Portrait of a Merchant House
History is a log, not a compass
Van Eeghen Head Office Amsterdam
Throughout the 350 odd years of its existence, Van Eeghen’s management has successfully steered free of its rich history. Rather than resting on their forebears’ laurels, each generation has kept their eyes firmly fixed on the horizon of the future. Having been around for ages does not in itself qualify a company for a promising future. It only works when the management takes lessons from the past seriously. As for every navigator, log readings are invaluable to establish a starting point from where to shape a course. But for that course he needs the compass of business acumen.
Sports & Nutritional Supplements
Infant & Clinical Formulae
While East and West India Companies –and governments, for that matter- came and went, merchant houses emerged, merged and vanished, Van Eeghen stayed independent and survived, alive and kicking. Van Eeghen’s long and successful history is partly explained by the consistency with which this unusual merchant house has, from 1662, clung to three pillars:
Van Eeghen - Functional Food Ingredients
During the mid 1990’s Van Eeghen invested in the new market of functional foods and started to invest in the nascent health enhancing products. Again a new niche market which on this occasion had its roots in Japan and the USA. Van Eeghen was confident that with time this market would become popular in Europe. The reasoning was the conviction that a new market was about to develop on the basis of some key trends :
Today, Van Eeghen Functional Ingredients offers an in-depth range of products comprising Choline, Inositol, Taurine, Nucleotides, Vitamins, Minerals, Premixes, Vitamin derivatives, Antioxidants, Amino Acids, Natural Botanical Extracts, Nutritional Oils. The ingredients are targeted at the markets of infant & clinical foods and sports & nutritional supplements. It has meanwhile become a valued partner of some of the largest multinational infant food manufacturers and premix producers around the world. A strong position has also been developed with the sports & nutritional supplements industry, leveraging its product knowledge, network and capabilities acquired in the infant formulae industry.
Left, former MD Willem van Eeghen with, right, present MD Jeroen van Eeghen
Van Eeghen equals superior products, premium service, extensive quality control, long-term fixed contract pricing, JIT supplies and long-term partnerships. Our branded and unbranded products pass the most stringent quality requirements in order to guarantee the purest and safest Infant & Clinical formulae ingredients. We have a leading position in various vitamins and derivatives, especially in Natural E, and B & C vitamins as well as in antioxidants, amino acids and natural botanical extracts.
Thus, Van Eeghen’s functional food ingredients Business Unit forms the beginning of yet a another cycle in the evolution of niche activities.
For further information on these activities we refer you to Van Eeghen’s website: www.vaneeghen.com
After 1945 Indonesia soon won independence after a nasty episode caused by dug in Dutch colonial heels. Van Eeghen’s contingency planning had even before that concentrated on diversification towards other Far Eastern countries and Africa, with similar produce as Indonesia. An import-export subsidiary was set up in Dar-es-Salaam, Tanganyika (today’s Tanzania). Industrial products such as building equipment, railway materials, fertilisers, electrical equipment and foodstuffs, were bought for East African markets; raw materials for the food industry, sisal and mica were exported. This trade was later brought into a joint venture with the Tanzanian Government (State Trading Co.), which handled most of the country’s im- and exports.
Bought out in 1968 by the Tanzanian Government, Van Eeghen & Co established a subsidiary buying office, Intrata Overseas BV in Amsterdam. A major project, with co-financing of the World Bank (IFC) and others, was funding and founding the Kilombero Sugar Company plantation and factory in Tanzania. This company is still operative today.
By that time a new law, prohibiting the combination of merchant and banking activities in one firm, had forced Van Eeghen to sell its banking branch. Though all formal ties were cut, the private equity bank still survives today as Oyens & Van Eeghen.
In the late 1950s Van Eeghen & Co saw the market potential of Oriental and exotic cuisine and the taste for ready-made food of an increasingly affluent society. The company became a major supplier of dehydrated vegetables to food processors in the Netherlands and abroad through a new branch: Van Eeghen International BV. This was to evolve into the company’s mainstay. The Chemical Division concentrated on trade and distribution of fine chemicals.
