Category Archives: Sri Lanka

The Financial Ascent of the Dutch VOC

From: The Ascent of Money: A Financial History of the World, by Niall Ferguson (Penguin, 2008), Kindle Loc. 1780-1831:

The campaign for a reform of what would now be called the VOC’s corporate governance duly bore fruit. In December 1622, when the Company’s charter was renewed, it was substantially modified. Directors would no longer be appointed for life but could serve for only three years at a time. The ‘chief participants’ (shareholders with as much equity as directors) were henceforth entitled to nominate ‘Nine Men’ from among themselves, whom the Seventeen Lords were obliged to consult on ‘great and important matters’, and who would be entitled to oversee the annual accounting of the six chambers and to nominate, jointly with the Seventeen Lords, future candidates for directorships. In addition, in March 1623, it was agreed that the Nine Men would be entitled to attend (but not to vote at) the meetings of the Seventeen Lords and to scrutinize the annual purchasing accounts. The chief participants were also empowered to appoint auditors (rekening-opnemers) to check the accounts submitted to the States-General. Shareholders were further mollified by the decision, in 1632, to set a standard 12.5 per cent dividend, twice the rate at which the Company was able to borrow money. The result of this policy was that virtually all of the Company’s net profits thereafter were distributed to the shareholders. Shareholders were also effectively guaranteed against dilution of their equity. Amazingly, the capital base remained essentially unchanged throughout the VOC’s existence. When capital expenditures were called for, the VOC raised money not by issuing new shares but by issuing debt in the form of bonds. Indeed, so good was the Company’s credit by the 1670s that it was able to act as an intermediary for a two-million-guilder loan by the States of Holland and Zeeland.

None of these arrangements would have been sustainable, of course, if the VOC had not become profitable in the mid seventeenth century. This was in substantial measure the achievement of Jan Pieterszoon Coen, a bellicose young man who had no illusions about the relationship between commerce and coercion. As Coen himself put it: ‘We cannot make war without trade, nor trade without war.’ He was ruthless in his treatment of competitors, executing British East India Company officials at Amboyna and effectively wiping out the indigenous Bandanese. A natural-born empire builder, Coen seized control of the small Javanese port of Jakarta in May 1619, renamed it Batavia and, aged just 30, duly became the first governor-general of the Dutch East Indies. He and his successor, Antonie van Diemen, systematically expanded Dutch power in the region, driving the British from the Banda Islands, the Spaniards from Ternate and Tidore, and the Portuguese from Malacca. By 1657 the Dutch controlled most of Ceylon (Sri Lanka); the following decade saw further expansion along the Malabar coast on the subcontinent and into the island of Celebes (Sulawesi). There were also thriving Dutch bases on the Coromandel coast. Fire-power and foreign trade sailed side by side on ships like the Batavia – a splendid replica of which can be seen today at Lelystad on the coast of Holland.

The commercial payoffs of this aggressive strategy were substantial. By the 1650s, the VOC had established an effective and highly lucrative monopoly on the export of cloves, mace and nutmeg (the production of pepper was too widely dispersed for it to be monopolized) and was becoming a major conduit for Indian textile exports from Coromandel. It was also acting as a hub for intra-Asian trade, exchanging Japanese silver and copper for Indian textiles and Chinese gold and silk. In turn, Indian textiles could be traded for pepper and spices from the Pacific islands, which could be used to purchase precious metals from the Middle East. Later, the Company provided financial services to other Europeans in Asia, not least Robert Clive, who transferred a large part of the fortune he had made from conquering Bengal back to London via Batavia and Amsterdam. As the world’s first big corporation, the VOC was able to combine economies of scale with reduced transaction costs and what economists call network externalities, the benefit of pooling information between multiple employees and agents. As was true of the English East India Company, the VOC’s biggest challenge was the principal-agent problem: the tendency of its men on the spot to trade on their own account, bungle transactions or simply defraud the company. This, however, was partially countered by an unusual compensation system, which linked remuneration to investments and sales, putting a priority on turnover rather than net profits. Business boomed. In the 1620s, fifty VOC ships had returned from Asia laden with goods; by the 1690s the number was 156. Between 1700 and 1750 the tonnage of Dutch shipping sailing back around the Cape doubled. As late as 1760 it was still roughly three times the amount of British shipping.

