Dutch Commerce and Chinese Merchants in Java Verhandelingen van het Koninklijk Instituut voor Taal-, Land- en Volkenkunde Edited by Rosemarijn Hoefte KITLV, Leiden Henk Schulte Nordholt KITLV, Leiden Editorial Board Michael Laffan Princeton University Adrian Vickers Sydney University Anna Tsing University of California Santa Cruz VOLUME 291 The titles published in this series are listed at brill.com/vki Dutch Commerce and Chinese Merchants in Java Colonial Relationships in Trade and Finance, 1800–1942 By Alexander Claver LEIDEN • BOSTON 2014 This is an open access title distributed under the terms of the Creative Commons Attribution‐ Noncommercial‐NonDerivative 3.0 Unported (CC‐BY‐NC‐ND 3.0) License, which permits any noncommercial use, and distribution, provided no alterations are made and the original author(s) and source are credited. Front cover illustration : Sugar godown of the sugar enterprise ‘Assem Bagoes’ in Sitoebondo, East Java, ca. 1900. Collection Koninklijk Instituut voor Taal-, Land- en Volkenkunde (KITLV), Leiden (image code: 6017). Back cover illustration : Five guilder banknote of De Javasche Bank, 1934. Front side showing a male dancer of the Wayang Wong theatre of Central Java. Back side showing batik motives and a text in Dutch, Chinese, Arabic and Javanese script warning against counterfeiting. Design by the Dutch artist C.A. Lion Cachet. Printed by Joh. Enschedé en Zonen. Library of Congress Cataloging-in-Publication Data Claver, Alexander. Dutch commerce and Chinese merchants in Java : colonial relationships in trade and finance, 1800-1942 / by Alexander Claver. pages cm. -- (Verhandelingen van het Koninklijk Instituut voor Taal-, Land en Volkenkunde, ISSN 1572-1892; volume 291) Includes bibliographical references and index. ISBN 978-90-04-25657-6 (hardback : acid-free paper) -- ISBN 978-90-04-26323-9 (e-book) 1. Java (Indonesia)-- Commerce--History--19th century. 2. Java (Indonesia)--Commerce--History--20th century. 3. Netherlands-- Commerce--History. 4. China--Commerce--History. 5. Dutch--Indonesia--Java--History. 6. Chinese--Indonesia-- Java--History. 7. Merchants--Indonesia--Java--History. 8. Netherlands--Colonies--Asia--Economic conditions. 9. Netherlands--Foreign economic relations--China. 10. China--Foreign economic relations--Netherlands. I. Title. HF3809.J4C55 2014 330.9598’2022--dc23 2013040518 This publication has been typeset in the multilingual “Brill” typeface. With over 5,100 characters covering Latin, IPA, Greek, and Cyrillic, this typeface is especially suitable for use in the humanities. For more information, please see www.brill.com/brill-typeface. ISSN 1572-1892 ISBN 978-90-04-25657-6 (hardback) ISBN 978-90-04-26323-9 (e-book) Copyright 2014 by Alexander Claver This work is published by Koninklijke Brill NV. Koninklijke Brill NV incorporates the imprints Brill, Brill Nijhoff, Global Oriental and Hotei Publishing. Koninklijke Brill NV reserves the right to protect the publication against unauthorized use and to authorize dissemination by means of offprints, legitimate photocopies, microform editions, reprints, translations, and secondary information sources, such as abstracting and indexing services including databases. Requests for commercial re‐use, use of parts of the publication, and/or translations must be addressed to Koninklijke Brill NV. This book is printed on acid-free paper. The realization of this publication was made possible by the support of KITLV (Royal Netherlands Institute of Southeast Asian and Caribbean Studies). CONTENTS List of Maps, Tables, Figures, and Boxes ...........................................................vii Acknowledgements ................................................................................................. xi Abbreviations..........................................................................................................xiii Glossary ..................................................................................................................... xv Conventions ............................................................................................................xix Maps ..........................................................................................................................xxi 1. Introduction ......................................................................................................... 1 Research Outline ............................................................................................ 1 Access to Capital, Information and Security .......................................... 3 The Indonesian Case ..................................................................................... 7 Sources .............................................................................................................. 