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$Title{Indonesia
Chapter 1B.   The Coming of the Dutch}
$Subtitle{}
$Author{Donald M. Seekins}
$Affiliation{HQ, Department of the Army}
$Subject{dutch
java
voc
system
british
javanese
century
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}
$Date{1982}
$Log{}
Title:       Indonesia
Book:        Indonesia, A Country Study
Author:      Donald M. Seekins
Affiliation: HQ, Department of the Army
Date:        1982

Chapter 1B.   The Coming of the Dutch

     By the last decade of the sixteenth century, the Dutch had become a major
seafaring power. The two provinces of Holland and Zeeland became centers not
only of trade and shipping but also of international finance by this time, and
Amsterdam served as Europe's principal center for commerce and banking. The
ambitions of the "Sea Beggars," as the Dutch were known, rapidly took on
global proportions. The union of Spain and Portugal under the Spanish crown
from 1580 to 1640 led the Dutch to war against both, and Portuguese bases were
the main targets of Dutch wrath in the Indian Ocean and the Indonesian
archipelago.

     A Dutch fleet of four ships entered Indonesian waters in 1596, landed at
Banten, the principal port of the kingdom of the same name, and then proceeded
along the north coast of Java to Madura. There followed a few years of "wild"
or unregulated voyages, when a number of different Dutch trading concerns sent
out ships to the Malukus and elsewhere. In 1602, however, these companies
merged to form the United East India Company (Vereenigde Oost-Indische
Compagnie-VOC) under a charter issued by the Dutch parliament, the
States-General. This made the VOC a unique institution, combining military and
political with commercial functions. Not only was it responsible for
conducting profitable trade in the East, but it could also wage war, build
fortresses, administer justice, and conclude treaties with Asian rulers in
order to achieve this end. Its directors, the Seventeen Gentlemen (Heeren
Zeventien), envisioned gigantic profits accruing from an effective monopoly of
the spice trade, and the VOC pursued this goal throughout the seventeenth
century with ruthless determination.

     The VOC established its first permanent base at Banten, a main port for
the pepper trade, in 1603. In the Malukus the Portuguese had made themselves
thoroughly disliked despite the successes of Catholic missionaries, and the
Dutch, with the cooperation of the local ruler, expelled them from their
settlement at Ambon southeast of the island of Ceram in 1605. Ambon's
Christians subsequently converted from Catholicism to Calvinist Protestantism.
In 1607 the sultan of Ternate made an alliance with the Dutch against the
Spanish, who were moving in from the Philippines. Although the British East
India Company, which had been established in 1600, had only one-eighth the
financing of the VOC, and Britain and the Netherlands were technically allies
in the struggle against the Iberian powers, the growing British presence in
the Malukus, Sumatra, Borneo, Sulawesi, and Java was regarded by the Dutch as
a genuine threat to their interests. The rulers of Indonesian coastal states
welcomed the new infusion of Europeans, as competition would drive up prices
for their commodities, but the Dutch had no intention of tolerating a free
market once they were established.

     In 1610 the post of governor general of the VOC was created with broad
powers, as it proved virtually impossible for the Heeren Zeventien to direct
its operations from Europe. Jan Pieterzoon Coen, governor general from 1619 to
1623 and again from 1627 to 1629, is credited with establishing the firm
dominance of the VOC in the archipelago. His first act as governor general
was to seize the port of Jayakerta (Jakarta) on the western end of Java from
the forces of the sultan of Banten and to establish there a city named
Batavia; this became the principal VOC base in the western archipelago and a
subsequent center of Dutch rule in the region. Coen perceived control of
Indonesian trade as vital to his country's interests and proved unscrupulous
in his methods to impose and maintain it. When the people of the small Banda
archipelago south of the Malukus continued to sell nutmeg and mace to British
merchants, virtually the entire original population was killed or deported.
The islands were repopulated with VOC servants who worked the nutmeg groves
with slave labor. Coen was implacable toward the British, opposing their
trading activities at every turn. His subordinate, the governor of the Dutch
settlement at Ambon, was responsible for the execution on trumped-up charges
of 10 British merchants there in 1623. The Amboina Massacre embittered
relations between the two erstwhile allies and marked the beginning of the end
of a significant British presence in the archipelago until the late eighteenth
century.

