produce spices, which would have to be sold at fixed prices
back to the company.
The extractive institutions created by the Dutch in the
Spice Islands had the desired effects, though, in Banda this
was at the cost of fifteen thousand innocent lives and the
establishment of a set of economic and political institutions
that would condemn the islands to underdevelopment. By
the end of the seventeenth century, the Dutch had reduced
the world supply of these spices by about 60 percent and
the price of nutmeg had doubled.
The Dutch spread the strategy they perfected in the
Moluccas to the entire region, with profound implications for
the economic and political institutions of the rest of
Southeast Asia. The long commercial expansion of several
states in the area that had started in the fourteenth century
went into reverse. Even the polities which were not directly
colonized and crushed by the Dutch East India Company
turned inward and abandoned trade. The nascent
economic and political change in Southeast Asia was
halted in its tracks.
To avoid the threat of the Dutch East India Company,
several states abandoned producing crops for export and
ceased commercial activity. Autarky was safer than facing
the Dutch. In 1620 the state of Banten, on the island of
Java, cut down its pepper trees in the hope that this would
induce the Dutch to leave it in peace. When a Dutch
merchant visited Maguindanao, in the southern Philippines,
in 1686, he was told, “Nutmeg and cloves can be grown
here, just as in Malaku. They are not there now because the
old Raja had all of them ruined before his death. He was
afraid the Dutch Company would come to fight with them
about it.” What a trader heard about the ruler of
Maguindanao in 1699 was similar: “He had forbidden the
continued planting of pepper so that he could not thereby
get involved in war whether with the [Dutch] company or
with other potentates.” There was de-urbanization and even
population decline. In 1635 the Burmese moved their
capital from Pegu, on the coast, to Ava, far inland up the
Irrawaddy River.
We do not know what the path of economic and political
development of Southeast Asian states would have been
without Dutch aggression. They may have developed their