Deflation Made Simple (Part I)

A falsely vilified phenomenon (034)

There is much that could be said about the VOC, but we still have many historical events to traverse between the VOC’s ambitious opening in 1602, the day the company closed its doors in 1799, and today — nearly four centuries and a score (419) years in total. In other words, we must choose our material wisely.

Until the VOC was created the so-called pre-companies that were brought together to form the much larger VOC were short-term business ventures. In general, these trading companies were formed when several businessmen came together, pooled their savings, built or purchased several ships, and sent them out to sea. When the ships returned and the accounts were tallied, the local and overseas business climate would be reassessed, and the same businessmen would decide whether to do it again, reorganize and do it differently, or disband altogether. These ventures, because they were small, were highly profitable, but fragile.

It was understood when the VOC was first conceived that it would take much time to organize and yield a return. Thus, rather than the usual 2-3 year life-span of a pre-company, it was agreed that the VOC would be dissolved after ten years. Already, this was considered an extraordinary length of time, and many doubted that very many would be willing to entertain such a long-term investment. The politics of the day, and the need for protection against the large, highly organized, Spanish and Portuguese trading fleets proved the skeptics wrong.

What is more, the VOC was not designed to constrain the much less demanding, but still profitable and already well-established North and South Atlantic, Mediterranean, Baltic, and North Sea trade. Only the routes to the east of the Cape of Good Hope (the southern tip of Africa) and to the west of the Straits of Magellan (the southern tip of South America) — in effect, trade that spanned the much more distant, far more expansive, and much less known and understood Pacific and Indian Oceans and all of their adjacent seas — would be affected.

Now, many small companies have withstood the ages, but few large companies have lasted as long as the VOC. So, let us pause and examine closely one of the company’s many overseas success stories.

In 1543 a group of Portuguese merchants were blown off course and arrived on the Japanese island of Tanega (tanegashima). This island goes by the same name today and is located south of the much larger Island of Kyūshū — the southern most of Japan’s four principal islands. Six years later the Jesuit missionary Francis Xavier landed in the rather undeveloped Japanese port city of Nagasaki and began his missionary work.

At the time of Xavier’s arrival the Japanese countryside was in political disarray, and Japanese pirates were raiding the Chinese coastline. The Portuguese Jesuit mission filled an important spiritual gap that had long been neglected by competing Buddhist temple priests who were caught up in Japan’s political rivalries. As a result, Christianity spread across the island of Kyūshū and much of Honshū —Japan’s largest island.

In addition to their important spiritual role, the Jesuits served as linguistic and cultural intermediaries between Portuguese traders and Japanese noblemen who had embraced the Christian faith.

In effect, these traders had discovered — quite accidentally — an important commercial opportunity between Japan and China and began shipping Japanese goods to China and Chinese goods to Japan. This allowed the Chinese and Japanese to put an end to the Japanese raids without cutting off trade between the two nations.

By 1557 Portuguese traders had convinced China’s Ming Court to lease land along the Chinese coastline for the purpose of conducting trade, and the Portuguese ocean port of Macau was established. By 1580 the Portuguese had managed a similar arrangement with a local Japanese feudal lord (daimyō) named Ōmura Sumitada on the peninsula of Nagasaki along the western coast of Kyūshū Island.

The Portuguese success attracted their Spanish brethren, and the careful network of trade and religion that the Jesuit missionaries had established with carefully selected Japanese feudal lords was soon jeopardized. The Spanish Catholic orders tended to be more brazen than their Jesuit counterparts and lacked the local sensibility of the Jesuit order. Soon the Japanese leadership began to fear the Christian presence.

In 1582 Oda Nobunaga who had embraced the Jesuit presence on the Island of Honshū was assassinated and Toyotomi Hideyoshi fought to take his place. By 1587 Toyotomi had conquered the island of Kyūshū and ordered all Christian missionaries to leave Japan. The first Dutch trading ship arrived in Japan in 1600.

The Dutch traders, although Christian, were not Catholic and lacked the evangelistic spirit promoted by the Catholic Church. They quickly became an important alternative to the continued Catholic presence in the eyes of the Japanese political overlords.

Trade with the West had already been well developed by the time that Toyotomi had conquered Kyūshū Island, and the West had much to offer the Japanese general who now served as Japan’s effective leader in the stead of Japan’s emperor. So, Toyotomi seized direct control of the port of Nagasaki and the adjoining peninsula, but did not eliminate the trade that passed through the port.

Once again, the VOC was formed in 1602 and by 1641 the so-called Island of Exit (dejima) had been formed — Western goods in, Christianity out.

In conclusion, the Dutch VOC was granted a monopoly trade position with the Japanese shogunate that had since replaced Toyotomi’s military rule, and the Dutch remained Japan’s sole trade partner with the Western world until Admiral Perry, a hero of the War of 1812, arrived in Tōkyō Bay in 1853, nearly two centuries later.

In liberty, or not at all,
Roddy A. Stegemann