The economic and political ascent of the VOC can be traced in its share price. The Amsterdam stock market was certainly volatile, as investors reacted to rumours of war, peace and shipwrecks in a way vividly described by the Sephardic Jew Joseph Penso de la Vega in his aptly named book Confusión de Confusiones (1688). Yet the long-term trend was clearly upward for more than a century after the Company’s foundation. Between 1602 and 1733, VOC stock rose from par (100) to an all-time peak of 786, this despite the fact that from 1652 until the Glorious Revolution of 1688 the Company was being challenged by bellicose British competition. Such sustained capital appreciation, combined with the regular dividends and stable consumer prices, ensured that major shareholders like Dirck Bas became very wealthy indeed. As early as 1650, total dividend payments were already eight times the original investment, implying an annual rate of return of 27 per cent. The striking point, however, is that there was never such a thing as a Dutch East India Company bubble. Unlike the Dutch tulip futures bubble of 1636-7, the ascent of the VOC stock price was gradual, spread over more than a century, and, though its descent was more rapid, it still took more than sixty years to fall back down to 120 in December 1794. This rise and fall closely tracked the rise and fall of the Dutch Empire. The prices of shares in other monopoly trading companies, outwardly similar to the VOC, would behave very differently, soaring and slumping in the space of just a few months.

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Filed under Britain, economics, Indonesia, Netherlands, piracy, Portugal, Spain, Sri Lanka, war

Dutch Burghers Left Behind in Colombo, 1796

From: Being “Dutch” in the Indies: A History of Creolisation and Empire, 1500–1920, by Ulbe Bosma and Remco Raben, tr. by Wendie Shaffer (National U. Singapore Press, 2008), pp. 81-82:

The British and Dutch Burgher communities lived — quite literally — separate lives. The British settled inside the walled fortress of Colombo, while the Burghers lived in the city. An eyewitness describes an atmosphere of cool friendliness: “They meet seldom, unless on public occasions, when they are mutually friendly and agreeable to one another. Intercourse of this nature does not occur sufficiently often to breed intimate acquaintance, or lasting attachments.” Yet as early as 27 August 1796, a short six months after the British occupation of the city, the first marriage was celebrated between a young woman from a Burgher family and an Englishman. And more were to follow. In addition, little by little the British fluttered forth from their entrenched position and started to rent houses in the city and surrounding districts from the impoverished Burghers.

Although we have little information about the material circumstances of Burghers in the 18th century, it is evident that after the British occupation many fell upon hard times. Before February 1796, most of the Europeans had been working for the Dutch East India Company; now they had to make ends meet in some other way. Anyone who owned land would try to manage by selling coconuts, areca nuts and palm wine, and by renting out houses to the English. Burghers gradually gained modest positions in the government, since they were very useful to the British, providing a cheap source of labour and being well acquainted with the island. The Burghers, who lived mainly in the colonial centres and traditionally worked for the government, continued to be a community of civil servants. Several prominent clergymen and lawyers emerged from their midst, but on the whole they held posts in the lower ranks of the law courts and various administrative government departments.