     As the example of Banda shows, control of the spice trade was gained at
the cost of much suffering for Indonesian populations. Maintenance of a
profitable monopoly remained the centerpiece of VOC policy during the time of
Coen's successors, and this involved not only the forcible exclusion of
non-VOC competitors but also a careful regulation of spice production to keep
prices artificially high. This necessitated active intervention in the
politics of the coastal states where spices were grown or transshipped. An
anti-Dutch alliance grew up among some of the Maluku sultans, which was
suppressed with great severity in the 1650s. The Hoamoal peninsula in western
Ceram was depopulated in 1656 and its groves of clove trees destroyed by
Dutch and Christian Ambonese "war fleets" in order to enforce the monopoly of
clove production on Ambon. The Spanish gave up their bases in Tidore and
Ternate in 1663, and the former swore allegiance to the VOC. Ternate was
subdued by 1683. The Makasarese sultanate of Gowa in southern Sulawesi, which
had encouraged anti-Dutch resistance in the Malukus and continued to carry on
free trade, was defeated in 1669 after a bloody war in which Gowa's rival, the
Bugis state of Bone (modern Watampone), allied with the VOC. The Dutch
established forts on the site of the Gowa capital of Makassar (modern Ujung
Pandang) and at Manado in northern Sulawesi, expelling all foreign merchants.
Malacca had been captured from the Portuguese in 1641, though its importance
as a trade center and its prosperity had much dwindled, but VOC forces were
unable to dislodge them from the eastern part of the island of Timor in the
Lesser Sunda Islands, which carried on a valuable export trade in sandalwood
with China and remained a part of the ramshackle Portuguese overseas empire
until 1975.

Developments in Java, 1619 to 1755

     The establishment of Batavia in 1619 as the center of VOC operations
involved it decisively in the Machiavellian politics of the inland states and
led to its domination of Java by the end of the century (see fig. 4). This was
apparently not Governor General Coen's original objective. The VOC continued
to see its mission primarily in economic terms: the maintenance of a network
of trading posts that would bring a good return to investors back home. Yet
economic interests entailed military and political ones, and from the very
beginning the Dutch at Batavia were involved in confrontations with Javanese
rulers.

     The most important of these were the sultans of Mataram, a state
established in the mid-sixteenth century in eastern Java. Its greatest ruler,
Sultan Agung (1613-45), had dreams of restoring the glory of Majapahit. By
1625 he had conquered Surabaya, a powerful rival, extended his power as far
west as Cirebon on Java, occupied the island of Madura after a bloody
campaign, and forced the submission of the sultanates of Banjarmasin and
Sukadana on Borneo. Sultan Agung subsequently moved on the western Javanese
kingdom of Banten. The Dutch at Batavia found themselves in the unenviable
position of battling two enemies at their gates: the forces of Banten, which
resented a Dutch-imposed blockade of its shipping, and Mataram, which had its
own grudges against the VOC for refusing to aid in the siege of Surabaya. The
Banten forces were driven away by late 1627, but in 1628 Mataram attacked
Batavia by sea, and the following year by land. These forces were also
defeated, and the sultan was obliged to accept the existence of the VOC on
Java, though royal poets and chroniclers, with imaginative duplicity, depicted
Dutch diplomatic missions to the Mataram court after 1629 as expressions of
humble submission. Sultan Agung turned his attention eastward and attempted
unsucessfully to conquer the island of Bali.

     The minimal concept of VOC power on Java was abandoned at the end of the
long and bloody reign of Sultan Agung's successor, Amangkurat I (1645-77). The
Dutch troops were called in to help and in return the new king gave the VOC
monopolies over the sugar, rice, opium, and textile trade in Mataram
territory. He also gave them the revenues from the north coast ports to pay
for the costs of the war and ceded to the Dutch the port of Semarang and the
Priangan Districts south of Batavia. In 1684 the independence of Banten was
ended when the crown prince there sought VOC aid after revolting against his
father and was obliged to offer his submission to the Dutch.

     The last two decades of the seventeenth century and the first half of the
eighteenth century saw the VOC consolidate its dominant position on Java. The
first Javanese War of Succession (1704-08) resulted in the exile of King
Amangkurat III (1703-05) and the installation, with the support of the Dutch,
of his rival, Pakubuwana I (1705-19). In return for this, the new king of
Mataram was required not only to reconfirm the concessions made to the VOC in
1677 but also to offer significant new ones, such as the privilege of building
forts anywhere on Java, the stationing of a VOC garrison at the royal court
paid for by the royal treasury, the annual grant of a large amount of rice to
Batavia for 25 years, and the promise that Javanese ships would not sail east
of Lombok or beyond the bounds of the Java Sea. The Second Javanese War of
Succession (1717-23), which resulted in the installation of Amangkurat IV
(1719-26), left Mataram still further dependent upon the VOC for support.

