THE RISE AND FALL OF THE MUGHAL EMPIREinformation from whatever source. They also already had a huge merchant
marine engaged in the Baltic Sea trade; they would be able to draw on this
once they decided to embark on their voyages to India. The Baltic Sea link
also gave them access to sufficient wood for shipbuilding, thus ensuring
that they would never face a shortage of the kind that had seriously injured
Venetian shipping in the late sixteenth century.
On the Dutch coast ships were built so cheaply and quickly that the
method of construction almost prefigures that of Henry Ford’s twentieth-
century assembly line. The standard type of ship was the fluyt—a relatively
slow vessel, but easy to handle, cheap and sturdy, and with a lot of space
for cargo. Investment in ships was popular with the Dutch; even artisans
would commit their small savings in fractional shares of ships. Risks were
spread in this way and the loss of one ship could be compensated for by
the successful return of another. Due to this broad-based pattern of
investment, the Dutch East India Company which was founded in 1602
could immediately send great numbers of ships into the Indian Ocean. In
fact, this company was set up not because it was difficult to raise the
capital for such voyages, but rather in order to prevent ruinous
competition. Unlike the situation in Portugal, the state had no hand in this
business, and the monopoly which was granted to the company referred to
spices only. Furthermore, monopoly control stopped once the shipments
reached Amsterdam, where the goods were freely auctioned to the highest
bidder. Of course, these auctions were sometimes not quite as free as they
were supposed to be. The company could store and withhold shipments if
the price was going to fall due to a glut on the market. There were also
ways and means of arriving at secret deals. But in general these auctions
provided a good idea of what the market would take, and they also helped
to introduce new commodities, such as textiles, which were not covered by
any monopoly.
In London an East India Company was founded in 1600, two years
before the Dutch one, and it operated on much the same terms including
the sale by auction. The initial stimulus for the establishment of that
company was the lack of venture capital for this risky overseas trade. The
joint stock subscribed by individual merchants was limited to the
investment in single voyages to begin with and it was only when overhead
charges for the maintenance of outposts, etc., increased that the joint stock
was made permanent.
Throughout the seventeenth century the English East India Company
operated on a much smaller scale than its Dutch counterpart. Nevertheless,
the Dutch were deeply concerned about British competition and tried their
best to ward it off. While fighting against the domination of the seas by the
Spanish and the Portuguese, the Dutch had stressed the principle of the
freedom of the seas. Their great legal luminary, Hugo Grotius, had
published his famous book Mare Liberum in 1609, but only a few years