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Dutch, The


Dutch, The discovery of the oceanic communication opened up direct maritime trade between Europe and Asia, and the portuguese set the trend in an extensive and direct spice trade from Asia to Europe in the sixteenth century. Attracted by the vast market in Europe and the huge profits of the spice trade, the English and the Dutch East India Companies were formed in the early seventeenth century (the English Company in 1600 and the Dutch Company in 1602) with the primary objective of carrying on trade in Asia. By the middle of the seventeenth century the Dutch and the English who began their Bengal trade from around the middle of the seventeenth century after establishing their factories in hughli overshadowed the Portuguese.

The companies went to the so-called Spice Islands in the eastern archipelago to buy spices with silver obtained from the 'New World'. But to their great surprise they found that it was not silver which was in demand in these islands but coarse and cheap Indian calicoes. So they turned to India in search of textiles which could be exchanged for spices in the Indonesian archipelago. First their attention was drawn to the Coromandel Coast, which produced large quantities of cheap and coarse textiles greatly in demand in the Spice Islands. But soon war, famine and political instability rendered the Coromandel trade risky, uncertain and expensive, and so the companies eventually turned their attention to Bengal.

Bengal offered certain unique advantages to the companies. It was the largest producer of coarse and cheap calicoes - much cheaper and of much better quality than those available in the market. Secondly, Bengal silk was a highly lucrative and profitable commodity for the companies as there was a growing demand for it in Europe replacing Italian and Persian silk because of its comparative cheapness and good quality. Moreover a third lucrative item for the companies' trade was saltpetre which was in high demand in Europe and which could also be profitably used as ballast for Europe-bound ships.

The Dutch came to Bengal in 1630 and settled in Pipli. They obtained trading rights from the Mughal government on condition that they would pay 3% custom duties on exports. After the departure of the Portuguese from Hughli in 1632, the Dutch obtained a new parwana from the Subahdar azam khan in 1634 to establish a factory at Hughli. However, it was not until sometime between 1645 and 1647 that the company established the factory at Hughli. The Westzanen was the first Dutch ship to arrive there. The rate of the customs duty was not properly defined in the parwana and that led to frequent disputes. A farman of November 1642 exempted the Dutch from paying transit duties on the Pipli-Agra route that went through Bengal. The English factory was established at Hughli in 1651.

Between 1633 and 1638, the Dutch opened factories in Orissa and Patna but these were closed soon after. Peter Sterthemins was the first Director of Bengal, who transferred the Hughli factory to chinsura and the Company took lease of the villages of Chinsura, Baranagar and Bazar Mirzapur at an annual rent of Rs 1574 only, the rent of Baranagar being the highest (Rs 793). The dominance of the Chinsura factory soon became evident and the Pipli factory was abandoned in 1675, although Balasore remained the anchoring point of the bigger ships. The Dutch opened a factory at dhaka in the early 1650s at the place where the mitford hospital now stands and they had a garden house at Tejgaon.

aurangzeb, in his early years, had exempted the Dutch from payment of transit duties throughout Bengal, Bihar and Orissa and had fixed the customs duties at 4% at Hughli and 3% at Pipli and Balasore. Such discrimination was responsible for frequent quarrels with the government. The Dutch had always tried to evade tax. This was also a cause for dispute. In 1671, Hughli Factors had informed Batavia, the eastern headquarters of the Dutch company, that they had evaded the payment of at least 25% of the customs duties for the last sixteen years. This was finally detected and the Dutch had to pay one and a half lakh rupees. Batavia encouraged the Hughli Factors to make such evasions whenever possible. In 1678, the Dutch procured a nishan from Prince muhammed azam for payment of 4% at Hughli. In 1679, this was reduced to 3.5% and in 1709, by the farman of Shah Alam, it was further reduced to 2.5%. This was confirmed by the farman of 1712 by the emperor Jahandar Shah, who also exempted the Dutch from paying transit duties throughout the Mughal Empire.