     The period from 1740 to 1757 was one of still greater violence and
instability. Batavia had by the eighteenth century acquired a large colony
of Chinese, mostly traders and craftsmen. The Chinese population continued to
grow despite government attempts to restrict immigration, and most Europeans
regarded them with suspicion and hostility despite their acknowledged industry
and enterprise. As early as 1721 there had been rumors, largely baseless, of
Chinese plots to murder Europeans. In 1740, however, Dutch suspicions that the
Chinese were plotting a revolt and Chinese fears that the Dutch, who were
planning to deport some Chinese, would dump them in the sea, led to clashes
between the two groups and the massacre of as many as 10,000 Chinese,
apparently with the complicity of the Dutch governor general. The survivors
fled the city and attacked VOC posts in other parts of Java. The Mataram king,
Pakubuwana II, decided to join the rebels and sent an army to attack the VOC
garrison at Kartasura. Although he eventually made peace again with the Dutch,
this was only at the price of extensive territorial concessions, the payment
of a large annual indemnity of rice, and further restrictions on Javanese
shipping. Moreover, the king could appoint as prime minister only someone
approved by the VOC.

     The result of the Third Javanese War of Succession (1749-55) was the
division of the kingdom of Mataram into the states of Surakarta and
Yogyakarta, each with its own sultan. When it was learned that Pakubuwana II
had agreed to cede Mataram to the VOC on his deathbed, Javanese princes, led
by Mangkubmi, his brother, revolted against his VOC-supported successor,
Pakubuwana III. The war dragged on until 1755, when the Treaty of Giyanti, was
ratified recognizing Pakubuwana III as ruler of Surakarta and Mangkubmi as
ruler of Yogyakarta; in 1757 Mas Said, nephew of Mangkubmi, was confirmed as
ruler of Mangkunegaran, a state carved out of Surakarta. Although the VOC
had been unable to eliminate the rebellious Mangkubmi, the tripartite
division of Mataram was the beginning of an effective "divide and rule"
policy. Instabilities in Banten led to that state's becoming a vassal of the
VOC by 1753. Thereafter, conditions on Java were much more peaceful, but the
VOC had little time to enjoy the fruits of its many decades of involvement
in Javanese court politics.

United East India Company Bankruptcy and the English Occupation

     The VOC had followed the Portuguese into Indonesia in hopes of realizing
vast profits from the spice trade. It was frustrated by a number of factors.
One was the corruption of its servants from the governor general on down, who
preferred to engage in illegal, but highly profitable, private trade rather
than advance the commercial interests of the company. Others involved
international conditions. Ironically, the success of the Dutch in enforcing
a trade monopoly in the archipelago led to their own undoing as the British
and French began growing spices in their own territories, thus keeping prices
down. The development, moreover, of winter forage in the late seventeenth
century in Europe made spices less of a necessity, for cattle did not have
to be slaughtered in autumn and their meat preserved over the cold season. The
long succession of costly wars in Java also depleted VOC reserves, and a war
with Britain (1780-84) made it virtually impossible for Dutch ships to
transport its goods.

     By the end of the seventeenth century, textiles and pepper from Sumatra
surpassed spices from the Malukus in economic importance; the eighteenth
century saw the increasing prominence of coffee and tea, grown in the
mountainous Priangan Districts south of Batavia. Income from cash crops,
however, failed to offset VOC losses. In the past the employment of arcane
accounting methods, or none at all, had hidden, these losses, but in 1789 the
Dutch parliament discovered it had a deficit of some 74 million guilders. A
debate ensued on the future of the VOC, but this was cut short by the
occupation of the Netherlands by French revolutionary troops in 1795. A
French protectorate was established, and it abolished the VOC by allowing
its charter to lapse in 1799. VOC territories became the property of the
Dutch government.

     The Dutch government-in-exile in London agreed that the British should
occupy its Indonesian possessions on the understanding that once the war
with France was successfully concluded, they would be returned. British
troops took over Malacca on the Malay Peninsula, Padang in Sumatra, and
Ambon and the Banda Islands in the Malukus. Java, however, remained in the
hands of the protectorate and the monarchy under Louis Bonaparte, brother
of Napoleon.

