Krupnikoff 1

Sam Krupnikoff
Western Civilizations
Section A
12/11/15
The Modern Corporation: the 17th century to the 21st
The Dutch East India Company was one of the first joint-stock companies, and it
originated in the early 1600s, rising to prominence in the 17th and 18th century. The Dutch East
India Company was vital to the Dutch economic prosperity including, both the merchant
community and the Dutch Crown. 1 The model and structure of this company as well as others
of its time period have influenced how most multinational corporations are run today. In modern
corporations, corruption is just as relevant as it was in the 17th and 18th century with
government corruption, bribery, gift-giving, and human rights abuse. Additionally, corporate
structures from the 17th century to the 21st century have many common aspects such as: jointstock companies, monopolistic corporate actions, and being creators of corporate cities. All of
these similarities to the modern day corporation can be seen within The Dutch East India
Company.
In the early 1600s and late 1500s, merchants from Europe raised money to explore and
colonize Asia, Africa, and North and South America. Using these colonies, Europeans produced
food, made trading relations, and extracted resources for their financial gains. The Dutch East
India Company was created in 1602 to promote trade with Asia, and the company was based in
modern day Indonesia. Additionally, this company not only brought wealth to Dutch merchants
who ran and owned the company, but it also brought wealth to the Dutch Crown. This wealth
1 "Dutch East India Company," World History: The Modern Era, s.v. accessed November 17, 2015.
http://worldhistory.abc-clio.com/.

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centered from its headquarters at Batavia [now Jakarta] in Indonesia [where they] controlled
the trade of the Spice Islands in eastern Indonesia giving the corporation many great trading
opportunities in the East Indies. With their trade relations, the Dutch East India Company gained
control over the Spice Islands in eastern Indonesia. 2 In turn, this, as well as its monopoly on
trade in Asia (granted by the Dutch Crown), made the owners of The Dutch East India Company
and Dutch Crown extremely wealthy. The Dutch East India Company was one of the first jointstock companies, and it set the example for many modern corporations.
The concept of the joint-stock company was for people to pay for a percentage of the
company: this gave them a share of the company, while it increased capital for the company
where they bought their share from. Joint stock companies arose at the end of the sixteenth
century to encourage [European] trade with far-flung cultures from Russia to Africa to Southeast
Asia. The concept of the joint-stock company became apparent when people specifically
merchants, came upon so many resources, that they did not have the financial ability to trade
with the cultures who had it. These companies also made it easier for the investor. Before the
creation of the joint-stock company, one investor would spend a large amount of money to pay
for the same investment that many people would pay for in a joint-stock company. In turn, this
system lowered the risk for the investor, allowing them to have less liability. In addition, one of
the most important aspects of this was that these companies attracted investors from a relatively
broad spectrum. 3 With less money needed to make an investment, more people could afford to

2 "Dutch East India Company,"World History: The Modern Era, s.v. accessed November 17, 2015.
http://worldhistory.abc-clio.com/.

3 Will Kaufman and Heidi Slettedahl Macpherson, Joint Stock Companies. 2005. In Britain and The Americas:
Culture, Politics, and History, . Santa Barbara: ABC-CLIO., Nov 15 2015
http://search.credoreference.com/content/entry/abcbramrle/joint_stock_companies/0

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put forth capital to a company. The best part is, joint-stock companies made anyone able to start
a corporation.
In the 17th century and now, governments can own or control corporations. Coenraad van
Beuningen a company director describes, The Dutch East India Company, 1602-1796 [I]t is
commonplace and to a certain extent the truth to say that the Dutch East India Company is not
just a Company of commerce but also of state. 4 When Coenraad van Beuningen, a company
director, said this, he made it clear that while The Dutch East India Company is not owned (this
did not happen until later) by the Netherlands, it represented the country.
One such example of this in the modern business world is the corporation Gazprom.
Gazprom is a gas and energy company that has strong ties with Russian government workers, so
it is owned by the government. In other words, since it is basically owned by the government, the
company represents Russia. 5 The Dutch East India Company and Gazprom embody many
similar traits. First, these companies were both eventually owned by their respective
governments, and second, each corporation represented the country before it became part of the
government. Overall, many corporations globally have ties or represent their country of origin,
just like the Dutch East India Company.
Unfortunately, when a company is run or owned by its government, it will often be
involved with corruption in the company. In 1800, The VOC (The Dutch East India Company)
had its land and assets taken because of its bankruptcy. 6 The land became Dutch colonies, and
4 Bhawan, Ruangsilp. 2007. Dutch East India Company Merchants at the Court of Ayutthaya : Dutch Perceptions
of the Thai Kingdom, C. 1604-1765. Leiden: Brill, 2007. eBook Collection (EBSCOhost), EBSCOhost (accessed
November 8, 2015)., page 5, http://eds.a.ebscohost.com/eds/detail/detail?vid=3&sid=905d46b3-bbf4-493d-9c71addf3be0533b%40sessionmgr4004&hid=4208&bdata=JnNpGU9ZWRzLWxpdmUmc2NvcGU9c2l0ZQ%3d
%3d#db=nlebk&AN=252720

