Heavy and light money in the Netherlands Indies and the Dutch Republic: dilemmas of monetary management with unit of account systems

In its Asian operations the Dutch United East Indies Company (VOC) (1602–1798) acted both as a territorial ruler and as a trading company. The company shipped large amounts of precious metals to Asia, both in the form of bullion and as coins, to pay for its trade and to provide currency for the areas under its control. The Company faced the problem that silver coins rapidly disappeared from circulation, as demand for silver was high in Asia. The Company attempted to manage the problem with a monetary policy using a unit of account, modelled after the policy of the Dutch Republic. It turned out that the two purposes of the money of account system, viz., putting the bookkeeping on a systematic basis and managing the currency in circulation, were conflicting. The first demanded a fixed unit of account, the second demanded a flexible policy of linking and de-linking the unit of account to real coins. Although the Company managed to muddle through this dilemma, it only succeeded in finding temporary solutions.