     In 1808 Louis Bonaparte appointed Herman Willem Daendels as governor
general of his East Indian possessions. Daendels, imbued with revolutionary
and Napoleonic ideas and extremely impatient with Java's "feudal" political
system, set about a comprehensive set of reforms during his three-year
tenure. These included the overhaul of the administration of Java. The
reform emphasized the strengthening of central control and integration of
native rulers into a unified civil service; the establishment of a judicial
system for Indonesians based on customary law (adat), separate from the
system maintained for Europeans; and the modernization of the by now decrepit
armed forces. Daendel's policies, however, were extremely unpopular with
the Javanese elite who saw them as directed at undermining their power and
prestige. In 1810 the Netherlands was incorporated into the French empire,
and the following year the British moved to occupy French-held Java (now
French territory). In August they seized Batavia and a month later received
the surrender of the French forces.

     Thomas Stanford Raffles, who had been appointed lieutenant governor
of Java and its dependencies by Lord Minto, governor general of British
India, soon found himself, like the Dutch before him, involved in the
internal politics of Javanese kingdoms. In 1812 British troops occupied
Yogyakarta and deposed the ruler, Hamengku Buwono II; a portion of the
Yogyakarta territory was given to a prince who had allied with the British
and who became Pangeran Pakualam I. When it was discovered that the sultan
of Surakarta had rebellious designs, he was stripped of much of his territory
and many of his privileges. In 1813 the sultanate of Banten was abolished.

     Raffles, like Daendels, was interested in comprehensive reform. One
of the first proponents of the welfare of indigenous peoples, he proposed
the abolition of the old system of forced labor and the delivery of fixed
quotas of rice or cash crops, the latter being particularly well established
in the coffee-growing Priangan region. Instead, there would be a land tax
or, more properly, land rent, because all land was to be considered property
of the government. Peasants would be obliged to pay a certain percentage
of their crop, depending on the productivity of the soil, or the equivalent
in money. They could choose which crop to grow and how to dispose of the
remainder after paying the tax. Designed to improve the peasants'
circumstances, the land-tax system was difficult to implement, given the
problems of administration and tax assessment. Committed to the abolition
of slavery, Raffles acknowledged that this was impractical at the time but
worked to improve the legal position of slaves and outlawed the slave trade
in the archipelago. Slavery was abolished in 1860. Other reforms included
the payment of salaries to government officials, including village headmen,
and a reorganization of the legal and administrative systems along lines
laid down in British India. Java was divided into 17 residencies, each
resident possessing broad governmental powers.

     There was little time for Raffles' reforms, particularly those connected
with taxation, to take root; he had hoped that Java and the Outer Islands
could be made permanent British possessions. London, however, desiring to
maintain a strong Netherlands as a counterweight to France, reaffirmed its
commitment to return the Indies to the Netherlands once the Napoleonic threat
had passed. Dutch authority was reestablished in 1816, and two years later
a new governor general, G. Baron van der Capellen, was installed at Batavia.

The Colonial System in the Nineteenth and Twentieth Centuries

     Although its economic objectives required active intervention in the
politics of Indonesian kingdoms, particularly on Java, the VOC was not
interested in political or social transformation. It was easier to use than
to change traditional political and social structures. The hierarchy of
traditional authority, starting with local village headmen, extending
through locally based regents (bupati) up to the ruler himself, was
co-opted in the process of extraction and delivery of cash crops. Although
Javanese rulers found themselves dependent upon Dutch military support during
periods of crisis, they were, outside of fulfilling specific obligations
accruing to the VOC, essentially independent. This state of affairs changed
under Daendels and Raffles. Both men wished to centralize authority, to base
it on legal-rational or bureaucratic standards as were typified in the new
Napoleonic state and extend it down to the lowest level of authority.
Europeans were charged with a more active role in administration. The result
of their reforms was a diminution of the power and prestige of the traditional
elite. Resentment of these policies combined with worsening conditions for
the common people to create a dangerous situation for the Dutch after they
returned to Java in 1816.

     The Java War of 1825-30 marked the end of the old order and at the
same time a halt in the European-directed process of rationalizing the
political system. The center of resistance was Yogyakarta, which had been
humiliated by the British occupation and partition of 1812; its aristocrats
bitterly opposed Dutch interference in their affairs, particularly the
abolition of highly profitable land leases to Europeans and Chinese. The
population in general resented the excesses of Dutch-appointed Chinese
overseers who extracted taxes from the villagers. The leader of the revolt
was Pangeran Dipanagara, the eldest son of Hamengku Buwono III, a religious
mystic, who claimed a divinely appointed destiny as the future king of Java.
The immediate cause of the revolt was the Dutch decision to build a road
across some of Dipanagara's property containing a sacred tomb. Raising the
standards of both Islam and traditional Javanese religious beliefs, he led
troops against the Dutch in the central and eastern parts of the island.