From around the 1670s the trade of the companies in Bengal became significant, with a boost in the export of raw silk from Bengal. But it was actually the big boom in the export of Bengal textiles from around the early 1680s that revolutionized the pattern of the Asiatic trade of the companies. This was in fact in response to a revolution in consumer taste in England and Europe where suddenly Indian textiles, especially the textiles from Bengal, became a fashion and consequently there followed an unprecedented demand for Bengal textiles. As a result Bengal became the most dominant partner in the Asiatic trade of the companies and from around the 1680s till the mid-eighteenth century, the Dutch and the English East India Companies played a significant role in Bengal's maritime and international trade.

In the case of the Dutch, though their export to Europe began to decline in the 1720s, it picked up from the early 1730s. In 1730, Nawab Shujauddin gave the Dutch a parwana confirming old privileges. In 1748, alivardi khan gave them the privilege that customs should be collected from the Dutch private merchants at the same rate as that of the company (2.5%) instead of the 3.5% they had been paying so long. Nawab sirajuddaula sent parwanas to the Dutch, French and the Danes to join him against the English. The Dutch had remained neutral. The nawab, after censuring them, besieged their factory and demanded thirty lakh rupees, which was reduced to four lakhs through the mediation of Khwaja Wajid and Raja Durlabhram. Finally the Dutch agreed to pay four lakh rupees in lieu of free trade for the company. After the capture of chandanagore by the English, the Dutch gave refuge to its French inhabitants despite the protest of Clive.

The importance of Bengal trade in the Asiatic trade of the companies can be seen from the fact that Bengal's share in the average annual value of Asian commodities exported to Holland by the Dutch company was around 40 per cent in the early eighteenth century. Again, more than 50 per cent of the total value of the Dutch textile export from Asia was in the form of Bengal textiles. Thus Bengal became the most important theatre of the Dutch company's activities not only in India but in the whole of Asia. No different was the case with the English east india company. The English factors regarded Bengal as 'the flower in the Company's garden' and the 'choicest jewel'.

The raison d'EAtre of the Dutch company's operations in Bengal was the procurement of export goods for other parts of Asia as well as for Europe. The role of the precious metals and goods imported into the region from Europe and other parts of Asia was chiefly to provide the purchasing power needed to buy the export goods. Most of these imports were precious metals because, given the structure of relative prices, the local demand for imported goods was comparatively small. Most of the Dutch imports into Bengal were in the form of silver from Europe, though a certain amount of precious metals imported by the Dutch was obtained within Asia. This included silver and gold from Japan and silver from Pegu, Arakan and Persia.

The goods the Dutch company imported into Bengal were practically all of Asian origin except a small amount of ordinary metals like lead, iron etc and some woollens from Europe. An important constituent in the imports from Asian countries was pepper and other spices. Pepper was procured mainly from Sumatra and the Malay Peninsula. The other spices, especially clove, nutmeg and mace, were obtained in the eastern part of the Indonesian archipelago. The principal items exported by the company from the region were textiles, raw silk and saltpetre. Comparatively minor items, mainly for export to Asian markets, included provisions such as sugar, rice, wheat, clarified butter and mustard oil, opium, wax, borax, sea-shells (cauris), gunny bags etc. Though in the beginning raw silk played a crucial role first in the company's intra-Asian trade and subsequently in the trade with Europe, it was textiles, which dominated the exports of the European companies from Bengal in the late seventeenth and the first half of the eighteenth century.

In the second half of the seventeenth century the Dutch trade was much ahead of the English. The same was the case in the first two decades of the eighteenth century, as will be evident from the tables below:

Table 1 Value of the English and Dutch Exports from Bengal 1701-1720 (in Florins).

Years Average Annual English Exports to Europe Average Annual Dutch Exports to Europe Average Annual Dutch Exports to Europe and Asia
1701-1710 1,382,595 2,315,384 3,274,369
1710-1720 2,666,764 2,650,607 3,616,242

Source and note English Exports calculated from KN Chaudhuri, Trading World, p. 509 with one-year lag. Dutch Exports computed from Om Prakash, Dutch Company, p. 70; L = 12 florins, 1 Rupee = 1.5 florin.