Acquainted with barter and compensation arrangements in Comecon countries and the Third World, Van Eeghen International added significant value for customers who appreciated what unpredictable risks such trades involved. Its fine nose for political evolution in for instance Warsaw Pact countries, punctual payers in the high days of communism, inspired Van Eeghen to seek insurance against default on payments of deliveries two years before the Berlin wall came down.
Two Van Eeghen branches, closely at the heart of management during 25 years following 1960, were Central Buyers BV at Amsterdam and Central Procurement Ltd. at Winchester (UK). Both worked worldwide as international procurement and consultancy agencies, representing Third World government organisations and multi-laterally financed development projects in agriculture, forestry, livestock and fishery, irrigation, education, water and power supply, and mining. 80% of the projects were World Bank financed. Pre-qualified projects could obtain credit facilities from Van Eeghen through which a current account relationship was established, thus avoiding for them the cumbersome procedures of opening and confirming Letters of Credit. Both companies’ networks, purchasing power, transport, insurance, in- and export facilities often proved great helps for ‘novice exporters’ where international aid did not. The sound commercial footing of the enterprise worked wonders to fulfil their motto ‘from poverty to plenty’. When, however, in the late 1980s synergy with the rest of the company was lost and prospects for added value vanished, it was deemed wise to sell both activities.
Yet, this end to Van Eeghen style development cooperation did certainly not stop trade with the developing world. Van Eeghen’s network and acquaintance with non-European cultures, as well as the management’s un-western perseverance and long term vision, continued to connect trading partners in the ‘third’, the ‘second’ and the ‘first’ world.
Mocking conventional thought, Van Eeghen’s consistent dependability and agility throughout dramatically changing ages has made it a thoroughly modern company, with a flat organisation structure, stern adherence to business ethics and high added value. In the last century Van Eeghen’s agility allowed it to evolve from a merchant house in a staple market to a trading company concentrating on niche markets.
In 1824 the Nederlandsche Handel-Maatschappij (later referred to as N.H.M., or Netherlands Trading Company) was founded to reanimate Dutch trade with the Orient, especially in Dutch ships. Indonesia became nominally a colony of the Netherlands and from 1829 the ‘Cultuur Stelsel’, a sort of produce system, was introduced, stimulating the locals to cultivate food and industrial produce for export –which was virtually a N.H.M.-monopoly.
Van Eeghen & Co, from 1839 till 1847 managed by Pieter II, with his son Pieter Christiaan and nephew Jan III, realised they needed exports of textiles to the East to obtain suitable consignments. So they became early financiers of the Dutch ‘cotton belt’ in the eastern Twenthe region. In 1860 Jan van Eeghen splashed out on early power looms in Twenthe. Van Eeghen cooperated closely with textile manufacturers G. & H. Salomonson, dodging the NHM-monopoly for cotton exports.
In 1842 Van Eeghen & Co sent through B. Kopersmit & Co in Batavia (presently Jakarta) its first cargo of copper sheets and nails, which were much in demand in the busy port. Tons of Java rice came to Amsterdam in return. Trade with Indonesia increased when from 1850 the N.H.M. softened its protectionism. Pain Stricker & Co. became a trusted trading partner in Batavia, employing from 1858 former Van Eeghen & Co. trainee B. Heldring. He kept sending illuminating reports on opportunities for cotton trade and monetary systems in the Indonesian archipelago. By 1875 Van Eeghen’s Indonesian network included 30 merchant houses. Export of cotton to Indonesia and agricultural products in return became the firm’s mainstay, outpacing by 1865 its trade with the United States. After 1900 consignments of dried hides and tobacco increased.
In the 1890s closer connections with 23 commercial plantations, mainly producing coffee, tea, rubber, quinine, cacao, spices and palm oil, secured produce for trade. Sumatra tobacco got a bumpy ride but rubber production took off after 1909, when Van Eeghen & Co. participated in establishing the Nederlandsche Rubber Maatschappij (Dutch Rubber Company) and the Tjiboeni Tjipongpok Caoutchouc Company. Copra rapidly gained importance, especially through the relationship with the house of Michael Stephen & Co. of Macassar.
