Indonesia’s Colonial Sugar Industry
Summary and Keywords
Colonial Indonesia’s sugar industry, developed under Dutch and Sino-Indonesian auspices over a period of almost three centuries, beginning c. 1650, evolved into one which exhibited a unique configuration in which an industrialized sugar complex became embedded within much larger “peasant” economy of the farming of rice and “second” crops. It was on this agrarian and largely self-financed basis that Indonesia’s colonial sugar industry, located exclusively in the island of Java, became one of the leading sectors of the international sugar economy of the late colonial era, eventually even rivaling Cuba—the nonpareil of such producers—as an exporter to world markets. During the interwar Depression of the 1930s and subsequent decade of war and revolution, it lost much (and eventually all) of its international standing—yet managed to survive into Indonesia’s postcolonial era, albeit in an attenuated form. There were four main phases to the industry’s colonial-era history. The first, foundational phase, which saw the establishment of modern industrialized manufacture extended from the 1830s through to the 1880s. The second phase, from the 1880s to 1930, was the period of sugar’s peak expansion. The third phase, beginning in 1931 and ending in 1942, was one of retrenchment and (partial) recovery prior to the spread of the Second World War into Southeast Asia. The fourth phase, 1945–1958, was one of postwar reconstruction.
Colonial Indonesia, ruled by the Dutch until independence in 1949, was once one of the world’s most important sugar manufacturing countries, possessed of a technologically highly advanced industry that was on par with those of Cuba and (until its decline during the First World War) imperial Germany. Indeed, during its peak period of production on the eve the interwar Depression of the 1930s, Indonesia’s sugar producers—concentrated exclusively on the island of Java—accounted for just over one-fifth of the world’s recorded production of cane sugar—and nearly one-fifth of the world’s total exports of sugar of any kind (cane or beet). Yet despite the once massive scale of its output, colonial Indonesia’s sugar industry is today little known outside a small circle of regional specialists. In part, its relative obscurity reflects the privileged position of Western European and North American consumption and Atlantic zone production in the historiography of a commodity which, for all its richness and diversity, still does inadequate justice to Asian output and Asian markets. In part, too, its neglect results from the fact that in the middle decades of the 20th century (ex-) colonial Indonesia disappeared completely from the ranks of world sugar exporters, to be replaced in Asia by India and Thailand. In consequence, its earlier heyday as the powerhouse of industrialized sugar manufacture in the region—an “Oriental Cuba” would be an appropriate description—has largely faded from the global historical record. This chapter sets out to remedy this defect and to return colonial Indonesia to its rightful position at the forefront of the international sugar economy. As such, it explains how the Indonesian outpost of a small and economically backward European power rose to such importance as a producer-exporter of sugar for the better part of a century—and how it subsequently fell from its position while remaining substantially operational as a manufacturer of the commodity.
It does so, firstly, by reviewing the commodity chains that drew colonial Indonesia—and Java in particular—into intra-Asian and intercontinental trade in sugar from the mid-17th century onward.1 Secondly, it outlines events in the middle decades of the 19th century that saw an industrial project transform Java’s long-established artisan sugar manufactory and radically change its position in the international sugar economy. In so doing, it also analyzes the social basis of production that underpinned the project and the expansion of production that it achieved. Thirdly, it examines the interface between this revitalized and vastly expanded colonial sugar industry and the Asian markets that provided the mainstay of its development from the 1890s through to the onset of the interwar Depression of the 1930s. Within this framework, it reviews the basis for the industry’s entry into a global “age of mass production” that is generally dated from the very end of the 19th century. Finally, it summarizes the colonial industry’s history in the wake both of the Depression and of the subsequent midcentury chain of events that began with the Second World War and culminated in Indonesian independence (1949) and the industry’s subsequent nationalization (1957–1959).
In this latter context, in particular, it draws attention to the development of a domestic Indonesian market for industrially manufactured sugar—something that provides a vital clue to the industry’s survival after the demise of its colonial era raison d’etre. The point is an important one. Although this chapter is focused on the Indonesian sugar industry’s colonial era history, it is not a story that terminated with the end of colonial rule. Indeed, it is one that is still evolving at the time of writing, a fact with clear implications for our understanding of the location of Java sugar’s colonial era history in its organic relation to postcolonial developments.
The Rise of Sugar in Colonial Indonesia
The commodity chains that linked the production of sugar in what was becoming colonial Indonesia with markets and consumers elsewhere in Asia, the Middle East, and the West were forged over several centuries by Chinese, Arab, Armenian, and European traders, in conjunction with a variety of Indonesian intermediaries.2 During the course of the 19th century, however, they were substantially refashioned, not least by the emergence of new mass markets and by major improvements in transportation and communication, together with the contemporaneous and associated formation of an international market for the commodity predicated on a world price for a globally standardized product.
The Industry’s Early History
In the early days of sugar production in Indonesia, of course such developments were some way off. What the island of Java produced, from the middle of the 17th century through to the 1820s, was a commodity that differed only in taste (generally much prized) and quantity (far less than that which emanated from South and East Asia) from that produced by a multiplicity of similar industries in an arc extending from India through Southeast Asia to southern China and the southernmost fringes of Japan. All of them, with a few exceptions—notably in Ryukyu, where water mills apparently existed by the early 18th century—were reliant on manually operated or ox-driven mills, consisting of two or sometimes three vertically set wooden, stone, or even iron rollers. In a series of sequential artisan processes, expressed cane juice was reduced in caldrons over an open fire—often with only a modicum of its impurities removed—and then left to set in vessels of some kind. These latter might be as simple as the half-coconut shells common in rural Java (at least in modern times) or as sophisticated as the arrangements found in the karkhanas (preindustrial sugar refineries) of 19th-century India. All were mechanized only in the most rudimentary manner, highly labor intensive and essentially dependent on experiential craft skills.
The case of Java was to some degree a particular one. Both in the cane fields that supplied the mills and in the mills themselves the labor force was largely local, drawn—in a way characteristic of sugar production in Asia generally—from the peasantry of the surrounding villages of the already relatively densely settled rural lowlands of Central and East Java. An important exception, however, was formed by the sugar industry that grew up in the environs (Dutch: Ommelanden) of the Dutch colonial capital of Batavia (present day Jakarta) from the mid-17th century onward. Whereas elsewhere on the island cane was generally intermingled with the peasantry’s cultivation of wet rice and so-called second crops, around Batavia (and in other, adjacent areas of West Java) cane constituted a monoculture, planted on enclave-style estates worked by a mixed labor force many of whom were seasonal migrants—whether coerced or notionally “free”—from better-populated districts further east along Java’s north coast, though some few were reportedly slaves from the Indonesian islands to the east and northeast of Java itself.