It was around the second decade of the eighteenth century that the English trade from Bengal picked up and almost equalled the value of the Dutch exports, though the total Dutch trade, including the trade to their other Asian factories, was still higher than that of the English. The English company's exports to Europe increased substantially from the early 1730s and reached their peak in the first quinquennial period of the 1740s. However they declined marginally in the first quinquennial period of the 1750s but the decline was not really very marked or sharp, compared to the average annual value of the English exports from Bengal in the period from 1730 to 1755, which was around L 440,000 or a little over Rs 3.5 million. It may be pointed out here that the decline in the English exports in the early 1750s was compensated by the increase in Dutch exports to Europe during the same period and as such, so far as Bengal's export trade to Europe as a whole is concerned, there was hardly any noticeable change in the position in the first half of the 1750s as compared to the earlier period.

The average annual value of the Dutch export to Europe increased steadily throughout the period from the early 1730s to the middle of the 1750s. The growth of the Dutch export to Europe was more remarkable in the early 1750s when the English trade declined, though not considerably. The interesting point to note is that the Dutch trade, which was much behind the English trade in the early 1730s nearly, equaled the latter in the early 1750s. However in this computation the Dutch exports included the value of their exports to their Asian settlements, which was on a steady decline from the 1730s. The average annual value of the Dutch exports to Europe was around L 284,775 or Rs 2.3 million while the average annual value inclusive of exports to Asian markets stood at around L 373,342 or Rs 3 million in the first five years of the 1750s. The following table will give an indication of the comparative position of the average annual value of the English and Dutch exports from Bengal in the first quinquennial periods from 1730 to 1755:

'Table 2 Quinquennial total and average annual value of the English and Dutch exports, 1730-1755 [in florins].

Years English Average Annual Value of Exports to Europe Dutch Average Annual Value of Exports to Europe Average Annual Value of Total Exports to Asia and Europe
1730-31-1734/35 5,082,453 2,020,460 3,489,567
1740/41-1744/45 5,764,284 2,390,558 3,475,770
1750/51-1754/55 4,879,785 3,417,306 4,480,104

Source and note Dutch exports compiled and computed from export invoices in the Dutch Company’s records at the Algemeen Rijksarchief, The Hague. The figures for English exports calculated with one-year lag from KN Chaudhuri, Trading World, 509-10; The rate of conversion is L 1 = f 12.

In this connection it is significant to note that the Dutch exports from Bengal, which were so important a part of their trade in the late seventeenth and early decades of the eighteenth century, show a steady decline in the period 1730-1755. On the contrary the value of exports to Europe was steadily increasing in the years from 1730 to 1745 and was marked by a substantial increase in the early 1750s. However in the first quinquennial periods of the decades from 1730 to 1755, the value of the Dutch exports to Batavia showed a steady increase, though the Dutch intra-Asiatic trade declined as a whole. The percentage share of the average annual value of the Dutch export from Bengal to Batavia in the total value of Dutch exports from the province to the different parts of Asia was 64.83 in the early 1730s, increasing to 77.02 in the first half of the 1740s and to 89.92 in the 1750s. But the export to two other important Dutch markets for Bengal goods namely, Japan and Persia showed a gradual decline. The Dutch export to other centres in Asia was almost negligible in the period from 1730-1755.

Thus a few interesting features of the export trade by the English and the Dutch companies emerge from the above analysis. The Dutch had a definite lead over the English in the first decade of the eighteenth century while they were almost equal in the second. From around the early 1720s, the Dutch fell behind the English but were picking up from the 1730s. The average annual value of the exports by the English reached the high mark in the first quinquennial period of the 1740s but it declined marginally in the first five years of the 1750s. On the other hand, the value of the Dutch exports, including exports to Asia, nearly equalled that of the English in the early 1750s. And considering the total value of exports by the two companies, there was hardly any decline from 1730 to 1755. The decline in the value of English exports in the early 1750s was made up for, as far as Bengal's export trade was concerned, by the increase in that of the Dutch during these years. So far as the Dutch intra-Asiatic trade was concerned, there was a gradual decline throughout the period, though the percentage share of Batavia in the total value increased steadily.