Christiaen Pieter van Eeghen (in charge 1865-1889) introduced telegraphic communications with Batavia, a typewriter (one of the first in the Netherlands) and a link with the Telephone Bell, making Van Eeghen one of the most advanced offices in town. Increasing foreign investment, growing international competition, differential import duties and new shipping lines further changed the commercial world. Indonesian products were directly shipped to, for instance, North America, Great Britain and India, rather than to Amsterdam, where traditional commission houses sorted the goods to meet international markets. The last remnants of the Amsterdam staple market succumbed to what might be dubbed ‘processed cross trades’, in which Van Eeghen led the way. The house had already before 1785 been trading Baltic grain on sample while it was shipped straight from Prussia to Italy. Van Eeghen sought added value in product refinement and stock delivery of rare products. This became and to a large extent still is the ‘core business’ of Van Eeghen
Creating standard quality brands and regular sortings in cooperation with producers, helped to secure regular buyers for commodities traded on international contracts. In 1908 S.P. van Eeghen became chairman of the young Association for Copra trade, furthering the interests of sellers and buyers. Tea, cacao and spices got similar associations. Hides and certainly tobacco, where the commissioner’s knowledge could not be missed, escaped the new system. Between 1880 and 1912 Van Eeghen & Co’s imports rocketed from 3.8 million to 8.4 million florins, but during World War I the Dutch banking system and sea communications virtually collapsed. Indonesia’s merchants diverted their attention to the US and Japan.
When after WW I the global economy bounced back from the wartime destruction, direct shipments of copra and rubber soon picked up. Van Eeghen choose to concentrate on high value market niches. Trade in tobacco and hides remained very important, as did shipments of rubber, capok, tea, coffee, copra and spices.
The world economic crisis of the early 1930s and its collateral wave of protectionism hit the free trading Netherlands hard, although Van Eeghen’s trade in Indonesian produce survived remarkably well. Until WW II struck. Trade with Indonesia screeched to a halt. Van Eeghen & Co. reverted to a whale’s ‘dive reaction’ and concentrated all efforts on keeping an ‘inner staff of associates’ of Messrs. H.L. and L.C. van Eeghen and J.C. de Beaufort ticking over.
Thriving commodity trading
In 1662 Flemish cloth merchant Jacob van Eeghen moved from the Southern Netherlands to thriving Amsterdam. Soon he was an established marine merchant, importing and exporting commodities for own account and in commission. Linen and linseed came from Flanders, England and Westphalia, and went to the West Indies (the coarse Flemish variety) and France (the finer qualities) or were sold locally. From France and Portugal came wine and huge quantities of salt as a preservative for the booming herring industry. Salt was also traded with Baltic clients for timber.
After 1740 Van Eeghen’s West Indian trade through the South American staple of Curaçao increased: import of tobacco, cacao, hides and indigo, later also sugar, coffee and quinine, export of various products, mainly linen. For instance in 1747 Van Eeghen's new ship America carried for 28,725 florins worth of linen to Curaçao, more than twice the vessel’s value.
Import of grain from the Baltic, wine from France, Genoese oil from Italy, copper, almonds and cotton from the Levant and North Africa continued throughout the 18th century. Most commodities were refined before re-export or exported as (semi) manufactured merchandise, increasingly to the Americas and the Far East. While the monopolistic Dutch East India Company (VOC) waned, tea, spices and Indian fabrics gained importance.
In 1763 and 1772 severe credit crises hit the Amsterdam Bourse, but barely dented Van Eeghen’s trade. Silesian linen was to become a main commodity, shipped through Hamburg or Altona, or carried by diligence via Osnabruck. In 1778 the Van Eeghen brothers Christian and Pieter (then a partner in Juilion & Rulffs) joined forces to, for the first time, formally establish the firm. Pieter bought his associates out, their mother Cornelia brought her assets in and the firm Pieter & Christiaen van Eeghen was formed. Julion & Rulffs' big network widened the product range considerably with, for instance tin, saltpetre and spices. Alongside linen, the Russian leather trade flourished; grain from Rostock and Swedish iron went to Spain and Italy; sugar, coffee and wines were shipped back from Nantes, Bordeaux and Montpellier; rice, usually bought in Italy, came after 1790 also from the US (Charleston).
