In consequence of a wild and ruinous spirit of speculation having seized the Dutch merchants, the government, in 1602, formed all the separate companies who traded to India, into one; and granted to this extensive sovereignty over all the establishments that might be formed in that part of the world.  Their charter was for twenty-one years:  their capital was 6,600,000 guilders (or about 600,000_l_.) Amsterdam subscribed one half of the capital, and selected twenty directors out of sixty, to whom the whole management of the trade was entrusted.

From this period, the Dutch Indian commerce flourished extremely:  and the company, not content with having drawn away a large portion of the Portuguese trade, resolved to expel them entirely from this part of the world.  Ships fitted, either to trade or to fight, and having on board a great number of soldiers, were sent out within a very few years after the establishment of the company.  Amboyna and the Moluccas were first entirely wrested from the Portuguese:  factories and settlements were in process of time established from Balsora, at the mouth of the Tigris in the Persian Gulf; along the coasts and islands of India, as far as Japan.  Alliances were formed with many of the Indian princes:  and in many parts, particularly on the coasts of Ceylon, and at Pulicat, Masulipatam, Negapatam, and other places along the coasts of Coromandel and Malabar, they were themselves, in fact, the sovereigns.  The centre of all their Indian commerce was fixed at Batavia in Java, the greatest part of this island belonging to them.  From this general sketch of the extent of country, which was embraced, either by their power or their commerce, it is evident that the Indian trade was almost monopolized by them; and as they wisely employed part of the wealth which it produced, to establish and defend their possessions, they soon became most formidable in this part of the world, sending out a fleet of 40 or 50 large ships, and an army of 30,000 men.

They were not, however, content, but aimed at wresting from the Portuguese almost the only trade which remained to them; viz. their trade with China.  In this attempt they did not succeed; but in the year 1624, they established themselves at Formosa.  Soon after this, the conquest of China by the Tartars, induced or compelled an immense number of Chinese to leave their native country and settle in Formosa.  Here they carried on a very extensive and lucrative trade; and Formosa became the principal mart of this part of Asia.  Vessels from China, Japan, Siam, Java, and the Philippines, filled its harbours.  Of this commerce the Dutch availed themselves, and derived great wealth from it, for about forty years, when they were driven out of the island.  In 1601, the Dutch received permission to trade to Japan, but this privilege was granted under several very strict conditions, which were, however, relaxed in 1637, when they discovered a conspiracy of the Spaniards, the