Here it should be noted that though it was held for long that the Europeans were the major partners in Bengal's export trade, it has been shown recently that the exports of the Asian merchants from Bengal even in the mid-eighteenth century were much higher than that of the Europeans. Textile export by Asian merchants can be computed at around Rs 9 to 10 million a year while the total export of Bengal textiles by the Europeans hardly exceeded Rs 5 or 6 million at the most. The Asian lead in silk export is much more spectacular. While the total value of silk exported by the Asian merchants is estimated at around Rs 5.5 million on an average during the period from 1749 to 1753 and Rs 4.1 million in the next five years, the average annual value of the European export of silk was only around Rs 0.98 million over the same period. In other words, the Asian share of the silk export from Bengal was 4 to 5 times more than the European share of the same in the pre-Palashi period. Most of the other European companies' trade shrank considerably after Palashi as the British pursued a policy of wiping out their European and Asian rivals, and whatever remained of the latter's trade was financed by private British individual's, who in return received bills of exchange in Europe.

It is surprising that the Dutch remained almost onlookers when the British were plotting the conquest of Bengal. After Palashi, however, they made abortive attempts to recover the lost ground. In this respect they got an ally in the person of mir jafar, the Nawab. On 20th November 1759, the English seized the Dutch factory at Baranagar while the Dutch landed troops on the 22nd on the Sankrael Reach. The English won the naval battle on the 24th and the Dutch attack on the English position at Chandarnagore was beaten back. On the 25th, the English defeated the Dutch at Badera, located between Chandarnagore and Chinsura. Through the intervention of Miran, the Dutch were given back their privileges by a convention signed on 5 December 1759. The battle of Badera effectively put an end to Dutch power in India.

When shah alam II invaded Bengal, the Dutch formulated a plan to drive the English out. But Mir Jafar's successor mir qasim forced the Dutch to demolish the outer work of their fort, Fort Gustavas, at Chinsura and to pay 50,000 florins. The nawab then demanded Rs 50 lakh as compensation from the Dutch and seized their factory at kasimbazar. The Dutch paid half the amount and with English help could draw up a convention with the nawab on 23 August 1760, whose terms were very harsh on the Dutch.

Despite the English help given twice to the Dutch, the friction between them continued till the authorities in London ordered the English in Bengal not to treat the Dutch severely. The victory in the battle of buxar, 1764 and the acquisition of the Diwani in 1765 by the English further reduced the political position of the Dutch.

Their commercial position was also reduced as seen in the fall in their export of cotton piece goods from 79,000 pieces in 1758 to 47,000 pieces in 1764. The reason of the Dutch dependence on cotton piece goods was that after 1757 the English practically monopolised the saltpetre and opium trade.

One of the reasons of the soft English attitude towards the Dutch was that the English officials used to send money home by purchasing Dutch bills of exchange. This helped the Dutch in Bengal to increase their investment in raw silk and cotton pieces, whose investment in the seventies of the eighteenth century was nearly forty lakh rupees in which import of bullion was not necessary, reflecting the prosperity of English private trade. However, with the coming of lord cornwallis as Governor General, British private trade declined and with that the Dutch trade came to a virtual stop in the 1790s.

True, the Dutch did not get the necessary encouragement and support from the Heeren Seventeen (Board of Directors) in Amsterdam. But it is true at the same time that the Dutch officials in Bengal were rather not much interested in conquest. After the battle of Palashi, there was a frantic effort by Mir Jafar and Khwaja Wajid to dislodge the British, and the two joined hands with the Dutch whom they tried to persuade to invade Bengal and act as counterpoise to the British. But the gamble failed miserably and the Dutch were gradually eliminated from the trading world of Bengal. [Aniruddha Ray and Sushil Chaudhury]

Bibliography KN Chaudhuri, The Trading World of Asia and the English East India Company, Cambridge, 1978; Om Prakash, The Dutch East India Company and the Economy of Bengal, Princeton, 1985; S Chaudhury, From Prosperity to Decline - Eighteenth Century Bengal, New Delhi, 1995; Om Prakash, European Commercial Enterprise in Pre-Colonial India, Cambridge, 1998; S Chaudhury, The Prelude to Empire-Plassey Revolution of 1757, New Delhi, 2000.