With the arrival of the new authority in Ceylon, the social position of the Burghers changed. Just as, 150 years earlier, high-ranking officials in the Dutch East India Company had looked down upon the Portuguese, so after 1796 the “Dutch Burghers” were dismissed by the British as a “mixed-race breed” with extraordinary habits. Only very gradually did a mixed British-Ceylonese community develop; hence, for a long time the local Mestizo community remained synonymous with the term “Burgher”. Their sense of unity was strengthened by their loss of status and the arrogant attitude of their new masters. Already under the Dutch East India Company the Burghers had regularly approached the government as a group, demanding certain rights and privileges. They continued to do so under the British. They were concerned about the erosion of their social standing, as exemplified by their (privileged) custom of keeping slaves, their educational privileges, and their job opportunities, which were being threatened by the emerging class of well-educated Sinhalese and Tamils. However, they seem to have lacked a strong sense of Dutch identity. When in the mid-19th century the Burghers began to voice their own political and cultural agenda in the press, it was not to Dutch examples that they turned, but rather to British models, and they found inspiration in antiquity and the rise of nationalism in Europe. It was chiefly Burghers who supported the founding of the newspaper Young Ceylon in 1850. Inspired by Giuseppe Mazzini’s Young Italy movement for the unification of Italy, Young Ceylon voiced the thoughts of a rising elite of Burghers and cautiously promulgated the sentiments of Ceylonese patriotism. It was an expression of the intellectual ambitions of a young generation imbued with Western culture yet maintaining a markedly Ceylonese perspective. Like the newspaper’s founders, Charles Ambrose Lorenz and the brothers Frederick and Louis Nell, most of those working on the newspaper were descended from Dutch East India Company employees, although there were also a few Sinhalese involved.

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Slavery in the Dutch East Indies, 1600-1800

From: Being “Dutch” in the Indies: A History of Creolisation and Empire, 1500–1920, by Ulbe Bosma and Remco Raben, tr. by Wendie Shaffer (National U. Singapore Press, 2008), pp. 46-47:

While Mestizo communities were growing rapidly in the colonies in South Asia, Java and the Moluccas, things were looking very different in Batavia. Here the social spectrum was, in a manner of speaking, weighed down under the burden of two opposing immigrant streams. On the one hand were the large numbers of newcomers from Europe. They continued to occupy the upper ranks in the Dutch East India Company, fashioning their world with their conventions and status norms. Among the newcomers were thousands of soldiers living in the garrisons who were not permitted to marry. On the other hand, the city swarmed with slaves who had been brought there from neighbouring regions and who, after manumission, filled the ranks of the urban proletariat. During the 17th and 18th centuries between 200,000 and 300,000 slaves were transported to Batavia. Indeed, the majority of those living in Batavia had a background of slavery. Inside the city walls, where about 20,000 people lived, at least half the population were slaves and 10 per cent were Mardijkers [interesting etymology!—J.]. Most of the extramural communities also consisted of former slaves and their children. The demographic effects of the slave trade were enormous: when slavery was abolished in 1813, population growth ceased for a long time.

The Europeans were the largest group of slave owners. There are no statistics recording how many slaves there were per household in Batavia, but figures from other comparable cities can offer some idea. In Colombo in 1694, 70 per cent of the slaves were owned by Europeans, with an average of almost 11 slaves per household; on Ambon these figures were respectively 59 per cent and almost five. In Batavia the Mardijker community fluctuated with the number of Europeans in the city, which suggests a close correlation between the number of Europeans and the emancipation of Christian slaves. There appears to have been an almost insatiable demand for slaves. The whole of Batavia — from the company’s dockyards to household personnel, from orchestras to agriculture — depended on slave labour. The ubiquitous slaves also provided easy sexual contacts for their owner. Presumably, sexual relations between masters and their slaves were so common, and so much a matter of course, that they were seldom given special mention.

Slavery left other traces on the pattern of urban life. It was customary for Europeans to baptise their slaves. This practice took off after 1648, when baptised slaves were admitted to the religious celebration of the Lord’s Supper in the Dutch Reformed Church. In Protestant churches it was not the sacrament of baptism but that of the Lord’s Supper (Eucharist or Holy Communion) that admitted a person into the community of Christian believers. Furthermore, many Batavian Europeans took pride in emancipating their baptised slaves. They would usually do this in their wills. Some of the emancipated slaves would, not surprisingly, be the natural children of slave women and European fathers. Once they had been baptised and emancipated, these former slaves merged into the Mardijker community. The Mardijkers were a flock of varied plumage. Initially, most of the slaves in Batavia came from India and Bali. This changed between 1660 and 1670, when the VOC halted its slave trade from India and Pegu (southern Burma) and, after the capture of the southern Sulawesi kingdom of Goa, channelled the extensive slave-trade network from Makassar to Batavia. The slaves of Indian origin living in Batavia quickly became a minority group. After some decades, this shift in slave supply areas resulted in the establishment of a Malay-speaking church in Batavia. The slaves from India tended to speak Portuguese, and the lingua franca in most households with slaves would probably also have been Portuguese. Thus, after their emancipation, slaves from India as well as the East Indies joined the Portuguese-speaking community. Between October 1688 and February 1708 there were 4,426 people accepted into the Portuguese-speaking church, while in the Malay-speaking church the number is no more than 306. With time, the Portuguese language began to fade out of use, and so during the 18th century the balance shifted. In the 1780s each year saw about 30 people joining the Portuguese congregation, while 31 were accepted into the Malay church.