The vital stimulus to this production—in whatever form it took—was the overseas rather than the local market. Indeed, Indonesians themselves, so it was said, largely preferred sweetener made from the juice of the arenga palm to that manufactured from cane. The biggest single export market was generally that provided by China, which was reached via the extensive junk trade carried on between the great ports of southern China and the Nanyang (i.e., the southern seas). Even so, throughout the 18th century quantities of Java sugar were sold in the Persian Gulf (and hence presumably throughout the Middle East), while at times when the usual sources of Europe’s sugar supply in the New World were either disrupted by warfare or by a shortfall in production, the Dutch East India company—the VOC (Vereenigde Oost-Indische Compagnie)—was able profitably to offload some of its stocks of Java sugar on the Amsterdam market. At other times, however, such quantities as reached Europe did so primarily as ballast in returning Company ships.
The Mid-19th Century: Commodity Chains and the Industrial Project c. 1830–1884
The commodity chains that linked Java’s output of cane sugar to overseas consumers experienced significant shifts during the course of the 19th century.3 First and foremost, Java—in common with other Asian producers—became firmly enmeshed in trades in sugar that became a truly global in their reach. For the first time, Asian sugar became fully incorporated into an international sugar economy which, though heavily focused for much of the century on rapidly expanding Western markets and consumer demand in the Atlantic zone, drew its supplies from wherever they were most readily and cheaply available. In the specific case of Java this meant that during the middle decades of the century the island’s sugar exporters began to supply European refineries on a regular basis in ever increasing quantities, while their role in intra-Asian trade declined appreciably.
Initially this development took place under the auspices of a quasi-monopolistic trading company (the Nederlandsche Handel-Maatschappij or NHM) set up in Holland under state patronage in 1824, more than two decades after the collapse of the VOC. In turn, however, it heralded a period in which Java’s export trade in sugar came to be dominated by privately operating European (and North American) shippers, many of them based in Java itself, whence they conducted their primarily mercantile operations in conjunction with associates (who were only sometimes their principals) in London, Amsterdam, Rotterdam, Boston and some few other major commercial centers in the West. In tandem, this cluster of developments heralded a period in which Java’s output of sugar increased almost sixfold over a period of little more than four decades (with a particularly sharp increase at its end, largely accounted for by improved industrial capacity):
The Industrialization of Sugar Manufacture: Mid-19th-Century Java
Underlying these developments was a far-reaching transformation of the basis of sugar production in Java that saw the island’s radical departure from the common pattern that had hitherto characterized Asian sugar manufacture. It was during the history of sugar production worldwide during the “long” 19th century (c. 1780–1914), that key advances in steam technology and the associated mechanization of production, in tandem with equally crucial advances in the chemistry of sugar’s manufacture, placed the commodity at the cutting edge of the first industrial revolution. In turn, these developments reflected sugar’s unique position among major world commodities—namely, that by the middle years of the 19th century it was being produced in considerable quantities from two quite botanically distinct raw materials—cane and beet—in entirely different parts of the world and under wildly disparate climatic regimes.
Concentrated at this time in northern Europe, beet sugar producers had the advantage of existing in proximity to major centers of industrial development—in northern France, Belgium, and Germany in particular—as a result of which they were able to draw on advanced local technical and scientific expertise to improve their output, above all in relation to maximizing the quantity and quality of the sugar that they obtained from beet juice. The same held good for the processes by which, in Western Europe and North America, raw sugar was refined into a more commercially viable and attractive product. Continuous improvements in the steam-operated apparatus developed in this dual context for the evaporation and simultaneous cleansing (or defecation) of liquid “sugar” together with its conversion into a crystalline form—the key inventions being the vacuum pan, the so-called multiple effect, and the centrifuge (hence “centrifugal” sugar)—were transferred rapidly, albeit expensively, into the sphere of cane sugar manufacture throughout the world, as cane sugar interests sought to keep up with their beet sugar rivals.
Of course, given the capital sums involved and the economies of scale needed justify the necessary technological or scientific transfers or both, progress worldwide was uneven and far from linear. To give some key examples: In Asia, the industrial project in sugar just described was taken up in the Indian subcontinent in the 1840s but subsequently faltered, while in the Indian Ocean, on the borders of Africa and Asia, the project took a firmer hold on the island of Mauritius, only to stagnate toward the end of the 19th century. Other potential candidates in Asia—in the Philippines for example—adopted some parts of the industrial project (primarily the vacuum pan) but not the whole package. In the Asian context (for reasons discussed below), until the beginning of the 20th century it was only on Java that the industrial project was both implemented (c. 1840 onwards) and sustained over the following decades, with the consequence that by the 1880s the majority of the island’s hundred or so sugar factories had come to be as well fitted out with the essentials of modern industrial manufacture as any of their counterparts in the Western hemisphere. A decade prior to that, Java had overtaken Brazil as the world’s single largest producer-exporter of sugar after Cuba.
Cultuurstelsel and Capital
The reasons why the Java sugar producers were able successfully to implement the industrial project were various and complex. One had to do with the capital resources available to them, initially courtesy of the Dutch colonial government that, from the 1830s to the 1850s, provided both start-up finance and working capital to the island’s (re-) nascent industry, while at the same time insulating it (in effect) from market fluctuations that might otherwise have destroyed it. The government acted as it did in the context of the System of State Cultivations (Dutch: Cultuurstelsel) inaugurated in 1830 under Governor-General Van den Bosch in an effort to made Java a profitable venture for the Netherlands in the wake of an expensive colonial war that had begun five years earlier in the island’s interior. In respect to the commodity production of sugar, the manufacturing base created under the Cultuurstelsel consisted of a network of factories—there were almost one hundred of them by midcentury spread primarily across the coastal lowlands of Central and East Java—owned and managed predominantly by Dutch and Dutch colonial “government contractors” (Sino-Indonesians were in a distinct minority among them), operating concessions which gave them privileged access to both labor and raw material (see below) as well to finance. By the 1850s, the direct financing of production was increasingly being taken over by colonial mercantile capital, manifested in the shape both by the NHM (whose Indies tail, the NHM Factorij Batavia, at this date was inclined to wag the Dutch metropolitan dog) and the island’s commercial and manufacturing bourgeoisie that owned much of its initial strength to the workings of the Cultuurstelsel. In respect, however, to labor and—above all—to the provision of raw material the Stelsel remained operative (though slowly phased out c. 1870 onward) for another three decades.