French contraction, American accent
From 1795 French domination of the Netherlands thwarted Van Eeghen’s commodity trading. Neutral flags had to keep ships out of British naval hands. American merchant ships took 92% of the market by 1807. Christiaen van Eeghen and his friends brought a degree of sense to the government’s coffers shortly before his death in 1798. Until 1810, cork and heads went to New York; cotton, grain, pitch and -increasingly important- tobacco from Galveston and Baltimore, Cuban sugar and East Indian coffee came back. Pieter van Eeghen and Hendrik Sye, a partner who had joined in 1792, traded especially with America, even in oriental goods, through old friends, the New York merchant house LeRoy & Bayard. But in 1810 Napoleon finally choked his empire’s economy with the Continental System and all commerce ground to a halt. By 1812 Van Eeghen’s assets were barely a quarter of their pre-war peak, but it was one of the few merchant houses to survive at all.
Early 1812 Pieter left the firm, Hendrik Sye took the helm. Christaan’s sons Abraham, Jan (II) and later Pieter (II) joined, forming Van Eeghen & Co. Trading resumed when in 1815 the first American ship, Emulation docked at Amsterdam with a cargo of cotton and tobacco for Van Eeghen. Return cargo included cashmere, cloth, canvas, cheese, herring and ‘Haarlemmeroil’ –a sort of medical fluid. Although tobacco and Baltic grain did well, commodity trading remained fairly modest until the late 1830s.
Though basically marine merchants, Van Eeghen soon branched out in other activities, such as financial facilities and shipping, but only when economic conditions made this logical for bolstering the core business.
After 1672, Van Eeghen participated in a growing number of ship owning syndicates (`partenrederij'), in which syndicate members took one or more 1/64 parts in a vessel. Having 1/64 parts in 64 ships was safer than owning one ship, especially if this one went down and was lost, so this form of syndicating was a means of insurance. In the 18th century the Van Eeghen brothers managed quite a few ships, especially West Indiamen. Increasingly stakes in ships were shared only with close friends, and often with the captain (for whose motivation this worked wonders). Over time interests in shipping increased and by 1760 Jan van Eeghen fully owned a number of vessels. At the height of the Amsterdam credit crunch Jan’s widow Cornelia ordered a 137 feet frigate from the shipyard of Ary Staets & Compagnie - which she partly owned. By the early 1790s the Van Eeghens sensibly skipped most of their stakes in shipping; war was in the air again, while the five Dutch navies (`Admiralties’) were starved of money.
The NHM did not eschew protection for resurrecting the Dutch merchant marine and industries from the ashes of Napoleonic madness. Ashore it stimulated smaller and medium sized manufacturing rather than big mechanised industries with their collateral hell of
overpopulated cities, although this did nothing for competitiveness. At sea the NHM’s system of guaranteed cargoes for Dutch ships at very comfortable rates, and its stiff construction and manning regulations, bred an equally uncompetitive and over-manned though safe merchant navy. When after 1840 the NHM’s protectionism waned big, fast and undermanned American clippers gave the ‘Dutch butterboxes’ a hard time. From 1853 the Dutch began building their own clippers.
To the Van Eeghen house’s anguish, the NHM’s protected merchant navy had, if the merchants were lucky, only small and despairingly slow tubs available when big, fast ships were needed to despatch consignments in time for making the most of markets. It was clearly time to reanimate the ship owning business: in 1852/53 the barques Capella, Alcyone and Bellatrix were built, followed in 1856 by George Raynes’ famous flyer, the 1,498 tons Yankee clipper Witch of the Waves, renamed Electra.