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A Costly Victory in Sri Lanka

Writing in The Atlantic, Robert Kaplan offers an awfully grim retrospective on how Sri Lanka won its 26-year war against the Tamil Tigers.

Though it was only a one-day news story in the United States, a momentous event occurred last spring, with worldwide military significance. After 26 years of heavy fighting, the Sri Lankan government decisively defeated an ethnic insurgency, killing all of its top leadership, whose bodies were displayed on national television. Massive victory parades followed.

The Tamil Tigers were no ordinary insurgency. Built on the ethnic hatred of the minority Hindu Tamils against the majority Sinhalese Buddhists, the movement was among the best organized and most ruthless to have emerged anywhere since the Second World War. The Tigers boasted their own air force and navy to go along with their unconventional ground troops. They helped pioneer the use of suicide bombers. (Recall that it was a female Tiger suicide bomber who killed Indian Prime Minister Rajiv Gandhi in 1991.) They regularly embedded their fighters among noncombatants, using them as human shields. In other words, they were as organized and heartless as any insurgent group in Iraq or Afghanistan.

The Tamil Tigers, moreover, had a brilliant, charismatic leader by the name of Vellupilai Prabakharan, who was venerated by many ethnic Hindu Tamils to the same extent that radical Muslims have venerated Osama bin Laden. His following was cult-like and was largely responsible for the war that killed 70,000 people since 1983, in an island of only 22 million people. Compare that to the deaths of 3,000 in the World Trade Center out of a population of 300 million in the United States. So when the Sri Lankan government displayed Prabakharan’s body on television last May, it represented the culmination of a counterinsurgency campaign that the U.S. could only dream about….

The war was won using techniques like the following, which the United States could and should never employ.

The insurgents are using human shields? No problem. Just keep killing the innocent bystanders until you get to the fighters themselves.… The Sri Lankan military indiscriminately killed large numbers of civilians—as many as 20,000 in the final months of fighting, according to the United Nations.

Bad media coverage is hurting morale and giving succor to the enemy? Just kill the journalists.… No journalist I met in Colombo was willing to cross the line and publicly attack the government.

The international community disapproves of your methods and cuts off military aid because of the human rights violations you’ve committed? Again, no problem. Get aid from China, whose assistance comes without moral lectures. That’s just what the Sri Lankan Government did. In return, the Chinese got the right to help construct a deep water port in Sri Lanka, close to world shipping lanes….

via RealClearPolitics

Kaplan adds a few other harsh observations in an interview with Michael J. Totten.

The Sri Lankan government was elected in 2005 to win the war. And it has done that. Extremely brutally. It’s a government that’s very nationalist Sinhalese Buddhist. These are not the Richard Gere’s “peace and love” Buddhists. These are the real blood and soil Buddhists, where Buddhism is like any other religion when it’s threatened and it’s defending a piece of territory. It can be very brutal….

In Sri Lanka you have a majority Sinhalese Buddhist population that thinks like a minority. They have a minority sense of oppression. Although they have 75 percent of the population while the Tamils have only about 18 percent, there are 60 million more Tamils nearby in southern India. So they’re kind of like the Iraqi Shias and the Serbs, other majorities who feel like minorities, and can be twice as brutal because of it.