It was this privileged access to the island’s agrarian resources that was the fundamental key to the industrial project’s successful implementation in mid-19th-century Java. Worldwide comparisons are illuminating, since it was in relation to the provision of labor and supplies of raw material that the Dutch colony differed most profoundly from its New World counterparts—and many contemporary producers elsewhere in Asia itself. In this all-important context, formulas such as “sugar without slaves” and “sugar with peasants” are revealing in some respects but potentially confusing in others. The barrack slavery that characterized mid-19th-century Cuba and other sectors of the contemporaneous New World sugar industry was absent in Java. Instead, during the course of its mid-century expansion, Java sugar was able to draw on systems of coerced peasant labor that the Dutch colonial state had inherited from its precolonial Javanese predecessor. At the same time, however, such “traditional” systems of accessing labor (and land) were transformed, arguably radically, in the process of exploiting them as the basis for a new kind of commodity production: in this context, the requirements of the sugar industry fused with a newly introduced revenue system (the so-called Landrente) to create a specifically colonial peasantry that was increasingly bifurcated into landholding farmers and functionally landless workers.
A Colonial Peasantry
It was the existence of this evolving form of peasantry that accounted for the ability of the industrial project in Java to harness sufficient labor in both factory and field to make viable the installation of machinery capable of producing vastly more amounts of sugar than earlier manufacturing units had ever been capable of turning out. Inter alia, this involved the shifting of the key centers of the industry away from its old heartlands around Batavia to sites in the much more dense pockets of population found along the island’s North Coast and in the interiors of South-Central Java—“pockets” which spread exponentially during the course of the century as the lowlands of Java began (seemingly) to” fill up,” rendering the area one of the most densely populated regions on earth. In short—though it did not always appear so to labor-hungry manufacturers—the industrial project in 19th-century Java could rely on a plentiful supply of workers, channeled into the industry through systems of state-enforced coercion.
Delineated in the colonial state’s preferred quasi-feudal terminology as corvee or herendienst (lord-service), coercion was feasible because of the cooperation of extra-village elites, long habituation within the village, and because the presence of increasing numbers of dependent landless in the countryside made it possible to levy corvee without incurring the resistance of the better-placed strata of the peasantry or of the village headmen whose acquiescence was a vital part of the system. Alongside the direct coercion of labor, moreover, after mid-century the industry could draw on increasing numbers of so-called “free laborers” (Dutch: vrijwilligers) whose impecuniousness—they may be presumed to have been either functionally landless peasants or else small farmers, likewise heavily indebted and desperate to supplement the meagre returns of their fields, inter alia to meet the state’s tax demands—made them ready subjects for the paid casual labor regime that came to typify large sections of sugar production. At the same time, groups emerged within the peasantry who aspired to benefit directly from the cash that sugar manufacture caused to circulate in the countryside by setting up as petty contractors to cart cane from field to factory, from the 1860s onward, sometimes in conjunction with rudimentary rail networks, using carts and the water buffaloes that were a ubiquitous feature of the Javanese countryside.
In these several respects, in short, the industrial project in Java sugar was able to make headway so effectively in part because it could sidestep the costs (inherent in slave-based production, for example) of assembling a permanent workforce, except in the case of the relatively small numbers of skilled operatives employed in and around the factories for most of the year. Instead, the great bulk of its workforce was a seasonal one—the sugar “campaign” generally lasted for five or so months, as did the period of the year during which cane planting took place—which could be requisitioned and employed at will and laid off at no cost when not required.
The Rotational Cultivation of Cane on Peasant Farmland
Even so, in terms of comparative advantage, most authorities on the subject have long recognized that the single most critical dimension of the industrial project’s success in Java sugar lay in the way in which the factories—by the 1850 there were around one hundred operating on “government contract” (see above) and several score more operating quasi-independently in the lowlands of Central and East Java—accessed land for the cultivation of cane. Worldwide, arrangements for providing industrialized sugar factories with their raw material varied considerably, but the predominant “mode” was for cane to be grown on permanent plantations that were either directly farmed or owned or both by the manufacturers or else represented the enterprise of (tenant) farmers or smallholders who were subordinated to the factory by one means or another.
The case of Java sugar, by way of contrast, was a singular one. Under the arrangements put in place by Dutch officials with the inauguration of the Cultuurstelsel, sugar in Java ceased (in so far as it ever had been) to be a monoculture practiced on discrete estates. Instead, the Java sugar complex evolved, as did virtually no other, into one deeply embedded in peasant agriculture and village agrarian relations. Beginning c. 1830, the state used its expanded coercive powers (it had just fought and won a major colonial war in Central Java) to ensure that cane was moved into the peasantry’s irrigated fields (sawah), where it was grown in rotation (Dutch: wisselbouw) with wet-rice and other peasant crops. In “return” peasant landholders received a crop payment (Dutch: plantloon) in purported recompense both for the (temporary) loss of their land and for the work which either they or their dependent laborers now had to perform in the newly created cane “plantation” formed each season from the amalgamation of requisitioned sawah. Typically, once the main crop of wet-rice had been harvested, a given portion (notionally two-fifths) of a village’s stock of sawah was then taken over for the planting of cane, which continued to occupy the land for the next fifteen to eighteen months. Thereafter, the harvested cane fields were returned to the village and its associated peasant landholders, and fresh land for cane was requisitioned in their place, again through the agency of Dutch and Javanese government officials and village headmen.