In 1872/74 shipbuilders Meursing & Huygens of the famous Amsterdam ‘Concordia’ shipyard built for Van Eeghen the full rigged ships Amsterdam (1,482 tons) and Amstel (1,594 tons). Their unique Dutch system of composite construction -keel, frames and inner hull in iron, and a pitch-pine outer hull- gave them speed, strength and good carrying capacity. The Van Eeghen ships rarely made record passages but always consistently short passage times.
But the opening of the Suez Canal in 1869 made sailing ships unpractical in the Indies trade, and the Dutch merchant navy rapidly changed to steam, in which much higher investments were involved. Contemplating its core business, Van Eeghen sold Electra in 1875 and in 1887 the last vessel was sold. Van Eeghen & Co. continued, however, to play a significant role in finance and insurance of shipping, the latter activity being Pieter Christiaan’s favourite pastime. By 1900, interests in shipping companies - especially those hailing from Amsterdam- were twice as large as in Indian plantations and had three times the value of rubber shares. S.P. van Eeghen was a great supporter of widening of the IJmuiden locks giving entry to the port of Amsterdam. After World War II Van Eeghen’s interests in shipping decreased while its interests in ‘processed cross trades’ increased
Amsterdam was in the 17th and 18th century the cradle of insurance by underwriting (`particuliere assurantie') against, as Lloyd’s put it, the `perils of the sea'. In the 1750s those perils grew worse in the wake of even more wars, but since the Dutch were not fully involved, insurance was profitable. Jan van Eeghen was one of the major underwriters on the Amsterdam Bourse.
From 1779 P. & C. van Eeghen expanded into the young USA and diversified into securities trading and loan underwriting. They played a major role in the founding of a syndicate named Holland Land Company (see also large number of interesting references @ google) in 1793 pioneering property speculation in the USA and eventually leading to the purchase of approximately 3.5 million acres in the State of New York and Pennsylvania.
The Holland Land Office still today operating as a museum and a chart of marked properties in Pennsylvania
They invested in their purchase by surveying, building roads, digging canals in order to make it more attractive to new settlers. This growth rate of purchase could not be maintained and it became apparent that much of the land could only gradually be disposed of to new settlers, mostly from Europe. In 1863 the last plot of land was sold. At the same time, by the late 18th century financial services became increasingly important for Van Eeghen’s results and during much of the 19th century banking even dwarfed trading.
In 1806, during the French occupation of the Netherlands and much of Europe, many of the affluent were getting hard up in the wake of French economic kamikaze. Van Eeghen started a separate Lombard’s account. After 1812 the Netherlands were reanimated as an independent Kingdom. Vast funds remained idle, however, because commodity trading refused to pick up outside the realm of the monopolistic Nederlandsche Handel-Maatschappij, Van Eeghen & Co put the money to good use by participating in financial transactions in the Netherlands, England and France, trading money and funds. Especially the successful trade in securities helped Van Eeghen to survive the lean days for commodity trading. The large proportion of family deposits balanced against 50 to 60% of assets invested in securities, made Van Eeghen more a mutual investment fund than a merchant house. Jan van Eeghen went even further on the banking path in 1829 by becoming one of the directors of the Netherlands Central Bank (De Nederlandsche Bank).
Insurance picked up slowly after 1825. From 1850 this further increased, in step with reanimation of the commodity trading and shipping, when gradual liberalisation of trade with the East Indies allowed Van Eeghen to compete with the omnipotent Nederlandsche Handel-Maatschappij.
Meanwhile the range of banking activities increased as well, with many transactions being carried out for the Savings Bank of Semarang and a number of other banks. Credits were opened and working capital supplied for large enterprises at home and abroad. About 2 million florins a year was spent on participation in syndicates, which at that time made the house one of Amsterdam’s major bankers.
The firm’s considerable capital, the 60 funds it managed and its partners’ active share trading in friendly enterprises, consistently extended Van Eeghen & Co.’s network. The partners sat in 1910 on the boards of over 30 joint stock companies. In May 1914 Van Eeghen & Co. were accepted as share brokers on the Amsterdam Bourse, and from then on the firm officially called itself merchant house and bankers. The trading of shares also took place on the stock exchanges of New York, London and Paris.