5 M.C. Ricklefs (1991). A History of Modern Indonesia Since c.1300, 2nd Edition. London: MacMillan. 110.
6 Ricklefs, 110.

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the company was from then on government run. Gazprom is made of government assets, which
were really land or resources the government stole from people or other corporations. In many
cases the government purposely accuses the owner of the resource of tax evasion, bankruptcy, etc,
and then uses confiscatory taxes to take the asset as settlement. 7 Just like the Dutch
government, the Russian government took land and resources from corporations.
In many cases, government companies will go after the press or media who point out their
illegal activities. One such example, is the NTV television network. Interestingly, this
independent news organization was looking into Russian government run companies such as
Gazprom and their illegal activities. Because of this, they were dissolved with a new law only
used in the case against them, and consequently, the company leader Boris Berezovsky now lives
in London in exile. 8 Clearly, corruption within government corporations has been around since
the first few corporations.
Within business the concept of having monopolies is not only important, but highly
profitable. The VOC was granted a monopoly on Dutch trade in Africa, South America, and Asia
for 21 years by the monarchy at the time, and this subsequently led to the company's 198 year
period of high profitability before the government seized the company. 9 With this monopoly, the
Dutch had little competition. A more modern example can be found in the Russian hotel industry,
specifically in St. Petersburg. Back in the 1990s in St. Petersburg, Russia, Viktor Zubkov was
chief of tax inspection. He used his job to remove competition from the Russian market to help
out his friends in business, by accusation of tax fraud, tax evasion, etc. As a result, the Swedish
7 Steven, Erlanger. 1995. "A Corrupt Tide in Russia from State-Business Ties." New York Times, Jul 03. http://search
.proquest.com/docview/430256373?accountid=8450.

8 Erlanger, "A Corrupt Tide in Russia from State-Business Ties."

9 Wines, Russian court orders dissolution of independent TV network

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owners of Grand Hotel Europa forced to withdraw from the city. 10 By using his job illegally,
Mr. Zubkov made it so Grand Hotel Europa, who has many luxurious hotels throughout Europe,
could not do any further business in St. Petersburg. Therefore, this instance as well as multiple
others, has created monopolies in business. Undoubtedly, monopolies increase profitability for
one corporation, yet make business harder for their competition, as well as worsening the
economy for everyone else. After all, monopolies in many countries are illegal for a reason.
As corporations expand, they at times choose to build or shape the cities their business
inhabits. In Jakarta (the modern day capital of Indonesia), The Dutch East India company shaped
it to the way it is today. In 1619 the Dutch East India Company had created a city it called
Batavia (now Jakarta) on the island of Java. From this base the Dutch extended their control over
most of the archipelago's 3000 islands. 11 Similarly, in Florence, due to the patronage of the
Medici family, they shaped many parts of Florence that would not be here today without them
such as The Duomo.12 Finally, just a few miles from Chernobyl, Ukraine, a small city was made
for the workers and their families to live in while they worked on the nuclear reactor. Surely,
corporations throughout many eras have built or shaped cities to fit their needs for their business.
In the corporate world, bribery is an issue that has been around since The Dutch East
India Company started. In 1697, in An Essay on East India Trade by Charles DAvenant, he
describes, Some persons (without doors) [were] bribed by the Dutch. 13 Mr. DAvenant who
10 Karen, Dawisha. Putin's Kleptocracy Who Owns Russia? New York: Simon & Schuster, 85
11 Alexander J. Motyl. Oxford, "Dutch Nationalism". 2000. In Encyclopedia of Nationalism: Leaders, Movements,
and Concepts, Elsevier Science & Technology. http://searchcredoreference.com/content/entry
/estnational/dutch_nationalism/0

12 J. R. Hale, "Medici, Cosimo De' (1389 - 1464)". 2006. In Thames & Hudson Dictionary of the Italian
Renaissance, London: Thames & Hudson.
http://search.credoreference.com/content/entry/thir/medici_cosimo_de_1389_1464/0

13 Charles D'Avenant. "An Essay on the East-India Trade." The Avalon Project Documents in Law, History and
Diplomacy. Yale Law School Lillian Goldman Law Library, n.d. Web. 16 Nov. 2015.