Unique Agrarian Advantage
From the point of view of Java’s mid-century sugar manufacturers (the situation became altogether more problematic later in the industry’s history), the rotation system had many advantages. First and foremost, it gave them access to prime agricultural land at a minimal cost (crop payment), thereby circumventing the very substantial capital cost of having to purchase an “estate” and the delays inherent in opening up virgin soil. Moreover, it gave them access in such as way as to ensure that land came with its own in-built workforce of peasants whose corvee obligations (described in Dutch records under keeping under the apparently newly-minted “feudal” rubric of cultuurdienst or “agricultural labor service”) formed the basis under which cane was both planted and tended through the long growing season. Though this was the prime advantage, it was not only one. Sugar cane is a crop that exhausts the soil of the necessary nutrients if grown continuously, and rotation enabled the mid-19th-century manufacturers to avoid the expense of having to manure the fields with bean-cake, at the time the main locally available fertilizer (though some of them did so anyway, to boost yields on poorer soils). At the same time it precluded ratooning—the labor-saving but yield-reducing practice of regrowing cane from the previous season’s stumps. In 19th-century agricultural conditions, first-crop cane almost invariably meant higher yields, thereby boosting output while exploiting the fact that the Cultuurstelsel delivered the bonanza of cheap labor that made annual crop rotation feasible in the first place.
Of course, not everything went smoothly everywhere. The mid-century star-performing sugar districts were located primarily in Java’s Oosthoek (East Corner), the lowland areas extending eastward beyond the major port-city of Surabaya, where (inter alia) workers from the nearby island of Madura were readily available to supplement the local supply, the soil and climate was particularly well suited to cane, and where supra-village priyayi (office-holder/courtier) elites, inherited from the precolonial state, were well enough rewarded to collaborate closely with the factories in the provision of peasant land and labor. In other parts of the colony matters went less well. For a variety of reasons, priyayi proved recalcitrant, other Cultuurstelsel commodities compromised cane’s putative hegemony, village social and economic organization proved less malleable, workers were in less generous supply than central planners imagined, or soils needed more breaking in before cane could be cultivated successfully. Last but not least, clashes of authority between state officials and manufacturers might disrupt production, at least temporarily. Nonetheless, generally speaking the agrarian arrangements put into place or reinforced under the Cultuurstelsel were the critical factor in ensuring, at the very least, that the industrial project in Java’s sugar factories could proceed without major let or hindrance. Indeed, it was not until the 1880s that the first major check to the industry’s growth occurred—and this stemmed from developments outside Java, in the international sugar economy of which, during the middle decades of the 19th century, the island had become an integral and increasingly vital part.
New Directions: The Asia Connection and Agro-Industry c. 1890–1930
The mid-1880s were a crisis period for industrial sugar manufacturers worldwide. During the course of 1884 the international price of factory-made, “centrifugal” sugar fell by as much as 40 percent, and stayed low for the next decade or more.4 Whatever the causes—most likely a combination of overproduction in the world’s competing cane and beet sugar industries melded with temporarily reduced demand In their main markets in the West—the long-term effect was to transform the commodity chains that linked Java’s industrial sugar factories to the world market. This transformation, however, worked very much in Java’s favor, and created a situation in which the island’s industry was able not only to survive the potentially catastrophic events of 1884 but also able to embark on a process of continual expansion that only came to an end c. 1930 with the onset of the interwar Depression.
The Rise of the Asian Market
Sales in Asia itself, largely in abeyance in the mid-century decades, began to overtakes sales in the West, to the extent that by the eve of the First World War it was claimed that (temporarily) scarcely a single sack of Java sugar was exported “west of Suez.” Reflecting a taste for a now substantially cheaper product—one that was apparently viewed as “modern,” hygienic, and commercially standardized and convenient in comparison with its multifarious artisan-made counterparts—Asian consumers in Japan, the Indian subcontinent, China, and (though to a lesser extent) elsewhere in Southeast Asia took to industrially manufactured white sugar with relative alacrity.
To be sure, there were interludes when trade went in a different direction: at the very close of the 19th century and for some years thereafter, the bulk of Java’s sugar exports went to the United States, where they made up for the temporary shortfall in supply from war-wracked Cuba, while during the First World War the Dutch colony poured great quantities of the commodity onto the British metropolitan market, where the stoppage of exports from the beet sugar producers of imperial Germany threatened to create severe shortages among the world’s largest per capita consumers of the commodity.
The secular trend, however, was for Java sugar to find its outlets in Asia rather than in the West, either in its “raw” (or “brown”) form as supplied to the great refineries of Japan and Hong Kong or as so-called “factory white”—a relatively cheap substitute for refined sugar that Java industry began to turn out in huge quantities from the 1890s onward—which found its principle outlet in the Indian subcontinent. In combination, Java’s sugar industry succeeded in manufacturing and exporting at the end of the 1920s something approaching three million tons of the commodity—up from a million tons at the beginning of the century and less than half that c. 1880. As such, as an exporter of cane sugar to world markets, it continued to stand second only to Cuba (whose output by 1930 stood at 4.85 million tons, as opposed to Java’s 2.97 million).
New Channels of Finance
In attempting to explain how this had been achieved, we can begin with the question of capital.5 During the middle decades of the 19th century, Java’s colonial sugar industry (after a pump-priming flush of funds—as we saw—from the colonial treasury) had been largely self-financed through the agency of the colony’s burgeoning merchant-manufacturing bourgeoisie. That era ended fairly decisively in 1884, when a steep fall in profits made it no longer feasible to finance locally an ongoing industrial project in the manufacturing sector that had been more-or-less continuous since the 1840s. At this point, the industry was saved by the long-standing and organic links between the colonial bourgeoisie and its metropolitan counterpart, which now stepped in to refinance the industry, at some cost to its previous colonial autonomy.
Ties with metropolitan mercantile and financial circles that had existed in embryo for the previous two decades were developed in the 1880s into a small number of so-called cultuurbanken (agricultural investment banks)—in fact their interests were mercantile as well as financial—which, together with the NHM, came to control much of the industry from bases in Amsterdam, Rotterdam, and The Hague. It should be emphasized, nonetheless, that after an initial investment of capital from the metropolis, Java’s sugar companies (for that is what they now were) were largely self-financed through the ploughing back of profits rather than through the continuing injection of funds from the Netherlands. It was also the case that many of the pre-1884 sugar owners retained a stake in an industry in which, by the early 20th century somewhere between ten and twenty per cent of productive capacity was owned not by Dutch or Dutch-colonial interests, but by Sino-Indonesian concerns based in Java and owned by Chinese settlers whose families had sometimes been in “the Indies” for several generations and who played a major role in the late colonial Indonesian economy in general. Indonesian owners, on the other hand, played a very small part in the industry, owning no more than three or four industrial sugar factories out of Java’s pre-1930 total of around one hundred and seventy.