In 1923/24 international drawing-credit was developed in the Amsterdam stock market, to cushion the drawbacks of speculative exchange rates for commerce. This brought Amsterdam for a time back in its 18th century role of international financier. The banking branch of Van Eeghen & Co. flourished and kept on doing so except during WW II, when nothing flourished at all. When, however, in the 1960s Dutch law prohibited the combination of merchant and banking activities in one firm, Van Eeghen sold its banking branch, which today survives as Oyens & Van Eeghen, a private equity bank with no longer ties to the Van Eeghen group of companies.
In 1837 Jan van Eeghen participated in establishing a paper factory -the first industrial enterprise in the Van Eeghen annals. A significant further contribution to bringing modern industrialisation to the –then still mainly horse and wind driven- Netherlands was made when Van Eeghen & Co invested heavily in the steam weaving-mill ‘Nijverdal’ of G.& H. Salomonson. They were among the first to export to Indonesia outside the Nederlandsche Handel-Maatschappij and in 1853 the first to use steam in weaving. Van Eeghen & Co., harking back to their old textile trading, supplied much of the capital for the Salomonsons, who supplied much of Van Eeghen’s export trade.
In 1965 the sizeable Kilombero Sugar Company was founded in East Africa and is still producing sugar today.
Finally, in 1998, Van Eeghen started a spice, culinary herb and dehydrated vegetable factory in Montreal, Canada for refining, cleaning, blending and packaging of these savoury products for the North American business to business food market.
Al these activities have in common that they were relatively short lived and eventually sold.
As with all Amsterdam merchants of the 17th century, the early Van Eeghens had the office on the ground floor, kept the merchandise in the loft and in the basement, and lived in between. This explains the architecture of many tall Amsterdam canal houses. A barrier between private life and business barely existed. In liberal minded merchant families the staff virtually became members of an extended family.
In the meritocratic Netherlands of the 17the century, it was not uncommon for women to take part in economic life. The apparent habit of marrying wives with substantial business acumen came in helpful when a succession of Van Eeghen gentlemen died young. Christiaen van Eeghen’s widow Suzanne Blok ran the company for half a century from 1704, since also her sons and grandson died too young. In 1760 Jan van Eeghen died, aged only 31, though having achieved what others would barely pull off in twice that time. His widow Cornelia de Clerq took over and, while raising four children, continued trading and shipping, with help of a world-wide network of dependable friends. The sober, steady Van Eeghen-style of going about their business proved its worth. The dependability of friends, overseas as well as round the corner, ensured Cornelia of a sympathetic network. Activities contracted somewhat, but the young mother cum business woman carefully guided the house through two devastating credit crises at the Amsterdam Bourse (1763 and 1772/3).
In the early 1850s, Van Eeghen made school as a socially responsible ship owner with the lay-out of their new barques Capella, Alcyone and Bellatrix. These ships were probably the first to have their crew’s quarters in deckhouses that could be aired regularly and kept dry, rather than in the traditional dark and damp digs below of the past.
The new system of trade that emerged by the late 1890’s, which made the most of improved communications, caused extra work and the first lady typist was introduced into the, at that time entirely male, crew of Van Eeghen & Co. The growing complement watered down the patriarchal, yet close working relations, but great attention remained to be devoted to personnel management. Good pay and, even in 1900, the same number of holidays for all, from humble servant to lofty senior partner. When something special, private or business, was to be celebrated, everyone was invited. By Christmas time, when Mr. S.P., as he was called, had been hunting, all staff members got a hare for dinner. Times may change but habits remain the same.
During the early 1960’s a charitable foundation was created through large family donations and legacies and as such had gained the position of a majority shareholder with its own independent board. Although in 2014 some major corporate governance changes were made this foundation still remains the sole majority shareholder with largely the same charitable goal as before. Beside its goal it also avoids potentially complicated succession problems so often experienced by many family owned companies.