Financial system previous to the British occupation—? Raffles' changes—?Return of the Dutch—?Financial policy—?Van den Bosch Governor-General—?Introduction of the culture system—?Its application to sugar—?To other industries—?Financial results of the system—? Its abandonment—?Reasons of this—?Present condition of trade in Java—?Financial outlook.

As I have already mentioned, the Colonial Government succeeded the Dutch East India Company in the administration of Java towards the end of the last century. During the period antecedent to the British occupation, the revenue of the Government was derived from two monopolies: (1) that of producing the more valuable crops, and (2) that of trading in all products whatever. Meanwhile the mass of the natives were left entirely to the mercy of the native princes, by whom they were subjected to all manner of exactions.

The financial results of this state of things were seen in the fact that in 1810 the gross revenue of Java was only three and a half million florins,[16] a sum wholly inadequate to the requirements of administration.

During the five years of British occupation (1811-1816) Sir Stamford Raffles was Lieutenant-Governor. He at once introduced reforms. The native princes were displaced; the village community, with its common property and patriarchal government, was modified; a system of criminal and civil justice, similar to that in force in India, in which a European judge sat with native assessors, was introduced; the peasants were given proprietary rights in the soil they cultivated; and complete political and commercial liberty was established. An inquiry into the nature of the respective rights in the soil of the cultivator, the native princes, and the Government resulted in establishing the fact that, of the subject territory the Government was sole owner of seven-tenths. Of the remainder, two-tenths belonged to the Preanger Regents, and one-tenth was occupied by private estates, chiefly in the neighbourhood of Buitenzorg and Batavia. In order to teach the native the western virtues of industry and independence, Raffles determined to introduce the Ryotwarree system. The property in the land vested in the Government was handed over to individual peasant proprietors. In return for his land each proprietor was made individually and personally responsible for the payment of his land tax, and his land was liable to be sold in satisfaction of his public or private debts.

Before the English administration the peasant had paid—(1) a land rent for his rice lands to the native princes, amounting to a sum equivalent to one-half of the produce of sawah (irrigated) and one-third of tegal (unirrigated) lands; and (2) a tax of forced labour to the Dutch Government, which took the form of unpaid labour in the cultivation of the produce for export. Raffles abolished both, and in place of them he established a fixed money payment equivalent to a much smaller proportion of the produce of the land than had been paid before to the native princes alone.

The Dutch regained their East Indian possessions by the Treaty of London. On their return to Java, they restored the village community with its joint ownership and joint liability, and abolished all proprietary rights of the natives in the soil, only allowing ownership of land to Europeans. They contend that this attempt of Raffles to apply Western principles to an Eastern society had already proved disastrous. The peasants, on the one hand, had not acquired the habits necessary for the successful development of their holdings, but, on the other, through their inability to pay the land rent, were becoming hopelessly involved in debt to the Chinese and Arab money-lenders. The broad fact, however, remains that during the short period of British rule the revenue rose from three and a half to seven and a half million florins, and the population from four to five and a half millions.

As the old monopolies from which the chief part of the revenue had formerly been derived had been abolished by the policy of unrestricted commerce introduced by Raffles, it was necessary to find some other method of raising money. It was decided to retain the land tax as a basis of revenue, but, in order to make it more profitable, a return was made to the original principle of land tenure under native rule, by which the cultivator paid one-fifth of his labour and one-fifth of his produce in return for the usufruct of the land. One day of gratuitous labour in seven (the European week) was substituted for one day in five formerly given to the landlord. In certain districts, namely, those of which the Dutch became possessed by treaty and not by conquest, this contribution in kind and labour was paid to the native princes, and not to the Government. On private estates, again, as the Government had parted with their feudal rights in alienating the property, a tax of three-fourths per cent, on the estimated value of the property was substituted. This tax, called verponding, was at most equivalent to one-fifth of the net yearly income.

As before, the produce due from the peasants cultivating Government lands was commuted into a money payment assessed upon the rice crops; but this payment was made, not by the individual peasants, but by the wedanas, or village chiefs, on behalf of the whole community. Beside the land tax, an additional source of income remained in the profit arising from the sale of coffee, grown either by the Preanger Regents and sold to the Government at prices fixed by treaty, or on the coffee plantations established by Marshall Daendels, which were now restored.

