Ostend East India Company
Ostend East India Company
Before 1713 the southern Netherlands (now Belgium) was banned from trading in the overseas markets, except in the Spanish colonies in Latin and South America. But the War of the Spanish Succession (1701–1714) fundamentally altered trading relations with the Iberian Peninsula. One outcome was that in 1713 the southern Netherlands was ceded to Austria. At first this seemed like an economic disaster for Flemish entrepreneurs because it excluded them from what had been their most important trade, but more liberal Viennese perspectives on international commerce soon presented new opportunities. As the major firms of the Southern Netherlands searched for new markets, interest in the East Indies grew. Inspired by the lucrative expeditions of the Saint-Malo armateurs to the South Sea and China, beginning in 1715 merchants in Antwerp, Ghent, and Ostend organized a direct commerce with Asia that became quite profitable and resulted in a plethora of new initiatives in long-distance trade. Between 1715 and 1723 thirty-four vessels sailed from Ostend to China, India, Bengal, and Mocha, all financed by private entrepreneurs.
FLEMISH TRADING PARTNERSHIPS
These early trading ventures proved very expensive. Unwilling to risk all their capital on a single voyage, Flemish owners frequently entered into partnerships. This stratagem was hardly unique; indeed, it was common in the seventeenth and eighteenth centuries. But the Flemish partnerships, which were organized separately for each expedition, were different in that their makeup was cosmopolitan. The major group, which operated fully one-third of the private ventures, was created by Paulo Jacomo Cloots (1672–1725). This wealthy merchant originally came from Amsterdam, but family ties in Antwerp drew him to the Southern Netherlands in 1717 to participate in the East India trade. There he formed a consortium with his brother-in-law, Jacomo de Pret (1672–1736), who belonged to the leading mercantile circle in Antwerp. The other members of this international grouping included two Amsterdam firms, De Bruyn and Geelhand; two London merchant houses, Hambly and Trehee; and the French banker Antoine Crozat (1655–1738). The Antwerp and London firms each subscribed one-third of the capital, and the remaining one-third came from Amsterdam, Paris, and a few merchants in Ghent. The Cloots group focused on trade with China and Yemen and realized the largest profits of all the private venturers, mainly because they used experienced English supercargoes. Moreover, the Cloots group never encountered a lack of capital to organize the voyages, and it enjoyed a widespread, international network of potential buyers of Asian commodities. In the trade with Canton, net profits for the Cloots consortium varied between 5.7 percent and 189 percent, an average of 91.8 percent. The coffee trade with the Red Sea port of Mocha also yielded highly satisfactory net profits at the outset (an average of 87.5%), but exogenous factors, such as the wreckage of a Mochaman (a ship bound for the Red Sea) in 1720 on the roads of Ostend a few days before departure and the capture of another vessel by Algerian pirates in 1723 on the homeward bound from Arabia, eventually made the Mocha trade a losing proposition for Cloots and his friends.
Similar partnerships to explore the East Indian market were set up in Ghent (the brothers Maelcamp), Ostend (Thomas Ray, Pieter de Potter, and Mattheus de Moor), and Antwerp (the Moretus family), but all these small joint ventures had to manage without the kind of strong financial structure the Cloots consortium had.
Conversely, the idea of founding a company based upon the subscription of capital through shares, as in Holland and England, was current in Ostend when the first private ventures were established. Shortly after their first successful expedition to Surat with the SintMattheus (1715–1716), Thomas Ray (1681–1749) and Pieter de Potter (1670–1724) asked the government to grant them the privilege to establish an East India company on shares. This promising initiative was immediately crippled by the influence of the Antwerp financial lobby in Brussels and Vienna. The Antwerp merchants also thwarted a similar attempt in 1721 by the Maelcamps, who sought a monopoly on trade with China. The rivalry between them weighed heavily upon the profits, and this resulted in the foundation of the Generale Keijserlycke Indische Compagnie (GIC), better known as the Ostend East India Company, which was chartered by the Austrian emperor Charles VI in December 1722. The capital of the company was fixed at 6 million guilders, composed of 6,000 shares of 1,000 guilders each. The directors of the GIC—drawn from the leading Flemish trading houses with interests in East India—arrived at this figure by calculating that only six to eight vessels could be sent to East India each year if the domestic market was to be maintained.
The new company had little difficulty attracting sufficient capital. The directors invested especially in the textile trade with Bengal and southeast India. To facilitate the transactions in the Gulf of Bengal two factories were set up, in Cabelon (Kovilam), situated south of Madras, and Banquibazar in the Ganges Delta. In addition, the GIC focused on the tea trade with China. Between 1724 and 1732 twenty-one company ships were sent out, mainly to Canton and Bengal. Thanks to the growing demand for tea in Europe and the rise in tea prices, the China trade was highly profitable. In this period the Ostend East India Company played a major role on the tea market. Flemish ships carried a significant proportion of Chinese tea exports to Ostend in the years 1719 to 1728. During this period the "Imperial" Chinamen transported to Ostend more than 7 million pounds of tea, or 41.78 percent of the global European import, eclipsing by far the Dutch and the French in this market. The enormous success was primarily due to the fact that the Ostend East Indiamen made faster voyages than their European competitors. The Ostenders were forced by political circumstances to make their journeys as short as possible, and the number of ports en route where they could take on provisions was very limited. What at first seemed a handicap turned out to be an advantage. The shorter voyages lowered the costs of transport considerably and put the Ostend Company in a favored position when strong competition broke out in the tea trade during the 1720s. Whoever arrived first in Canton—where no permanent factories were permitted—could make the best deals with the Chinese middlemen, and whoever was back first in Europe fetched the highest prices.
DISESTABLISHMENT OF THE COMPANY
Despite the flying start and the favorable results achieved in the Bengal and China trade, the company's charter was withdrawn for a period of seven years on May 31, 1727. The Treaty of Vienna subsequently imposed a perpetual ban on the GIC on March 16, 1731, and the company was duly liquidated by resolution of its general shareholders' meeting on February 16, 1734. The GIC was suppressed because Holland, Britain, and France were keen to eliminate a rival that had proved particularly successful in the tea trade, and Vienna agreed to their demands in return for their signing of the Pragmatic Sanction, which allowed Maria Theresa (1717–1780) to succeed her father Charles VI as empress of Austria. The Ostend East India Company was sacrificed on the altar of the Austrian monarchy.
The directors of the GIC initially resisted these developments, and set up a secret joint venture in March 1728 with a capital of 1.2 million guilders. The new company was to engage in clandestine trade with the Orient. It fitted out several ships in foreign ports and sailed for Bengal and China under Polish or Prussian flags. The cargoes of these "masked" ships were auctioned in Ostend or Bruges as before, but when the official company was wound up permanently, the joint venture came to an end too. Finally, the company was permitted in 1732 to send two "concession ships" to Canton and Bengal, prior to the definite cessation of its trading activities. The financial settlement of the company dragged on until 1774.
SEE ALSO China; East India Company Dutch; India; Joint-Stock Company;Monopoly and Oligopoly.
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