     The Dutch found themselves involved in a bitter guerrilla war in which as
many as 200,000 Indonesians may have died, the Yogyakarta region suffering the
heaviest casualties. Although the revolt was led by conservative aristocrats,
it had considerable popular support and was suppressed only after the adoption
of the "fortress system": the posting of small units of mobile troops in forts
scattered throughout the contested territory. Dipanagara was arrested and
exiled to Manado in northern Sulawesi in 1830. The territories of Yogyakarta
and Surakarta, where there was considerable sympathy for the revolt, were
substantially reduced, although their sultans were paid compensation. The most
lasting effect of the Java War, however, was a Dutch reevaluation of the role
of the Javanese elite in the colonial system and the development of a system
of dual, though not equal, European and native rule.

     The Dutch came to believe that as long as they could retain the loyalty
of the Javanese elites, their hold on the island would be secure. The new
hierarchy of authority, a departure from the "rationalism" of Daendels and
Raffles, bore considerable resemblance to that which had existed under the
VOC; on the upper levels there was a European civil service, while a native
administration occupied the lower levels. The latter was drawn from the
priyayi class, an aristocracy defined both by descent from ancient Javanese
royal families and by the vocation of government service. The centerpiece of
the system was the bupati. Java was divided into a number of residencies, each
headed by a Dutch resident who acted as chief administrator on the regional
level; each of these was further subdivided into several regencies. The
sultanates of Yogyakarta and Surakarta were not included in the regency
system. Each was headed by a Javanese regent, assisted by a Dutch assistant
regent who was to work with him as his "younger brother." The regency was
divided into districts and subdistricts and contained an average of about 500
villages (desa); administrative responsibility was shared by Javanese district
chiefs and assistant district chiefs and Dutch controllers, while on the
lowest level the village head was responsible for the desa.

     A striking feature of the dual-rule system was the juxtaposition of
modern and traditional bases of authority. The Dutch civil service was
responsible for running the administrative, financial, and military machinery
of a modern state, while the regents were to serve as chiefs of the people,
maintaining close ties with them, supported by traditional Javanese values of
hierarchy and personal loyalty. The regents maintained their own courts and
corps of retainers, who were considered members of their households and
performed the duties of apprentice clerks and functionaries. An elaborate
etiquette emphasizing the differences between superior and inferior and the
correct use of Javanese honorific language defined relations among Javanese
officials and between them and Dutch officials. Regents were chosen by the
Dutch government, and the tendency was to make the office a hereditary one.
The priyayi were divided into a lower aristocracy and a super-elite priyayi,
which comprised the regents. The most basic assumption of the colonial system
was the idea that the people could never be motivated by modern incentives,
such as the profit motive or individual development. As long as the priyayi,
and especially the regents, could be used as symbols of traditional authority,
peace could be maintained. Dutch policy in the nineteenth century was both to
preserve and to compromise the priyayi class.

Colonial Economic Policies: The Cultivation System and Free Trade

     Johannes van den Bosch, proponent of the Cultivation System and governor
general in the 1830-34 period, hoped to utilize the authority of the regents
and priyayi on the regional and local levels to mobilize the island's
cultivators for the production of revenue and profit. The result was the
creation of a genuinely exploitive colonial system in which the wealth of
Java was diverted to the Netherlands to support the metropolitan country's
own finances and economic development.

     Van den Bosch argued that the Cultivation System would provide the
revenues that the land-tax system instituted by Raffles could not. It was,
in essence, a system in which peasants would be directed to set aside a
certain portion of village land for the cultivation of cash crops; the
government would decide what these crops would be and would buy them at a
fixed price. The land rent would be deducted from this, and the cultivators
could keep the remainder as profit. The most important of the crops, being
the most profitable, were coffee, sugar, and indigo; but tea, cinnamon,
pepper, tobacco, cotton, silk, and cochineal were also included. The crops
were sold by a government monopoly on international markets. Van den Bosch
asserted that the Cultivation System would not only bring in a steady income
for Java but would also improve the lot of the peasants, particularly as
they came to appreciate the profits gained from cash-crop cultivation. Strict
limits were to be placed on the amount of land and labor set aside for these
crops so that the rice crop could not be neglected. Village headmen, with
some assistance from lower level Dutch officials, would direct the
cultivation.