These two methods of raising revenue were resorted to by the Dutch upon their return to the island, and continued in force during the period 1816-1833. They were wholly inadequate. Whether the Dutch were right or not in characterizing Raffles' reforms as a failure, it is certain that nothing could be more desperate than the state of the island in the years immediately preceding the introduction of the culture system. At the end of the period 1816-1833 both revenue and population seem to have become stationary. The mass of the natives were becoming so impoverished that they ceased to be able to keep a supply of domestic animals and implements necessary for the cultivation of their lands. Apart from the princes, there was no class, merchants or tradespeople, possessing any wealth that could be taxed. Not only was the revenue stagnant, but, owing to a war with the sultans of the interior, a debt of over 35,000,000 florins was incurred by the Government. In a word, the colony seemed likely to become an intolerable burden to Holland. It was at this crisis that General Van den Bosch proposed the culture system as a means of rescuing the island from its financial and social difficulties.

The immediate object of the culture system was to extend the cultivation of sugar, coffee, and other produce suited for European consumption; its ultimate object was to develop the resources of the island. This latter was, of course, the most important. Van den Bosch saw that the natives would never be able to do this by themselves. In the first place, they were still organized on the patriarchal model in village communities; and, in the second, owing to the tropical climate and the extreme ease with which life could be sustained in so fertile a country, they were naturally indolent and unprogressive. He therefore proposed to organize their labour under European supervision. By this method he thought that he would be able both to raise the revenue and to improve the condition of the peasants by teaching them to grow valuable produce in addition to the rice crops on which they depended for subsistence. Van den Bosch became Governor-General of Java and its dependencies in 1830. Before leaving Holland he had made his proposals known, and obtained the approval of the Netherlands Government. He took with him newly appointed officials free from colonial traditions, and his reforms inspired such confidence, that a number of well-educated and intelligent persons were willing to emigrate with their families to Java in order to take up the business of manufacturing the produce grown under the new system. Upon his arrival in the island, a special branch cf the Colonial Administration was created. The first work of the new department was to found the sugar industry. It was necessary to supply the manufacturers with both capital and income. Accordingly, a sum amounting to £14,000 was placed to the credit of each manufacturer in the books of the department. Of this sum he was allowed to draw up to £125 per month for the expenses of himself and his family during the first two years. From the third year onwards he paid back one-tenth annually. Thus at the end of twelve years the capital was repaid. The manufacturer was to apply the capital so advanced to the construction of the sugar-mill, which was to be fitted with the best European machinery, and worked by water-power. Free labour, and timber from the Government plantations, was supplied; and the customs duties upon the machinery and implements imported were remitted. The building of the mills was supervised by the contrÔleurs, the officials of the new department, and had to be carried out to their satisfaction. The department also undertook to see that the peasants in the neighbourhood of each mill should have from seven hundred to a thousand acres planted with sugar-canes by the time the mills were in working order. In Java, as in other Eastern countries, the landlord has the right of selecting the crop which the tenant is to plant, and therefore the peasants saw nothing unusual in this action of the Government. The contrÔleurs ascertained, in the case of each village, how much rice land was necessary for the subsistence of the village, and they then ordered the remainder, usually one-fifth, to be planted with sugar-canes. At the same time, they explained that the value of the crop of sugar would be much greater than that of the rice crop, and promised that the peasants should be paid not only for the crops, but also for the labour of cutting the canes and carrying them to the mill. When, at the end of two years, the mills had been built and the plantations established, another advance was made by the department to the manufacturers. This was capital sufficient to pay for the value of the sugar crop, estimated as it stood, for the wages of the peasants, and generally for the expenses of manufacture. This second advance was at once repaid by the produce of the mill. At first the department required the manufacturer to deliver the whole amount of produce to them at a price one-third in excess of the cost of production. Subsequently he was allowed the option of delivering the whole crop to Government, or of delivering so much of the produce only as would pay for the interest on the crop advance, together with the instalment of the original capital annually due. Working on these terms, large profits were made by the manufacturers, and there soon came to be a demand for such new contracts as the Government had at their disposal.

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A PRODUCE MILL.