A “Free-Standing” Industry
By whomsoever owned and financed, however, the industry had a number of features in common that distinguished it from at least some of its late-19th-century counterparts elsewhere in the international sugar economy. Inter alia, the commerce in Java sugar was largely in the hands of Java-based firms, some of them European, others Sino-Indonesian. Although they often had a direct stake in production through the ownership of sugar factories, they purchased by far the greater part of their stocks of sugar either from sugar companies to which they (sometimes) supplied working capital but which they did not own, or else from third parties. That is to say, in general there was a striking absence of the backward linkages which, in other major sugar producers, tied manufacturers very closely to the commercial interests that exported sugar. Moreover, for a number of largely contingent and connected reasons, the Java industry was likewise characterized by the absence of vertical forward linkages: as such, it was almost entirely free of financial or monopolistic commercial ties to overseas refineries, either in the West or elsewhere in Asia.
During the mid-19th century, when the Java producers supplied much of their output to refineries in the Netherlands, such linkages had the potential to come into existence, but they did not, possibly because Dutch refiners became increasingly involved with Holland’s own beet sugar producers (whose output dominated the Dutch sugar market by the late 19th century) and because, from the 1860s onward, Java’s main point of sale in the West shifted to London, where the bulk of refinery sugar came from within the Atlantic zone rather than Asia, with a concomitant lack of interest (presumably) in forging permanent ties with distant and possibly—as indeed turned out to be the case—short-term suppliers. The shift of the Java industry’s focus to Asian markets late in the 19th century (see above) brought little change in this respect. The great British-owned refineries in Hong Kong that took much of Java’s raw sugar were not, apparently, interested in forging backward linkages to their suppliers in colonial Indonesia, not least because the essence of their highly competitive, global business was to source their supplies from wherever they were cheapest, a commercial strategy that largely precluded long-term arrangements with any producers anywhere. Much the same held true for the Java producer’s relations with Japanese refineries.
The Agrarian Context of the Industry’s Expansion
The fact that the Indonesia’s colonial sugar industry not only survived the crisis years of the mid-1880s but also went on a period of unprecedented expansion had to do, of course, with a great many factors other than the reconstruction of its financial and commercial ties and the commodity chains that linked it to world markets.6 Indeed, to look at it that way might be to put the cart before the horse, because the essential key to what happened in the industry in the half century prior to the onset of the interwar Depression was to be found in developments in the agricultural sector of production. This is not to discount, of course, the technological and scientific advances that characterized the industry’s emergence in what has been style an “age of mass production” that began in late in the 19th century and continued virtually unabated until the 1930s. In line with developments in the main sectors of the international sugar economy in general, most of Java’s existing network of factories were continuously updated to take account of such advances as the multiple milling of cane. By the close of the 1920s, a few of them had gone over to entirely electrified operation, while a score or more of big, entirely new state-of-the-art factories had been established, including a massive complex in the island’s sparsely populated southeast that bristled with the latest attributes of self-conscious industrial modernity and would have not been out of place among the industrial giants of contemporary Cuba.
Even so, the majority of Java sugar’s units of manufacture were significantly smaller than their global counterparts, something that reflected, in part at least, their long uninterrupted history since the middle decades of the 19th century, the limited amounts of investment capital available and—above all perhaps—the constraining effects of the Lilliputian world of Javanese peasant agriculture in which they were so tightly enmeshed. In consequence, Indonesia’s late colonial sugar manufacturers had to seek the economies of scale necessary to maintain comparative advantage in the age of mass production in something other than machinery alone. They did so, in effect, by creating an agro-industrial complex in the field that far outshone any contemporary—and rival—sugar industry in terms of its per hectare yields of raw material. In this sense, a superabundance of cane compensated—to a degree at least—for the industry’s failure to “grow” super-large factories.
Limited Access to Land
During the 1870s and 1880s the arrangements under which Java’s sugar factories had been supplied with cane under the auspices of the Cultuurstelsel had been largely dismantled.7 In their place, the island’s industrial sugar factories were allowed to make their own arrangements for renting land for the cultivation of cane—still on the same rotational basis as before—from the peasant landholders of the surrounding villages. They succeeded in doing so through a mixture of financial incentives to better-off villagers or “big peasants,” bribery of village heads, manipulation of irrigation systems, and the connivance (sometimes) of both Javanese and Dutch state officials in circumstances where the “opportunity cost” of growing cane rather than rice and second crops was by no means always apparent. During much of the 1880s and 1890s, moreover, they were helped by an apparent dip in the market price of rice in much of rural Java and what was widely recognized as the increasingly indebtedness of the peasantry in general, something to which the Indies’ government’s fiscal policies made a distinct albeit not unique contribution.
Nonetheless, the amount of land that Java’s late colonial sugar manufacturers were able to acquire for the cultivation of raw material was restricted by a number of factors. The fact that their operations were literally embedded among the rice fields of a peasantry whose numbers—and consequent land hunger—were constantly increasing imposed at least notional limits on the amount of land that could be taken for cane, while the Indies government, concerned that a far-reaching “proletarianization” of rural society might undermine the basis on which it controlled the countryside, imposed tight, formal restrictions on the number of hectares that each factory could rent at any one time. To be sure, this was not as constricting as might appear, since contemporaneous large-scale irrigation and drainage schemes carried out by the colonial administration created a considerable increase in arable land throughout Java between the 1870s and the end of the 1920s. In turn, this enabled the industry to increase, sometimes quite exponentially, the amount of land brought under cane. Even so, at peak times in the industry’s production cycle, when cane was being harvested simultaneously with the planting of the next season’s crop, sugar occupied no more than twelve to fifteen per cent of Java’s irrigated farmland. The vast swaths of cane stretching to the distant horizon that typified sugar production in places as far apart as Cuba and Hawaii were absent from late colonial Java.