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lived in this time period, makes it clear that members of The Dutch East India Company often
bribed people for maximum profit. Russia has many modern examples of this. In Russia, in an
interview with Mr. Saratov the president of Indem, he said one major businessman had told him
of having to pay monthly bribes to five federal ministries. Fully half of the businessman's profits
went to bribes, Mr. Satarov recounted. 14 Bribery has definitely escalated since the 17th century
globally, relative to how it was when the VOC was in its prime operation. Because of issues with
bribery from the first corporations, the problems it creates has increased.
Closely related to bribery, gift-giving with the same intentions is present in business from
the beginning to now. The Dutch participated in this multiple times. In his essay, James Harvey
Robinson who wrote about this topic back then mentions, the letter of love and friendship which
you sent and the presents, tokens of your good affections toward me. Here he is describing the
presents sent to him to complete a business deal. 15 Also in the modern world, this is a prominent
issue. After completing illegal business activities in 2008, Alexander Putin arranged for the 2009
G8 meeting held by Prime Minister Silvio Berlusconi to be in Italy to remove these activities
from the agenda of the meeting. Prime Minister Silvio Berlusconi has been profiting personally
and handsomely from secret deals with Putin that included the exchange of lavish gifts.
16

Again, the exchange of gifts goes along with bribery and business deals.

<http://avalon.law.yale.edu/17th_century/eastindi.asp>.

14 Steven Lee Myers. 2005. "Pervasive Corruption in Russia is 'just Called Business'." New York Times, Aug 13.
http://search.proquest.com/docview/433140170?accountid=8450.

15 From: James Harvey Robinson, ed., Readings in European History, 2 Vols. (Boston: Ginn and Co., 1904-1906),
Vol. II: From the opening of the Protestant Revolt to the Present Day, pp. 333-335., 334
Scanned by Jerome S. Arkenberg, Cal. State Fullerton. The text has been modernized by Prof. Arkenberg.
http://legacy.fordham.edu/halsall/india/1617englandindies.asp

16 Dawisha, 6

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The abuse of human rights in the corporate world has been around since the beginning of
The Dutch East India Company. When the VOC gained control of an island in modern day
Indonesia, they made sure Indonesian resistance was systematically crushed. Once they made
it clear the natives had no right to protest, they would then institute cultuurstelsel, otherwise
known as the cultivation system. On Java, where The Dutch East India Company maintained
their control, the rest of the island was turned into plantations. This is one such example of the
cultivation system. Within their territory, the VOC had natives grow: tobacco, coffee, tea, sugar,
indigo, quinine and many spices as well as other plants. 17 During the cultivation of these
agricultural products, many human rights violations occurred, and slavery was one of the biggest
violations The Dutch East India Company had. This can be seen now in/on many factories and
plantations globally, but mainly in either developing countries, or countries with corruption and
bribery issues. Overall, human rights violations are still a problem today, but they were much
worse when it was all slave labor opposed to the smaller percentage now.
Without The Dutch East India Company, the model for most joint-stock corporations
would not exist as they are today. When the company first went public in 1602, it became the
first multinational corporation that was also a joint-stock company. Within the business world
from the 17th century through the present day, corruption can be seen in many places: including
government nepotism, bribery, gift-giving, and human rights abuses. The design of the VOC and
other 17th century corporations impacted modern corporations consisting of: monopolistic
business choices, joint-stock organizations, and cities designed specifically for corporations. All
of this was apparent within The Dutch East India Company, just like it is now in many
17 Prem Poddar and Rajeev Patke, Continental Europe and Its Empires. Edinburg: Edinburgh University Press.
http://search.credoreference.com/content/entry/edinburghpcl/the_netherlands_
and_its_colonies_introduction/0

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corporations. Without the VOC, the modern business world would be different. The Dutch East
India Company impacted so many cultures, economies, and individuals making it the epicenter
of life back in its prime. All of its impacts can be seen now. Jakarta, where the VOC was based
out of, is now the capital of Indonesia. From the 17th through the present, anyone could buy
stock in a company. Without the Dutch East India Company, multiple aspects of the modern
world, not just in business, would not be as they are today.

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