9 Research Method .........................................................................................10 2. Prelude to Rapid Expansion (1800–1884) ................................................13 The Colonial State and the Economy .....................................................13 The Resilience of Private Enterprise .......................................................25 Entrepreneurship under the Cultivation System: Djauw Adjiem and Ho Kong Sing .......................................................34 Finance in Transition: Internatio and De Javasche Bank ..................49 Wholesalers and Retailers: Van Beek, Reineke & Co. - HVA .............65 3. Crisis and Adaptation (1884–1890s) ..........................................................73 Economic Policy and Political Expansion .............................................73 The Organization of Trade ........................................................................76 The Onset of the Crisis: Sugar and Coffee .............................................86 Beginning of the Crisis ...............................................................................91 The Crisis Experienced: Internatio and Dorrepaal & Co. .................96 The Crisis Prolonged: Sing Liong & Co. .............................................. 120 4. Redefining Dutch-Chinese Commercial Relations (1890s–1910) .................................................................................................. 133 An Awkward Alliance: The Interdependence of Dutch and Chinese Business ......................................................................... 133 The Economic Position of the Chinese under Scrutiny ................. 149 A Wave of Failures: Surabaya in the Late 1890s ............................... 172 The Chinese Boycott of the HVA ........................................................... 189 vi contents 5. The Road to Expansion (1910–1930) ...................................................... 241 The Late Colonial State: Consolidation and Conflict ...................... 241 The Colonial Economy before 1914: The HVA in Trade and Agriculture ..................................................................................... 247 The Lure of Sugar in Trade and Banking ............................................ 260 De Javasche Bank and the Outbreak of the First World War ........ 268 The Colonial Economy after 1914........................................................ 275 The Kwik Hoo Tong Handelmaatschappij: A Prominent Chinese in Sugar ................................................................................... 283 6. Economic Crisis and Commercial Resilience (1930–1942) .............. 349 The Economic Experience of the 1930s ............................................. 349 The Incidence of Failure: Bankruptcy Cases and Business Fraud .............................................................................. 358 Commercial Resilience and Crisis Management: Internatio and Margo-Redjo ............................................................. 371 7. Conclusion ....................................................................................................... 393 A Bird’s-Eye View of Colonial Trade ..................................................... 393 Trade Dynamics......................................................................................... 402 Sources .................................................................................................................... 405 Bibliography .......................................................................................................... 407 Index........................................................................................................................ 431 LIST OF MAPS, TABLES, FIGURES AND BOXES Maps 1. Southeast Asia and the Indonesian archipelago. ....................................xxi 2. The islands of Java and Madura. .................................................................xxii 3. Regions of origin in South China of Chinese migrants represented in Southeast Asia. .................................................................. xxiii 4. Main emigration areas and corresponding dialect groups in South China. ...............................................................................................xxiv Tables 2.1. Trading companies in Batavia, 1817–1828. ...........................................28 2.2. Trading companies in Batavia, 1829–1840. ...........................................28 2.3. Trading companies in Semarang, 1829–1840.......................................29 2.4. Trading companies in Surabaya, 1829–1840. .......................................29 2.5. Customer profile of the Batavia branch of Van Beek, Reineke & Co. / HVA (1878, 1884). ..........................................................70 3.1. The growth of Java and world sugar production in metric tons (x 1000), 1860–1890. ............................................................87 3.2. The share of Java sugar in world production, 1860–1890. ................89 3.3. Financial institutions and agricultural enterprises, 1884. .............. 104 3.4. Trade bankruptcies in the Netherlands Indies, 1883–1887. .......... 121 4.1. Colonial finances of the Netherlands Indies, 1816–1925 (in millions of guilders). ........................................................................... 147 4.2. Survey of defaulted retail traders in Semarang, 1898/99–1908/09. ..................................................................................... 226 4.3. Sustained loss ( f ) of selected European wholesale import traders, 1898/99–1908/09....................................................................... 227 5.1. Annual average growth in major economic aggregates, 1874–1940. .................................................................................................. 249 5.2. Price index numbers, 1870–1940 (1913=100). ................................. 