The Superabundance of Labor and the Evolution of Agro-Industry
In these circumstances, the critical point for Java’s comparative advantage in the international sugar economy related to the way in which limited quantities of land were exploited through an apparently inexhaustible supply of labor.8 The directly managed “plantations” that the sugar factories created from the peasant farmland that they rented were worked by a part-time, largely casual labor force of men, women and children assembled locally (though the heavy, specialized task of ‘opening up’ the newly rented fields was often carried out by work gangs who moved from one factory to another). There were times and places where the factories judged the workforce insufficient: labor might be siphoned off, for instance, for work on government irrigation projects or for railway construction and sometimes the industry’s own expansion took place at so rapid a pace that it caused temporary labor shortages in particular districts. In 1918–1919 the “Spanish” influenza took such a heavy toll on Java ‘s rural population that the industry was exceptionally hard pressed to find enough people for field work. More generally, the peasant agricultural cycle tended to clash with that of the sugar industry, in so far as the (sometimes) heavy demand for labor for second cropping after the main rice-harvest was prone to coincide with peak demand for workers in the sugar fields, either as cane planters or harvesters. At various times during the 1910s and early 1920s, moreover, the factories encountered labor activism and even strikes (duly suppressed by the Indies government). In such circumstances, industry circles toyed with ideas of mechanizing field work (experimental ventures were well reported) or—though much more rarely—reconstructing the entire agrarian basis of production by attempting to “escape” from the “confines” of village Java. Even so, for the most part the island lived up its reputation for superabundance of labor unmatched among contemporary industries.
It was how the factories exploited this superabundance, however, that was the critical element in Java sugar’s success. In essence, the sugar companies were able to create a labor-intensive (rather than machine-driven) agro-industry in the field unparalleled elsewhere in the international sugar economy—and likewise without peer in “tropical agriculture” in general. At its heart lay the exploitation of “peasant” labor along industrial lines. Men and—very importantly—women and children were organized into elaborate work routines. Soil preparation, together with cane planting and the tending of the growing crop, was carried out by wage laborers, who worked under the direction of both European and Indonesian factory personnel. Factory personnel also oversaw the harvesting of the ripened cane and its transportation to the factory. The disciplining of labor followed similar channels, while the recruitment of the workforce took place largely through the intermediary of Indonesian mandur (foremen or gangers) or was placed in the hands of Sino-Indonesian contractors.
Huge though the industry’s labor force certainly was—upwards of a million workers might be employed during peak periods of activity in field and factory—it was deployed in a manner in which, almost literally, every hour was counted. Meticulously devised and supervised work routines—supervision was both informed and informing from at least the 1880s onward—reflected, in turn, a careful division of labor into a multiplicity of well-defined tasks, all of them paid at piecework rates. In short, and quite contrary to notions of “labor-squandering” often implicit, at least, in accounts of colonial commodity production in “the tropics,” colonial Indonesia’s sugar industry in the opening decades of the 20th century was run with a striking degree of efficiency with respect to the exploitation of its workforce.
The Fertilizer Revolution and “Java’s Wonder-Cane”
It was within this organizational framework that land and labor were fused with a world-beating program of R&D. At the apex of this development, Java sugar’s internationally renowned Pasuruan Research Institute coordinated a network of technological experts that largely overrode the industry’s fragmentation into disparate ownership groups. Partly through the coordinating efforts of the Research Institute, the Java industry forged ahead because it was well positioned to take maximum advantage of the revolutionizing effect of new fertilizer inputs available to agriculture worldwide during the closing decades of the 19th century. In particular, thanks to its low labor costs and the ample availability of the requisite workers—many of them women and children—it was able to draw on an increasingly commoditized global supply of cheap fertilizers (itself contingent on falling freight costs)—above all, sulphate of ammonia—to institute a program of enriching its fields far in advance of that of almost all its major international competitors.
The upshot was hitherto unheard of levels of field productivity. The intensive use of chemical fertilizer, beginning in earnest in the 1890s and culminating in the early years of the 20th century (when “little” Java—with an area of no more than 48,263 square miles, considerable tracts of which are volcanic slopes inhospitable to most forms of agriculture—ranked seventh among the world’s consumers of sulphate of ammonia) was a vital stage in this. Having pushed the “fertilizer revolution” to its limits, however, the people who centuries earlier had perfected the tulip then turned their attention—through the agency of the Pasuruan Research Institute—to sugar’s raw material. Research on cane-breeding honed over several decades culminated in the creation in mid-1920s of the so-called “Java Wonder-Cane” (aka POJ2878), a variety that not only produced substantially more sugar than anything available hitherto, but also proved far more disease-resistant than the now obsolete cane varieties that it very rapidly supplanted.
Commercial Nemesis, War and Revolution 1931–1949
It was, in short, on the basis of an agro-industry fueled by key advances in the agriculture and horticulture of cane and made possible by the organization of superabundant labor on industrial lines that, at the end of the 1920s, Java stood out as one of the world’s foremost producer-exporters of sugar.9 Geographic position, and its location at the forefront of industrialized sugar production worldwide, meant, moreover, that colonial Indonesia was uniquely situated to supply consumers elsewhere in Asia with both raw and quasi-refined sugar (aka “factory white”) at prices that few or none could equal. With the onset of the interwar Depression, however, the industry’s “Asia Connection” began to unravel in a rapid and spectacular fashion.
To be sure, that deterioration did not occur not entirely without warning. Inter alia, the industry’s prime conduit to the important Japanese refinery market disappeared with the collapse of the Osaka-based Suzuki zaibatsu in 1926–1927, at a time when its market share there was already under threat from the expansion of Japan’s own raw sugar output in colonial Taiwan and Japan’s mandated Pacific island territories. Meanwhile, the Java producers—in common, it must be said, with many of their rivals—appear to have grossly overestimated the potential of the Chinese market while refusing to recognize the dangers posed to their huge South Asian sales by the surge of industrialized sugar manufacture and refining in the Indian subcontinent itself.
Near Collapse in the 1930s: “Exogenous” Markets and Economic Autarchy
With the onset of the interwar Depression at the beginning of the 1930s, however, these many adverse factors—already in gestation—impacted on a scale and with a speed that might have surprised even the most pessimistic observer. Over the course of less than two years, Java’s Asian sugar sales plummeted and the entire international trade in the commodity was transformed by the conditions of economic autarchy that the Depression either engendered or heightened. Not least, this was because Java was almost solely dependent on “exogenous” overseas markets in which it was totally devoid of any imperial clout, and so colonial Indonesia’s sugar factories were singularly hard hit. For different but related reasons, sales in East and South Asia virtually dried up.
In consequence, the early 1930s was a period of large-scale factory closures in Java; the laying off of very substantial number of workers; and a huge decrease in the amount of land planted with cane. On this latter score—and thoroughly indicative of the massive downsizing of production that took place—the area of land harvested for cane had fallen from 200,000 hectares in 1931 to less than 2800 hectares by 1935, the year in which the crisis bottomed out. The impact of these developments on the industry’s profile in the international sugar economy was far reaching: although sugar production declined worldwide during the depression, Java’s relative position was quite exceptional. Whereas in 1930 the Dutch colony had accounted for 11 percent or more of the world’s recorded production of “centrifugal” (i.e., industrially manufactured) sugar, four years later it supplied a mere 2 percent—and did so at fire-sale prices.
