC’s initial charter established its sole right among Dutch enterprises to do business in Asia and gave it exceptional powers, such as those of keeping an army and using military force, making treaties with local rulers, building fortifications, and issuing coinage. In addition, it called for little government oversight and did not require the new company to pay dividends to investors at the end of each voyage (as had been the practice), allowing it to amass large sums of money over longer periods of time. The purpose of this state-supported enterprise was primarily to make a profit. At home the directors, known as the Heeren XVII (Seventeen Gentlemen), recognized that fighting wars, establishing colonies (rather than simple trading posts and fortifications), and becoming involved in local disputes diminished profits, and they generally warned against such activities. *

Far away in the archipelago, VOC representatives, appointed after 1610 as governors general, tended to see the warring and political involvement as necessary and pursued them anyway, often vigorously. Even the more ambitious of their efforts, however, were restrained by certain realities. Above all, the VOC was never big enough or strong enough to dominate the entire archipelago and its people, and indeed the company found it impossible to enforce its will in local affairs without Indonesian allies, who frequently exacted a high price for their assistance and whose loyalty could never be taken for granted. It was also the case that even when it had its way— for example, by gaining control of specific trading ports or routes, or of the main areas in which particular spices were produced—interventions by the VOC often had unintended short- and long-term consequences that it could do little to control. Finally, of course, the VOC’s fortunes were subject to the vagaries of a trading system that stretched far beyond the archipelago, including the rise and fall in world demand for spices and, later, for other products on which it came to depend, such as coffee. In the course of nearly two centuries, the company failed to control the spice trade and establish the stable conditions necessary for mercantile growth, and came to rule over only minute patches of territory, except for small areas in Maluku in the seventeenth century and Java in the eighteenth. *

Indonesia Under the VOC

In the early years the Dutch East Indies (Indonesia) was controlled by United East India Company (later the Dutch East India Company), the same way India was controlled by the British East India Company. The officail name of the United East India Company was the Vereenigde Oost-Indische Compagnie (VOC). The VOC was mostly interested in trade and profits, except in areas where they set up agricultural monopolies like the Moluccas, it had relatively little impact on the people it traded with throughout Indonesia except in matters of trade. Things changed when the colonial Dutch government arrived in the 19th century. They were more intent on subduing and controlling the people.

Although its directors, the Heeren Zeventien (Seventeen Gentlemen), were motivated solely by profit, the VOC was not simply a trading company in the modern sense of the word. It had authority to build fortresses, wage war, conclude treaties with indigenous rulers, and administer justice to subject populations. In the early years, the Heeren Zeventien attempted to direct their operations from Amsterdam, but this proved impossible and in 1610 the post of governor general of the VOC was established.

According to Lonely Planet: VOC control grew rapidly: it took Melaka from the Portuguese in 1641, quelled attacks from within Java, secured the Sumatran ports and defeated Makassar in 1667. The VOC policy at this stage was to keep control of trade while avoiding expensive territorial conquests. An accord was established with the king of Mataram, the dominant kingdom in Java. This accord allowed only VOC ships (or those with permission) to trade with the Spice Islands. [Source: Lonely Planet]

The Dutch possessions were every profitable at first and helped usher in the Golden Age of Holland. In the 17th century the Dutch introduced Protestantism. Although some local people who worked with the Europeans in the colonial administration converted to the religion as was the case with Catholicism and the Portuguese. Christianity did not make much headway with the local population expect in a few areas like East Timor and the Spice islands.