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The Model T’s Effect on the Amazon

Seringueiros [rubber tappers] were, by default, the true settlers of Brazil’s interior. When Henry Ford had introduced the Model T in 1908, the Amazon had been the world’s sole source of rubber. The wild popularity of these automobiles, and the seemingly insatiable demand for rubber that accompanied them, had ignited a frenzy in South America that rivaled the California gold rush. In The Sea and the Jungle, H. M. Tomlinson complained that the only thing Brazilians saw in their rich rain forests in 1910 was rubber. “It is blasphemous that in such a potentially opulent land the juice of one of its wild trees should be dwelt upon … as though it were the sole act of Providence,” he wrote. “The passengers on the river boats are rubber men, and the cargoes are rubber. All the talk is of rubber.” Two years before Roosevelt had set sail for South America, his friend the great American naturalist John Muir had been similarly astonished by the rubber lust that he had witnessed as he traveled through the Amazon. “Into this rubbery wilderness thousands of men, young and old, rush for fortunes,” he marveled, “half crazy, half merry, daring fevers, debilitating heat, and dangers of every sort.”

By the time Roosevelt reached the Amazon, the dangers were still there but the promise of riches had all but disappeared. The bottom had dropped out of the South American rubber boom in 1912, when the Amazon lost its lock on the market. Thirty-six years earlier, an Englishman named Henry Wickham had smuggled Hevea brasiliensis seeds, the most popular species of Amazonian rubber tree, out of Brazil. Those seeds had then been cultivated at Kew Gardens, and the British had eventually planted their predecessors in tropical Malaysia. There, far from their natural enemies, the trees could be planted in neat rows with no fear that a blight would destroy the entire crop, as it likely would have done in South America. Labor in Malaysia was also not only cheap but readily available, and much more easily controlled. So successful had been the transfer of rubber trees to the Far East that by 1913 Malaya and Ceylon were producing as much rubber as the Amazon.

SOURCE: The River of Doubt: Theodore Roosevelt’s Darkest Journey, by Candice Millard (Doubleday, 2005), pp. 317-318

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South Asia’s Nationalist Time Zones

The Acorn has a mind-boggling post about the time-zone politics of South Asian nations.

Officially it was to save daylight. But the standardisation of time is just another way in which the countries of the subcontinent seek to assert their distinct national identity. Start with India, which in a style befitting the character of its polity, centralises its reference meridien by splitting the differences, ending up five and a half-hours ahead of UTC….

But it is Nepal that wins the prize for asserting a distinct national identity. It is five hours and forty-five minutes ahead of UTC, or 15 minutes ahead of Indian Standard Time.

A Sri Lankan commenter adds background on Sri Lanka’s latest fidgeting with time:

The President’s office informed the public today that the clocks in Sri Lanka would revert back to the old time i.e. Indian standard time from April 14, 2006 onwards. April 14 is the traditional Tamil/Sinhalese New Year (known in India as Baisakhi), a major public holiday in the island.

The shift back to old time is intended to accommodate the political powerful Buddhist monks and astrologers who never accepted day light savings time in 1996. Parents had also complained that school children had to leave for school when it was still dark. The decision in Colombo also puts the clocks in the island in line with the LTTE which never adopted the original time change in its territory.

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Blowback from Linguistic Nationalism in Sri Lanka

Blowback: Linguistic Nationalism, Institutional Decay, and Ethnic Conflict in Sri Lanka, by Neil DeVotta. Contemporary Issues in Asia and the Pacific (sponsored by the East-West Center). Stanford: Stanford University Press, 2004. xxii, 276 pp. Cloth, $55.00; paper, $22.95. Available online from Stanford University Press or from University of Chicago Press Distribution Center, (800) 621-2736.

In the mid-1950s, Sri Lanka’s majority Sinhalese politicians began outbidding one another on who could provide the greatest advantages for their community, using the Sinhala language as their instrument. The appeal to Sinhalese linguistic nationalism precipitated a situation in which the movement to replace English as the country’s official language with Sinhala and Tamil (the language of Sri Lanka’s principal minority) was abandoned and Sinhala alone became the official language in 1956. The Tamils’ subsequent protests led to anti-Tamil riots and institutional decay, which meant that supposedly representative agencies of government catered to Sinhalese preferences and blatantly disregarded minority interests. This in turn led to the Tamils’ mobilizing, first politically then militarily, and by the mid-1970s Tamil youth were bent on creating a separate state.

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