The Visible Hand in Tempo Doeloe: The Culture of Management and the Organization of Business in Java's Colonial Sugar Industry

Article excerpt

This article develops an argument about the business culture and managerial organization of the colonial Indonesian sugar industry. It argues that developments in both spheres during the third quarter of the nineteenth century - largely ignored in the relevant research literature - played an appreciable role in assuring the industry's survival in the crisis conditions of the 1880s, when the world price of sugar fell dramatically. An important explanation of such changes, it will be suggested, is to be found in the technological progress which took place in some sectors of the industry from the 1840s onward. This development, delineated here in terms of a "colonization" of the sugar factory or fabriek, began to set the industry apart from the dominant colonial socio-cultural environment in which it was situated, and to prefigure an ethos more commonly associated with the final decades of Dutch colonial rule in the Indies. A nascent business culture was paralleled, moreover, by changes to the ways in which both the fabriek itself and the industry in general were run - changes which pointed to the early growth of a specifically managerial type of enterprise within an industry where such developments have usually been allocated to the closing decades rather than the third quarter of the nineteenth century. Taken together, as will be argued, the two developments - however embryonic - formed one of the foundations which enabled the colonial sugar industry to survive a period of severe crisis in the mid-1880s and resume a vigorous expansion by the century's end.

Introduction: Managerial Culture and Business Organization in Java's Colonial Sugar Industry

During the course of the nineteenth century the Java sugar industry became the most important in Asia in terms of gross output and productivity. With a manufacturing sector industrialized decades ahead of its Asian counterparts and allied to singularly intensive cultivation in the agricultural sector, Java came to occupy a position at the apex of the international sugar economy. By the early twentieth century it was the world's second largest exporter of cane sugar after Cuba. Domestically, sugar - together with the land which it engrossed and the labour it employed - established a formidable grip on Java's agrarian resources which only began to erode with the partial collapse of the industry during the Inter-War Depression of the 1930s. Despite mid-twentieth-century vicissitudes, however, sugar did not disappear from the Javanese countryside, and remains a potent presence at the end of the century, though exclusively supplying a domestic market.

Prior to the mid-twentieth century, and throughout Indonesia's colonial era, the large-scale production of sugar was confined virtually exclusively to the island of Java, where the industry dated from the early 1600s. It grew up there initially in response to a combination of Dutch East India Company requirements for an export staple and the entrepreneurship and know-how of locally settled Chinese manufacturers and artisans.(1) In the mid-nineteenth century, however, the industry underwent a period of far-reaching transformation under the aegis of the Netherlands East Indies government's Cultivation System (1830-c.1880). Forced labour, the requisition for cane of some of the island's best farmland, a secure outlet for its product and access to low-cost finance(2) formed the basis for an almost total reconstruction of the industry and for its establishment as an ubiquitous presence in the rich agricultural lowlands of Central and East Java. By the 1850s, Java possessed some hundred or so colonial sugar factories,(3) predominantly under Dutch management and each centred on a plantation which moved, juggernaut-like, around the commandeered fields of the local peasantry, where cane was grown in a two-to-four-year rotation with rice and other indigenous crops.

In a number of key respects, the importance of mid-nineteenth-century developments in underpinning the industry's late colonial apotheosis has never been in doubt. …