     The Cultivation System was implemented primarily on Java, though not in
the Yogyakarta or Surakarta sultanates or in certain other territories. It
was also tried in western Sumatra and northern Sulawesi. However benevolent
van den Bosch's original intentions may have been, ignorance and greed played
a pivotal role in the workings of the system. According to Clive Day, an
economist writing in the early twentieth century, the government "centralized
the management of [production] and treated the country almost as though it
were a gigantic checkerboard to be laid out in squares of tea, coffee, sugar,
indigo, and pepper." Government officials had little knowledge of local
agricultural conditions, the dynamics of social life on the village level, or
the problems involved in processing and transporting the crops, some of which
were introduced to Java for the first time. Profits, moreover, became the
preoccupation of both the Dutch metropolitan government and the European and
Javanese officials on the scene. The civil war with the Belgian provinces and
their secession from the Netherlands in 1830 had drained the national
treasury, and The Hague came to see the Cultivation System less as a means of
financing Java than as "the lifebelt on which the Netherlands kept afloat."

     Abuses multiplied as regulations were ignored, and officials, originally
unenthusiastic about becoming crop overseers, were paid a commission on the
crops they brought in. In the push for increased production, villagers in
some localities were forced to devote much more land and labor to cash crops
than to the growing of rice. This was particularly true in regions where sugar
was grown, because sugar and rice required the same sort of land and large
amounts of water. Indigo and coffee also required a great amount of attention,
to the neglect of rice fields. There were famines in central and western Java
in the 1840s and 1850s, particularly in the sugar regions. Despite the fact
that the cultivations were supposed to pay for the land tax, this was
collected in addition to the tax in many regions.

     The economic historian Robert Van Niel estimates that between 1837 and
1851 over 70 percent of the agricultural families of Java were involved in
the system; more than one-half of these grew coffee, the most profitable
crop. In terms of revenue it was a remarkable success. Profits were returned
in the very first year of operation, and it is estimated that it provided 19
percent of Dutch state revenues before 1850 and as much as 32 percent between
1851 and 1860. These profits were used, among other things, to finance the
building of the Dutch State Railroad and to compensate slaveholders after the
emancipation of slaves in Surinam. They also paid for Dutch expansion into the
Outer Islands of the archipelago during the latter part of the nineteenth
century. Although Bernard Vlekke and other historians have suggested that
the increase of Java's population from 6 million to 11 million during the
1830-60 period shows that the people actually benefited from the system, the
connection of prosperity with population increase is by no means a tenable
one. It appears that few, outside of Chinese middlemen and the more
cooperative priyayi, gained much from the system on Java.

     Liberal opinion in the Netherlands was opposed to the Cultivation System,
and Dutch consciences were aroused by the publication in 1860 of Max Havelaar,
a novel written by Eduard Douwes Dekker, a former East Indies official, under
the pseudonym Multatuli. The novel describes the oppression of the Javanese
people by corrupt and greedy officials, both European and Javanese, and its
impact was comparable to that of Harriet Beecher Stowe's Uncle Tom's Cabin in
the United States. During the 1860s liberal opposition to the system gained
momentum. Under the tenure of Isaac Fransen van der Putte, minister of
colonies in the cabinet of a liberal Dutch government from 1863 to 1866,
government cultivation of, and monopolies over, spices, indigo, tea, tobacco,
and cochineal were dismantled. In 1870 the Sugar Law provided for government
withdrawal from sugar cultivation over a period of 12 years, beginning in
1878. This marked the end of the system, although forced cultivation of coffee
was maintained until 1917.

Dutch Expansion in the Outer Islands

     The Dutch concentrated their attention so much on Java during the period
of the Cultivation System that the Outer Islands were seriously neglected.
Spices from the Malukus and peppers from Sumatra were far less important
economically than the produce of Java, and British occupation of the Outer
Islands between 1796 and 1816 had weakened Dutch authority there even after
the restoration of their rule. Overall, the region was left to the
depredations of pirates who made its waters among the most dangerous in the
world. The growth of a British presence, particularly after Sir James Brooke
was established as the first "White Rajah" of Sarawak on the north coast of
Borneo in the 1840s, however, alarmed the Dutch and helped stimulate a more
aggressive policy outside Java. Step by step, they imposed their control over
what they perceived to be the lawless and uncivilized outer regions, so that
by the early twentieth century, all of the territory of what is now the
Republic of Indonesia, with the exception of Portuguese Timor, was brought
under their effective jurisdiction.

     By 1887 the rulers of Madura were reduced to the same status of
dependency as the regents on Java. The Lesser Sunda Islands were brought into
the colonial system in 1905-07, a major Dutch campaign having taken place
on Lombok in 1894 for the purpose of expelling invading Balinese. In Borneo
the Dutch became active in the internal politics of the coastal sultanates.
A revolt led by a prince of the royal house of Banjarmasin on the southern
coast was suppressed by 1863; the sultanate was abolished, and the area came
under direct Dutch rule. In Sulawesi, wars between the Dutch and the
Makassarese and Bugis states of Gowa and Bone continued through the
nineteenth century, the subjugation of these being achieved only in 1905-06,
as was that of the headhunting Toraja people of central Sulawesi. The Dutch
built a fort at Lobo in the western half of the island of New Guinea as early
as 1828, abandoning it eight years later. This mountainous region with its
small bands of Papuan tribesmen was not consolidated under their rule until
after World War I.