Troubles for the VOC in Indonesia

The key to Dutch commercial success in Indonesia was the security of its base of operations at Batavia. The security issue involved the VOC in the internal politics of Java. The earliest governor generals had not intended to become involved in Java's politics. They had envisioned the company as primarily a maritime power, consisting of a network of forts and heavily defended trading routes. But during the seventeenth century and especially the eighteenth century, the Dutch found themselves caught up in Java's perennial political instability. Defense of VOC interests required the raising of armies and collection of revenue from rulers and the general population to pay for them. *

By the 1620s, Sultan Agung of Mataram had conquered Surabaya, a powerful rival state, extended his power on Java as far west as Cirebon, occupied the island of Madura after a bloody campaign, and forced the sultans of Banjarmasin and Sukadana on Kalimantan (known during the colonial era as Borneo) to become his tributaries. Batavia, already threatened by the hostile sultan of Banten, was besieged by Mataram forces by both land and sea in 1628-29. The siege was unsuccessful, and Sultan Agung had to accept the company's continued existence on Java. Royal poets and chroniclers, however, portrayed Dutch diplomatic missions to the Mataram court after 1629 as expressions of humble submission. The ruler turned his attention eastward, devastating the Hindu-Buddhist state of Balambangan but suffering defeat in his attempt to conquer the intrepid Balinese. *

A revolt against Sultan Agung's successor, Amangkurat I (reigned 1646-77), in 1671 led the ruler, much resented for his harsh policies, to seek Dutch assistance against the rebels. When his palace was captured by the rebels, Amangkurat I sought refuge on VOC-controlled territory in 1677, where he died. His successor, Amangkurat II (reigned 1677-1703) gave the VOC monopolies over the sugar, rice, opium, and textile trade in Mataram territory in exchange for the VOC's military support in his efforts to regain the throne. Amangkurat II also agreed to the cession of the Priangan Districts south of Batavia. In 1684 the crown prince of Banten, involved in a revolt against his own father, asked for Dutch aid and in return was obliged to make concessions that essentially spelled the end of the kingdom's independence. *

Under the VOC, there was a rise of authoritarian rulers dependent on VOC support and unrest among groups—traditional leaders, merchants, religious and military figures—who opposed one or the other or both. Among the most prominent examples are those found in the histories of Ternate in the time of Sultan Mandar (r. 1648–75) and the wars against Hitu and Hoamoal (1638–56), and of southern Sulawesi in the era of the ambitious Buginese (Bone) prince Arung Palakka (1634–96) and the wars against the Makassarese (Gowa) and others. By the end of the seventeenth century, the glories of the spice trade had faded, and the vitality of the large and small states of the post-Majapahit era had been sapped; the weight of affairs had again begun to shift west, to Java.

Dutch on Java in the Early 16th Century

In 1619 the VOC had seized Jayakerta (Sunda Kelapa), a small but well-protected west Javanese port it had originally contracted from a disgruntled vassal of the sultanate of Banten, renaming it Batavia, forerunner of today’s Jakarta. The resolute Governor General Jan Pieterszoon Coen (in office 1619–23 and 1627–29) had conceived of this port as a kind of fulcrum of the company’s far-flung Asian enterprise, and he defended it vigorously against both Banten (allied briefly with England’s East India Company) and, in 1628–29, the powerful land and sea forces of the expanding central Javanese state that had taken the name of Mataram, after the ninth-century kingdom. [Source: Library of Congress *]

Mataram’s ruler, Sultan Agung (r. 1613–46), was Java’s greatest warrior king since Kertanagara nearly four centuries earlier. Using iron force and a keen sense of traditional diplomatic opportunities, Sultan Agung assembled a realm that consisted of all of Java and Madura (including the powerful kingdom of Surabaya) except Banten in the far west and the Hindu-Buddhist kingdom of Blambangan in the far east. Sukadana and Banjarmasin on Kalimantan also fell under his sway. *

He was not, however, able to dislodge the VOC, and after the failed campaign of 1628–29 he appears to have accepted the Dutch presence as a minor irritant. Contemporaneous Javanese historical works treated the company more as a potential ally than as a serious threat, a view that persisted among many in court circles for another century or more. And, indeed, at the time the VOC was neither interested in nor capable of tackling the full force of Mataram, which despite the destruction and political tensions wrought by nearly 40 years of expansion remained a formidable military power. The company saw itself as a maritime power, a rival for the control of produce and trade rather than territory, and it sought stable conditions for its activities rather than upheaval. *