250 5.3. Imports and exports of Java and Madura, 1900–1913: values (at constant prices x f 1,000) and index numbers (1913=100). ................................................................................................. 251 viii list of maps, tables, figures and boxes 5.4. Agricultural and trading activities of the HVA, 1901–1914: capital, commitments and profits (x f 1,000). .................................. 255 5.5. Credit extension within the commercial banking system of the Netherlands Indies in 1905, 1910 and 1914 (x f 1,000). ............................................................................... 265 5.6. Money withdrawals at the Surabaya agency of DJB, 4–8 August 1914. ..................................................................................... 274 5.7. Geographical composition of the foreign trade of the Netherlands Indies, 1914–1922 (in millions of guilders). ........... 277 5.8. Imports and exports of Java and Madura, 1913–1930: values (at constant prices x f 1,000) and index numbers (1913=100). ............................................................................................... 280 5.9. Average annual sugar turnover of KHT in 1927 (divided by territory, in metric tons). ................................................. 333 5.10. Balance sheet of the N.V. Kwik Hoo Tong Handelmaatschappij, 31-12-1933. ..................................................... 345 6.1. Imports and exports of Java and Madura, 1929–1940: values (at constant prices x f 1,000) and index numbers (1913=100). ............................................................................................... 353 6.2. Private capital imports and dividends & profits in the Netherlands Indies, 1900–1939 (x f 1,000,000). ................ 359 6.3. Corporate enterprises in the Netherlands Indies, 1914–1940................................................................................................. 360 6.4. New bankruptcy cases submitted at the Councils of Justice in the Netherlands Indies, 1919–1940. ............................................. 361 6.5. Assets, liabilities, losses and repayments at concluded bankruptcies in the Netherlands Indies, 1922–1940. ................... 362 6.6. Average sustained loss at concluded bankruptcies in the Netherlands Indies, 1922–1940. ......................................................... 364 6.7. Turnover and net profits of Internatio, 1900–1929 (x f 1,000). ........................................................................... 373 6.8. Internatio’s return on capital employed (ROCE), 1900–1929................................................................................................. 374 6.9. Turnover and net profits of Internatio, 1929–1939 (x f 1,000). ........................................................................... 375 6.10. Internatio’s return on capital employed (ROCE), 1929–1939................................................................................................. 376 6.11. Internatio’s outstanding debt on trade goods and import client write-offs in the Netherlands Indies, 1929–1939 (x f 1,000). .................................................................................................. 381 list of maps, tables, figures and boxes ix Figures 3.1. Credit arrangements with improved monitoring function. ............ 130 5.1. Index numbers of imports and exports, Java and Madura 1900–1913 (1913=100). .......................................................................... 252 5.2. Capital, investments and profits of the HVA, 1901–1914. ............. 256 5.3. Index numbers of imports and exports, Java and Madura 1913–1930 (1913=100). .......................................................................... 281 6.1. Index numbers of imports and exports, Java and Madura 1929–1942 (1913=100). .......................................................................... 353 6.2. Concluded bankruptcies and sustained losses in the Netherlands Indies, 1922–1940. ............................................................ 363 6.3. Internatio’s return on capital employed (ROCE), 1900–1939. ...... 376 6.4. Five guilder banknote of De Javasche Bank, 1934. ........................... 392 Boxes 4.1. Trading practices in Singapore (nineteenth century). ..................... 177 4.2. Excerpt from “ Hal Boycot ” in Kabar Perniagaan , 1 August 1908.............................................................................................. 221 5.1. Genealogy of the Kwik family. ................................................................ 284 5.2. KHT’s share capital and participants over time (1894–1916). ...... 285 6.1. Names and subtitles of Efficiency magazine. ...................................... 388 6.2. Name and subtitle of Geo. Wehry’s trade magazine. ........................ 