The Renewal of Production in the Wake of the Depression, War, and Revolution
In summary, the interwar Depression, and the changes in the international sugar economy associated with it, almost annihilated the industrialized sector of the island’s sugar manufacture—almost, but not quite. Some factories remained in (vestigial) production during the Depression years and during the second half of the 1930s the industry experienced a substantial, albeit only partial, recovery. Indeed, by 1941, the last year of manufacture before the Second World War erupted into Southeast Asia, some eighty-five factories—still rather less than half the 1930 number—were back in operation, and output had been restored to well over 50 percent of its 1930 peak. Then came almost a decade of war and revolution that culminated in Indonesian independence at the end of 1949, after the Dutch had been forced to the negotiating graph by a mixture of the United States’ pressure and their own inability to control the volatile security situation in the archipelago.
Survival Against the Odds
War, revolution, and independence brought about major changes, but did not extinguish the sugar industry, which survived the end of colonial rule and, perhaps more surprising, the nationalization of ex-colonial assets, including Java’s sugar factories, that followed almost a decade after independence had been achieved.10 World War Two brought a three-and-half year occupation of the Indonesian archipelago, Java included, by Japanese forces (February-April 1942–August 1945). The Japanese had little use for Java’s output of industrially manufactured sugar, apart from abortive attempts to turn it into aviation fuel, and a slow wave of factory closures meant that by the time of their surrender, less than a dozen were still working, with much-reduced levels of operation. Subsequent hostilities between the returning Dutch and Indonesian nationalist forces led to scorched earth tactics on the part of the latter that saw further and considerable infrastructural damage prior to independence, and a legacy of insecurity in the countryside around many sugar factories for some years afterwards. Even so, the industrial manufacture of sugar proved to be a “stubborn survivor,” and by the time that Java’s Dutch-owned factories were nationalized in 1957–1959 (Sino-Indonesian owned factories were taken over shortly afterwards), some fifty or more were once again in operation, albeit somewhat less productively than they had been in prewar days.
Stubborn survival on this scale was accounted for by a number of factors. The first was that during the struggle for control of the Netherlands Indies and Indonesia during the late 1940s the official Republican side was as keen to restore the industry as were the Dutch, not least because of its apparent potential to earn valuable foreign exchange on a world market in which postwar shortages had pushed up the prices to levels not seen for decades. In the longer term, however, the commodity chains that had linked Indonesia’s sugar producers to the world market prior to the Depression were almost totally disrupted by midcentury events. A partial and precarious return to “business as usual” toward the close of the 1930s ended abruptly during the Second World War, and thereafter increasing production costs on the island itself meant that Java sugar ceased to be competitive internationally. Instead, from the early 1950s onward, the sugar industry came to rely increasingly on the domestic market, as a growing taste for white, factory-made sugar—and the soft drinks that were dependent on it for their successful manufacture—gained an edge over traditional sweeteners on the Indonesian market (indeed, such was the strength of this trend that the Indonesian Republic became a net importer of industrially manufactured sugar from the 1960s onward).
Added to the fact that a big domestic market was opening up for its product, however, there was also an awareness that the industry provided work for legions of Java’s landless peasants, though this had to be balanced against the need to placate peasant farmers, whose interests were not necessarily best served by having their land used for cane. Hence the floating of schemes for a switch to smallholder cane planting as an alternative to the system of direct factory farming that had persisted hitherto. Underlying the industry’s survival, however, was the extent to which, in tandem with the constellation of interests at both the national and local level that had grown up around it, the industry had embedded itself in the consciousness of the colony’s and, subsequently, the Republic’s political and administrative class. On a more immediately tangible level, moreover, the money for reconstruction was available, both from the prewar reserves of the major sugar companies (enhanced in some case by the windfall profits enjoyed from other of their commodity investments in the immediate postwar years and during the Korean War boom) and from the treasuries both of the Indies state and its Republican successor. The upshot was that by the time the industry was nationalized, more than fifty factories were back in operation. Contingent on these several factors, when Indonesian independence was confirmed in 1949, the sugar industry not only continued its operations but continued to do so under largely Dutch ownership and—smallholder schemes apart—on an agrarian basis very similar, superficially at least, to that which had characterized its prewar, pre-independence existence.
In this sense, the history of colonial Indonesia’s sugar industry only came to an end with nationalization at the end of the 1950s, precipitated by events which had nothing directly to do with the industry—though they certainly reflected the discontents and agendas of “subaltern” stakeholders as opposed to those of the industry’s bosses and their associates with the higher echelons of the postcolonial state. Amongst those higher echelons, however, the officer corps of the Indonesian army (the TNI) rapidly came to the fore, once it was clear that nationalization was indeed a fait accompli and that a course of events that had begun with Dutch refusal to transfer sovereignty to the Indonesian Republic of the one part of the erstwhile Netherlands Indies—Irian Jaya or West Papua—than had been excluded from the settlement in 1949 was indeed irreversible. Ostensibly (at least) to forestall subaltern—and purportedly Communist-inspired—takeovers of the industry’s installations and at the same time to add significantly to its growing portfolio of economic assets, the Army took de facto possession of the industry, as it was also to do in the case of the Indonesian state itself only a very few years later. The industry hence became a ward of the state, to an extent unknown since the middle decades of the previous century, and as such subject to new state-inspired schemes for its perpetuation—as well as its expansion beyond Java to the so-called Outer Islands of the Indonesian archipelago. But that is another story, to be told, no doubt, elsewhere in these volumes.