Dutch on Java in the Late 16th Century

Conditions on Java began to change during the disastrous reign of Sultan Agung’s son, Amangkurat I (r. 1646–77), who lacked his father’s talents but sought to further strengthen the realm by centralizing authority, monopolizing control of resources, and destroying all real or imagined opposition. His misguided efforts to control trade revenues by twice closing the ports of the Pasisir, and even destroying Javanese trading vessels and forbidding Javanese travel overseas, had the opposite effect, in addition to alienating the commercial community and damaging the wider economy of producers. His obsessive fear of opposition led him to kill more than 5,000 Muslim leaders and their families in a single, well-planned massacre, and to murder hundreds of court officials and members of the aristocracy, including his own family, actions that of course only increased the hatred and intrigues aimed at removing him. His attitude toward the VOC was ambivalent, for, on the one hand, he admired its apparent wealth and power and considered it a potential ally and protector, yet on the other hand he sought to bend it to his will and to extract all he could from its representatives in Batavia. [Source: Library of Congress *]

Beginning in the early 1670s, rebellions began to rise, the most powerful of which was led by Raden Trunajaya (ca. 1649–80), a Madurese aristocrat conspiring with a disaffected son of Amangkurat I and allied with Makassarese and other forces. Trunajaya’s armies won a decisive victory in 1676 and looted the capital the following year. Mataram was disintegrating. In the course of this conflict, both sides requested assistance from the VOC, which now faced a momentous decision. The company sought political stability and a reliable supply of such key products as rice and teak, and it determined for the first time in more than a half-century that, in order to obtain them, intervention in Mataram’s internal affairs was necessary. *

Company officials viewed Javanese kingship through a European lens as a relatively absolutist, centralized form of rule that legitimated succession by, if not strict primo geniture, then something very close to it. This was a misreading of Javanese (and, indeed, other Indonesian) cultural custom, but nonetheless the VOC gradually came to see itself as the upholder of order (tradition) and to justify its actions in terms of favoring continuity rather than change. It made its choices accordingly, often with the ironic result of creating rather than solving discord and of weakening rather than strengthening the sorts of order it hoped to achieve. *

In any case, the VOC decided in 1676 to back the forces of Amangkurat I, who died soon after having fled to VOC-controlled territory on the Pasisir, and then to support his rebellious son as successor, a project requiring five more years of warfare to complete. The company gained treaties promising, among other things, access to the products and trading rights it sought, as well as repayment of all its military costs. That these treaty obligations proved difficult to fulfill did not negate the fact that the VOC had now embarked on a course that slowly and expensively intertwined its own fate with that of Mataram. The dark legacy of Amangkurat’s tyrannical misrule thus lay not only in 80 years of turbulence in Javanese life, punctuated by three destructive wars of succession, but also in the establishment of patterns of Dutch entanglement in indigenous affairs that were to outlive the VOC itself. *

Dutch Expand in Indonesia

In addition to fending off attacks from the Central-Javan-based Mataram empire, the Dutch and defeated the Makassar in 1667, extending their grasp eastward. They also managed to gain control of most of the important ports in Sumatra. The last Portuguese were expelled in 1660. At Banten in 1680, the Dutch expelled the British and established a monopoly on the Indonesian pepper trade by helping an ambitious prince overthrow his father.

The Dutch made vast profits selling nutmeg, mace, cloves and other spices. In addition to spices, the VOC made a fortune from selling sandalwood, slaves and horses and operating as the main intermediaries between Europe and China, Japan and Southeast Asia.

At this stage of the game, the Dutch were focused on maintaining their trading posts and profitable monopolies and had no great ambitions to establish colonies. A deal was made with king of Matram, the most powerful kingdom on Java, that the Dutch would support the king in return for exclusive right to the Spice islands. Large numbers of Moluccans were massacred and their farms were razed to make way for the spice plantations. The plantation system, which depended on the cheap labor of the local inhabitants, endured until the 20th century.

In the 17th century the Dutch traded from gold and pepper along the eastern coast of Sumatra. After they captured Malacca (Melaka) in 1641 they dominated trade on the eastern coast of Sumatra through the Straits of Malacca.