389 ACKNOWLEDGEMENTS So many people have contributed in so many ways that I cannot thank them all. I want to express my sincere gratitude to those that are not listed below. This book is my way of acknowledging the time and effort they were all willing to spend. I would like to thank Professor Heather Sutherland, who patiently and expertly guided me over the years. Her high academic standards guarded the quality of this research. Dr. Thomas Lindblad gave the kind of gentle and focused support one could only wish for, identifying the right solution to any obstacle encountered. The staff of numerous archives and libraries in the Netherlands and Indonesia has been very helpful. In Jakarta the employees of Bank Indonesia were indispensable. My stay there was particularly pleasant because of Ibu Lien Sahuburua, former head of the Bagian Arsip , who kindly took me under her wing. I cherish our conversations which taught me much about archives, and even more about Indonesia and its people. Many people gave generously of their time in numerous discussions. Some I need to thank in particular. Arjan Veering shared much of the research and fieldwork experience and became one of my closest friends. His advice was and is dear to me. I am grateful for all the help received from Margana whose dedication to academia is truly remarkable. I con - sider myself fortunate to count Thee Kian Wie and his lovely wife Tjoe among my friends. His sponsorship of my research opened the doors to the archives of Bank Indonesia. Kian Wie’s unmatched friendliness, work ethic and modesty remain an example to me. F.J. van Veelen showed great interest in my research and provided a listening ear each time we met. It was great to have an uncle with a love for history. Hilly de Vries was always there and her ability to listen has been a true blessing. My acquaintance with Ferry van de Ven was an encounter with Indonesia’s past. Pak Ferry was a true trader and a true Indies man. Through our conversations I experienced history. It made me aware that my research dealt with real people, who lived real lives. When he died he took with him an era long gone. I wish to express my thanks for the permission received to republish articles that are part of chapters II, IV and VI. These articles include ‘The Colonial Flow of Trade, Credit, and Information: The Chinese-Arab xii acknowledgements Clientele System of Van Beek, Reineke and Co . / HVA (1870s–1880s)’, Itinerario 36 (2), 2012; ‘A colonial debt crisis. Surabaya in the late 1890s’ in D. Henley and P. Boomgaard (eds), Credit en Debt in Indonesia 860–1930 (ISEAS, 2009); ‘Crisis, response and survival. Internatio in the 1930s’, Economics and Finance in Indonesia , 55 (3) 2007; and ‘Crisis management and Creative Adjustment; Margo-Redjo in the 1930s.’ in M. Dieleman, J. Koning, and P.Post (eds), Chinese Indonesians and Regime Change (Brill, 2011). The generous financial support provided by the Vereniging KITLV (Leiden, the Netherlands) made the Open Access publication of this vol - ume possible. Finally, the presence of Friederike Juncker and our little daughter Lotta has been invaluable. Friederike, the importance of your trust and encour- agement cannot be expressed in words. Thank you from the bottom of my heart! Den Haag, December 2013 Alexander Claver ABBREVIATIONS ASNI Algemeen Syndicaat van Suikerfabrikanten in Nederlandsch-Indië BB Binnenlandsch Bestuur BENISO Bond van Eigenaren van Nederlandsch-Indische Suikerondernemingen Borsumij Borneo-Sumatra-Handel Maatschappij CS Cultuurstelsel (Cultivation System) CV Commanditaire Vennootschap DJB De Javasche Bank GDP Gross Domestic Product GG Gouverneur-Generaal (Governor-General) HSBC Hongkong and Shanghai Banking Corporation HVA Handelsvereeniging Amsterdam Internatio Internationale Crediet- en Handelsvereeniging “Rotterdam” JCJL Java-China-Japan Lijn JSV Java Suiker Vereeniging KB Koloniale Bank KHT Kwik Hoo Tong Handelmaatschappij KNMH Koninklijke Nederlandsche Maatschappij van Havenwerken KPM Koninklijke Paketvaart Maatschappij NHM Nederlandsche Handel-Maatschappij NIEM Nederlandsch-Indische Escompto Maatschappij NIGIEO Nederlandsch-Indische Gouvernements Import en Export Organisatie NIHB Nederlandsch-Indische Handelsbank NILM Nederlandsch-Indische Landbouw Maatschappij NIS Nederlandsch-Indische Spoorwegmaatschappij NISM Nederlandsch-Indische Stoomvaart Maatschappij NIVAS Nederlandsch-Indische Vereeniging voor de Afzet van Suiker NIVIG Nederlandsch-Indische Vereeniging van Importeurs-Groothandelaren NV Naamloze Vennootschap RL Rotterdamsche Lloyd xiv abbreviations ROCE Return on Capital Employed SMN Stoomvaartmaatschappij ‘Nederland’ THHK Tiong Hoa Hwe Koan VJSP Vereenigde Javasuiker Producenten VOC Vereenigde Oost-Indische Compagnie GLOSSARY agentschap agency / branch (office) alun-alun central square of Javanese town arak alcohol distillate made of rice or palm juice baar newcomer, (expression used for a European who had recently arrived in the colony), derived from the Indonesian word baru = new. baba a person of Chinese descent born in the Straits Settlements (i.e. Malaysia and Singapore) (see also peranakan ) bang a Chinese dialect group organization bangsa nation or race bapak father / sir, form of address to an older man (often shortened into pak ) batik cloth with Javanese patterns, printed by means of a special dyeing technique boei prison bouw unit of square measure (1 bouw = 1.747 m 2 ) Binnenlandsch Interior Administration, Dutch colonial civil Bestuur service bupati / regent highest indigenous administrative official in Java, known collectively as priyayi Cabang Atas Chinese elite in Java Cina klontong pedlar of Chinese descent Cina mindering Chinese money lending, usury controleur Dutch official ranked below assistant resident cultuurbanken agricultural banks Cultuurstelsel Cultivation System desa village dokar horse-drawn buggy duit doit (copper coin of small denomination) erfpacht