     The Dutch had traditionally been more active on Sumatra than in the
eastern archipelago, owing to its closeness to Java, its strategic position on
the Strait of Malacca, and its economic potential. The evacuation of the
British in 1816 left the Dutch with the task of reasserting their authority
step by step. Palembang was captured in 1821, and two years later the eastern
portion of Sumatra was placed under direct colonial rule. The Minangkabau
region was brought under their control at the conclusion of the Padri War of
1821-38. (The Padris were religious teachers committed to the reform and
propagation of Islam and were dominant in the region after the assassination
of the Minangkabau royal family in 1815.) After defeating the Padris, the
Dutch extended their influence to the Batak, an animist people living north of
the Minangkabau, encouraging them to adopt Christianity. The Batak War was
fought in 1872, and their region was not completely subdued until 1895.

     The 1824 Treaty of London defined a British sphere of influence on the
Malay Peninsula and a Dutch one on Sumatra, although its provisions also
guaranteed no restrictions on British trade on the island. Friction between
the British and Dutch developed over what the British saw as Dutch attempts to
curtail their commercial activities there, and negotiations between the two in
the 1840s led to a slowdown in Dutch expansion north of Jambi. One provision
of the Treaty of London was the independence of the north Sumatran sultanate
of Aceh. Aceh, however, had grown in commercial importance owing to its
control of a large portion of the pepper trade; it was also becoming a more
active threat to Dutch interests as it sought relations with other Western
countries. The Anglo-Dutch Treaty of 1871, a major revision of the 1824
agreement, gave the Dutch a free hand in Sumatra concerning Aceh. In 1873,
talks between the American consul in Singapore and Acehnese representatives
over a possible treaty became the pretext for more aggressive Dutch action.
Gunboats were sent to bombard Banda Aceh, the capital, and troops landed
onshore. Thus began the Aceh War, which was one of the longest and bloodiest
in the history of the Dutch presence in Indonesia. Aceh was a large,
well-organized state, fired with Islamic zeal, and determined not to lose even
the smallest measure of its independence. Although the Dutch captured Banda
Aceh in 1874, fierce resistance to the Dutch continued until 1904 under
Acehnese sultans, as guerrilla forces harassed Dutch troops.

     The growth of what could be called an international Islamic consciousness
played a central role in Indonesian, and particularly Sumatran, resistance to
colonial rule. The Padris of Minangkabau were pilgrims who had gone to Mecca
and, inspired by the puritanical Wahhabi Movement on the Arabian Peninsula in
the early nineteenth century, strove to purge Minangkabau society of
non-Islamic elements, such as matrilineal inheritance and the consumption of
opium and alcohol. The Acehnese also had close contacts with Mecca, being the
most rigorously fundamentalist of all the Islamic Indonesian peoples. Militant
Islam became the rallying point of resistance to colonial rule and thus a
central concern of Dutch administrators.

     The principal architect of colonial Islamic policy was Christian Snouck
Hurgronje, an Arabic scholar who had gone to Mecca and conferred with
Indonesian pilgrims and who served as colonial adviser in the Netherlands
Indies from 1891 to 1906. He advised the government to pursue a policy of
tolerance toward Islam in the archipelago rather than push Christianization.
Central to Snouck Hurgronje's thinking was the distinction between
"established" Islam, typified by the cadis, or Islamic judges, of the royal
courts, and the "fanatic" Muslim teachers who maintained independent schools,
which were centers of antigovernment resistance. He counseled Dutch
administrators against the fallacy of considering Islam as a centralized,
highly organized "church" with disciplined "priests" controlled by a central
authority in Mecca. Instead, he urged that it be viewed as a disparate
community in which the puritanism of "fanatics" like the independent Islamic
scholars contrasted with the syncretism of nominal Muslims, whose beliefs were
composed of elements not only from Islam but also from Hinduism, Buddhism,
and, most significantly, the primordial animism of Indonesians. He also
encouraged the policy of gaining the allegiance of local, non-Islamic elites,
whose authority was based on adat, such as the clan chiefs of Aceh.