For a general history of world sugar production during most of the period covered by this article, see G. H. Galloway, The Cane Sugar Industry: An Historical Geography to 191411 and the extensive statistical compilations in FAO, The World Sugar Economy in Figures: 1880–1959.12 The present analysis draws heavily on a compact research literature that has evolved since the 1980s, and to which the reader is referred for substantiating documentation. Ulbe Bosma, The Sugar Plantation in India and Indonesia: Industrial Production 1770–2010 provides an introductory and comparative overview.13 Two volumes by the noted Australian scholar Robert E. Elson form a vital introduction to the industry’s growth and impact in Java itself: Javanese Peasants and the Colonial Sugar Industry: Impact and Change in an East Java Residency, 1830–1940 and Village Java under the Cultivation System, 1830–1870, while two studies by G. Roger Knight essay a broader discussion of the industry’s operations and its global context: Commodities and Colonialism: The Story of “Big Sugar” in Indonesia, 1880–1942, and Sugar, Steam, and Steel. The Industrial Project in Colonial Java, 1830–1885.14 All the works just cited provide extensive compilations of data and authoritative bibliographies. Other important studies, highly relevant to the topic of this chapter include: Jan Breman, Control of Land and Labour in Colonial Java: A Case Study of Agrarian Crisis and Reform in the Region of Cirebon during the First Decades of the 20th Century; Pierre Van der Eng, Agricultural Growth in Indonesia: Productivity Change and Policy Impact since 1880; Margaret Leidelmeijer, Van suikermolen tot grootbedrijf: Technische vernieuwing in de Java-suiker- industrie in de negentiende eeuw; and John Ingleson, Workers, Unions and Politics: Indonesia in the 1920s and 1930s.15
The most accessible archival sources relating to Indonesia’s colonial sugar industry are to be found in The Netherlands, most notably in the Nationaal Archief in The Hague (a huge and easily usable online catalogue covers both government records and the archives of many Dutch sugar companies and associated mercantile concerns); in the collections now in the Leiden University Library of archives from the KITLV/Koninklijk Instituut voor Taal-, Land- en Volkenkunde (Leiden) and the KIT/Koninklijk Instituut voor de Tropen (Amsterdam); and in the collections of the IISG/Internationaal Instituut voor Sociale Geschiedenis (Amsterdam). Otherwise unobtainable books and other printed materials, photographs, maps, etc., are likewise to be found in the Leiden University Library (ex-KITLV and ex-KIT) and the KB/Koninklijke Bibliotheek in The Hague and in the library of the IISG in Amsterdam. There are, however, vast holdings in Indonesia of archival materials relating to the industry in the Arsip Nasional Republik Indonesia in Jakarta. Researchers should be aware that virtually all the material that they may be researching is in either Dutch or Indonesian.
(1.) Of course, “commodity chains” are themselves subject to a variety of interpretations: here what is meant are those linkages that carried through from direct producers (often of raw material) to the ultimate point of consumption, taking in along the way a variety of “interventions” involving mercantile and other forms of capital, and varying degrees of processing and reprocessing. For some scholars, “commodity chains” also embrace the idea of the subordination of colonial “peripheries” to metropolitan “cores.” Richly suggestive as it is, however, this interpretation is not integral to the way the term is used here—not least because it raises issues related the whole concept of “core” and “periphery” that are beyond the scope of the present article. See in particular, Jennifer Bair, “Global Commodity Chains: Genealogy and Review,” in Frontiers of Commodity Chain Research, ed. Jennifer Bair (Stanford, CA: Stanford University Press, 2009), 1–34.
(2.) For this section, see G. Roger Knight, Sugar, Steam and Steel. The Industrial Project in Colonial Java, 1830–1885 (Adelaide, Australia: Adelaide University Press, 2014), 1–11 and the references therein.
(3.) For what follows in this section, see Knight, Sugar, Steam, and Steel, pp. 11–94, and the references therein.
(4.) G. Roger Knight, Commodities and Colonialism: The Story of “Big Sugar” in Indonesia, 1880–1942 (Leiden & Boston, Brill, 2013), 17–52 and the references therein.
(5.) Knight, Sugar Steam and Steel, pp. 133–176, “The Money Trail” and the references therein; Knight, Commodities and Colonialism, pp.123–152, “No Business Like Sugar Business” and the references therein.
(6.) Knight, Sugar Steam and Steel, pp. 95–132, “Sugar Without Slaves” and the references therein.
(7.) Knight, Commodities and Colonialism, pp. 153–164, “Enmeshed in Lilliput” and the references therein.
(8.) Knight, Commodities and Colonialism, pp. 53–96, “A Precocious Appetite” and the references therein.
(9.) For this section, see Knight, Commodities and Colonialism, pp. 211–234,
(10.) For an introduction to this and the following sections, see G. Roger Knight and Colin Brown, “Commanders and Subalterns: Foreign Capital, the Sugar Industry, Farmers and Workers In Rural Java, 1931–59,” Indonesia 101 (April 2016): 85–102 and the references therein.
(11.) G. H. Galloway, The Cane Sugar Industry: An Historical Geography to 1914 (Cambridge, UK: Cambridge University Press, 1989).
(12.) FAO, The World Sugar Economy in Figures: 1880–1959 (Rome: Food and Agriculture Organization of the United Nations, 1961).
(13.) Ulbe Bosma, The Sugar Plantation in India and Indonesia: Industrial Production 1770–2010 (Cambridge, UK: Cambridge University Press, 2103).
(14.) Robert E. Elson, Javanese Peasants and the Colonial Sugar Industry: Impact and Change in an East Java Residency, 1830–1940. Asian Studies Association of Australia, Southeast Asia. Publications Series 9 (Singapore: Oxford University Press, 1984); Robert E. Elson, Village Java under the Cultivation System, 1830–1870. Asian Studies Association of Australia, Southeast Asia Publications Series 25 (Sydney: Allen and Unwin, 1994); G. Roger Knight, Commodities and Colonialism: The Story of “Big Sugar” in Indonesia, 1880–1942 (Leiden & Boston, Brill, 2013); and G. Roger Knight, Sugar, Steam, and Steel. The Industrial Project in Colonial Java, 1830–1885 (Adelaide, Australia: Adelaide University Press, 2014).
(15.) Jan Breman, Control of Land and Labour in Colonial Java: A Case Study of Agrarian Crisis and Reform in the Region of Cirebon during the First Decades of the 20th Century. KITLV, Verhandelingen 101 (Dordrecht: Foris, 1983); Pierre Van der Eng, Agricultural Growth in Indonesia: Productivity Change and Policy Impact since 1880 (Basingstoke, UK: Macmillan, 1996); Margaret Leidelmeijer, Van suikermolen tot grootbedrijf: Technische vernieuwing in de Java-suiker- industrie in de negentiende eeuw. NEHA-Series III, 25 (Amsterdam: NEHA, 1997); and John Ingleson, Workers, Unions and Politics: Indonesia in the 1920s and 1930s (Leiden & Boston: Brill, 2014).