Dutch and Makassar

The first mention of the Makassar is around 1400. At that time there were a number of Makassar principalities, each of which was said to have been founded by a princess or prince who descended from heavenly beings. Islam arrived in 1605. [Source: Encyclopedia of World Cultures, East and Southeast Asia edited by Paul Hockings (G.K. Hall & Company, 1993) ~]

The Makassar state of Gowa became the most powerful state in Indonesia, outmuscling its rivals the Bugis of southeastern Sulawesi and exerting control over much of what is now eastern Indonesia in the 16th and 17th century. Early European explorers to the region encountered Makassar fleets trading as far east as New Guinea and as far south as Australia. The Makassar were among the first outsiders to have contact with Australian Aborigines, introducing metal tools, pottery and tobacco to them. Gowa endured until it was defeated by Dutch and Bugi forces in 1669. ~

The Dutch East India Company viewed Gowa as a threat to its spice monopoly. It allied itself with a Bugi prince to fight them. After a year of fighting the sultan of Gowa was forced to sign the Treaty of Bungaya in 1668 that greatly reduced Gowa’s power and gave the Dutch control of sea lanes and the sources of spices that it wanted. ~

After that the Makassar periodically rebelled and were not brought under Dutch control until 1906 when Dutch forces conquered the interior of their homeland and killed the king of Gowa. Colonialism was only made possible by the incorporation of Makassarese nobles into the colonial system. Even today Makassar nobles occupy many positions of authority in the Indonesian government. ~

Dutch and Bugis

The Bugis are believed to have originated from the Sa’dan River and migrated inland up the Sa’dan valley and across to the Gulf of Boni, where they established their first kingdom, Luwu, which grew rich by dominating the trade of iron and nickel. As time went on a more powerful Bugi kingdom based on a complex network of chiefs and wet-rice agriculture grew up in the south and eclipsed Luwu by the 14th century. [Source: Encyclopedia of World Cultures, East and Southeast Asia edited by Paul Hockings (G.K. Hall & Company, 1993) ~]

By the 16th century the Makassar challenged the Bugis for dominance of the region and prevailed by the 17th century. In 1667, the Bugis allied with the Dutch to overthrow the Makassar and established a powerful kingdom that endured through the Dutch period. During this time there was a great diaspora of Bugis, especially those who had been allies of the Makassar. ~

The weakness of the small coastal Malay states led to the immigration of the Bugis, escaping from Dutch colonisation of Sulawesi, who established numerous settlements on the peninsula which they used to interfere with Dutch trade. They seized control of Johor following the assassination of the last Sultan of the old Malacca royal line in 1699. Bugis expanded their power in the present-day Malaysia states of Johor, Kedah, Perak, and Selangor. In the Malay peninsula’s western areas, the Buginese and the Minangkabau, often fought each other. By 1740 the victorious Buginese ruled many peninsular states and continued to do so until they were defeated by an alliance of Johor and the Dutch in 1784.

Bugi mercenaries attained high positions in Aceh, Malaysia , the Riau Archipelago and Thailand and established large settlements in eastern Sumatra. Bugi merchants established strategic trading ports on Kuta in Kalimantan, Johor, north of Singapore, and Selangor, near Kuala Lumpur. ~

The Bugis were notorious mercenaries for the Dutch in the colonial period and their presence often turned the tide in the favor of the Dutch in places like the Riau Archipelago and East Kalimantan. Bugis were also involved in the Indonesia independence movement and thus still remain influential today. The Indonesia government has traditionally kept up a strong military presence in Bugi areas to keep them from rebelling and fighting one another. ~

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Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, Lonely Planet Guides, Library of Congress, Compton’s Encyclopedia, The Guardian, National Geographic, Smithsonian magazine, The New Yorker, Time, Newsweek, Reuters, AP, AFP, Wall Street Journal, The Atlantic Monthly, The Economist, Global Viewpoint (Christian Science Monitor), Foreign Policy, Wikipedia, BBC, CNN, NBC News, Fox News and various books and other publications.

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© 2008 Jeffrey Hays

Last updated June 2015

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