     One of the last regions to be subjugated by the Dutch in the first years
of the twentieth century was the island of Bali, whose inhabitants had
stubbornly resisted Javanese and European encroachments on their independence
for over six centuries. The last stronghold of a purely Hindu culture in the
archipelago after the Mataram conquest of eastern Java in the eighteenth
century, Bali was divided among a number of small kingdoms competing with each
other not only in war but also in the holding of elaborate and beautiful
ceremonies in accordance with the ritualism of Hinduism. During centuries of
self-imposed isolation, it had evolved its own cultural forms, which were
different not only from nominally Muslim Java but also from the Hindu-Buddhist
Java of the Majapahit period. Although Dutch influence was gradually intended
to the island, the local rulers refused to accept Dutch suzerainty.
Expeditions were sent to Bali in 1904 and 1908. Resistance was largely
suppressed by the later date. This was not accomplished, however, before some
of the kings and their royal families, realizing that their independence and
the self-sufficiency of the Balinese world were finally lost, committed
suicide by marching in front of Dutch gunners during the height of battle.

Economic Enterprise in the Archipelago, 1870-1940

     Although freehold estates exempt from the Cultivation System existed on
Java from the time of Raffles, the Agrarian Law of 1870 was something of a
watershed in the development of Indonesia's private enterprise. Under it,
subjects of the Netherlands could lease land from the government for periods
as long as 75 years; a further law, passed the next year, made it possible to
lease land from the Indonesians for shorter periods. These laws heralded the
breakup of the system and the beginning of an era of large-scale,
Western-owned plantations.

     Growth in cash-crop exports was stimulated by the opening of the Suez
Canal in 1869 and the expansion of steamshipping. Important plantation crops
included palm oil, sugar, cinchona (the source of quinine, used in treating
malaria), cocoa, tea, coffee, and tobacco. Java, once the center of cash-crop
production, fell behind the Outer Islands in economic importance in the late
nineteenth and early twentieth centuries. Coffee exports from the Outer
Islands were twice those of Java by value, and exports of tobacco, four times.
Eastern Java, however, remained a major producer of cane sugar.

     Rubber plantations were established on a large scale in the early years
of the twentieth century, particularly around Palembang and Jambi on Sumatra,
Java playing a lesser role. A high-yield variety of rubber tree was adopted
that had been discovered in Brazil and had proven very profitable in Malaya.
The spread of rubber plantations was facilitated by the willingness of
planters to grow the new variety on lands previously devoted to coffee, which
had suffered because of blights. The importance of rubber grew rapidly as
British, French, Belgian, and American, as well as Dutch investors poured in
funds as the international market for rubber expanded with the growth of the
automobile industry.

     Mineral resources also came to occupy a much more significant role in the
archipelago's economy. As early as 1722 the VOC had gained a monopoly over the
trade of tin mined on the island of Bangka, east of Sumatra, from the local
ruler; during the nineteenth century tin was also discovered on the island of
Billiton in the same area. Mining was dominated by large enterprises with
substantial government ownership. Immigrant laborers from China worked the
mines, and by 1940 some 44,000 tons of tin were produced annually from the
rich alluvial deposits of Bangka and Billiton.

     Petroleum, originally used as lamp oil, was first produced in marketable
quantities after 1884, when a well was drilled near Langkat on Sumatra. The
Royal Dutch Company for Exploration of Petroleum Sources in the Netherlands
Indies was established in 1890, and in 1907 it merged with Shell, a British
concern, to become the Royal Dutch Shell Company, which controlled the
greatest portion of oil production in the pre-World War II period. Output of
crude oil rose dramatically from 1.5 million tons in 1913 to 7.4 million tons
in 1938; most of this was pumped from wells in Sumatra, followed by those in
eastern Borneo.

     One consequence of the dismantling of the Cultivation System was the
growth of a cash economy. Cultivators, particularly those on Java with the
smallest holdings, became increasingly dependent on pawnbrokers and
moneylenders, who charge usurious interest rates. The government attempted to
curb these abuses by establishing pawnshops and village of "paddy" banks in
the early years of the twentieth century in order to provide a system of
popular, low-cost credit. Although there were some 12,000 paddy banks and
1,161 village banks on Java by 1912, private moneylenders continued to be
important in the village economy. The economy at this time could be described
as possessing three layers: the top layer consisted of large-scale
enterprises and banks owned and managed by Europeans; the Chinese were the
middlemen who provided most of the private credit; and on the lowest level
were the Indonesian merchants, confined to small-scale retail trade. This
arrangement would persist into the contemporary era, a source of much tension
and social instability as resentment grew between Indonesians and Chinese.