long lease Fukien Fujian, a province in Southeast China gandeng konco ‘buddies arm-in-arm’, a term referred to the Dutch-Chinese economic collaboration during colonial times in Indonesia xvi glossary gaplek dried cassava gemeente municipality gudang godown or warehouse gula batu lump sugar gula mangkok palm or cane sugar of lesser quality haji title give to a Muslim who has made the pilgrimage to Mecca handelsvere(e)niging trading association / trading company he(e)rendienst traditional obligatory labour service Hokkien people from Fukien , or dialect in south Fukien Huaqiao / Hoakiau Chinese sojourner / overseas Chinese hui a Chinese (business) association for mutual assistance hui kuan a Chinese (dialect) association inlander native (a derogatory term) IOU confession of guilt (abbrev. of ‘I Owe You’) junk Chinese vessel kabupaten regent’s residence / regency kacang kedele soy bean(s) Kapitan the second highest rank in the Chinese officer system under the Dutch colonial administration kecu robber / bandit kongsi a Chinese (business) partnership, company, association, secret society, or other share- holding socio-economic organization krakal hard labour kraton palace / court, especially of a Javanese ruler loteng loft Luitenant the lowest rank in the Chinese officer system under the Dutch colonial administration lurah (Javanese) village head Majoor the highest rank in the Chinese officer system under the Dutch colonial administration mandur caretaker / overseer Nanyang the Chinese term for Southeast Asia (lit. ‘Southern Ocean’) nihonjinkai Japanese cultural/business association(s) Ommelanden environs, particularly of Batavia glossary xvii Opium Regie a system whereby the Dutch colonial administration controlled the production and sale of opium paal unit of linear measure (1 paal = 1,507 km) pachter farmer (i.e. person who holds a revenue farm) pak see bapak Pangreh Pradja Java’s indigenous civil service, headed by a Dutch-trained bureaucratic elite ( priyayi ) (lit. ‘Rulers of the Realm’) pasar market (place) Pasisir the coastal region, particularly the north Java littoral passenstelsel pass system patungan trade clandestine opium trade peranakan Indonesia-born descendant(s) of Chinese immigrants, acculturated to varying degrees pergerakan (political) movement perkara (contested) matter picol / pikul unit of weight measure (1 pikol = 61,76 kg) pikulan carrying pole perintah halus soft command, indirect order disguised as a suggestion pribumi indigenous Indonesian priyayi hereditary Javanese aristocracy/officialdom, member of the governing elite of Java, or characteristics of that class qiaoxiang place of origin in China (lit. ‘sojourner’s home village’) / emigrant communities regency administrative district headed by a regent / bupati regent / bupati highest indigenous administrative official in Java, known collectively as priyayi resident highest Dutch administrative official residentie administrative district headed by a resident revenue farm a colonial system of leasing the collection of government taxes to the highest bidder – usually Chinese – for a fixed period against a fixed rent sawah wet rice field Syahbandar harbourmaster xviii glossary siang boe Chinese reading association siang hwee Chinese chamber of commerce singkeh new arrival, China-born immigrant sluipaccoord secret settlement in case of business default or bankruptcy Taiwan sekimin person registered in Taiwan Tionghoa Chinese toko (retail) shop totok Chinese China-born and less acculturated Chinese, regarded as the pure Chinese. towkay / tauke(h) boss / shopkeeper (synonymous with successful Chinese businessman) Vorstenlanden Principalities, the four indirectly ruled states of Central Java warung small retail shop or stall wedana Javanese district head wingewest area of (economic) exploitation CONVENTIONS The text follows the standardized Indonesian language spelling of names, places and persons as applied since 1972. Exceptions are on occasion made when names have been altered (e.g. Batavia/Jakarta or Buitenzorg/ Bogor), or when a person has preferred the traditional spelling (e.g. Soeharto). The colonial political entity comprising the Indonesian archi - pelago until 1942 is referred to as the Netherlands Indies. The word Indonesia(n) is used as a geographical notion, except when referring to the Republic of Indonesia as an independent country. In general, the romanization of the many sounds represented by Chinese characters is a treacherous matter as there is no commonly accepted means of rendering names. The pronunciation varies consider- ably from one dialect to another whereas the Western spelling itself depends on the time period as well as the colonial setting. Since the overseas Chinese were usually better known by the dialect form of their name, the decision has been made to identify individuals by the most common dialect spelling found. In agreement with M. Godley: “To use only the Mandarin pronunciation would be to strip away their Southeast Asian identities.” (Godley 1981: 8). The following rules apply with regard to the symbols used in the text: - no statistics available or (between two figures) inclusive -(10) minus (in combination with a number) 0 nil or less than 0.5 [ ] anything placed between brackets was added by the author N.B.: Detailed items in tables do not necessarily add up to totals because of rounding off.