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    Department of History National University of Singapore

    Living Standards and the Distribution of Income in Colonial Indonesia: A Review of theEvidenceAuthor(s): Anne BoothSource: Journal of Southeast Asian Studies, Vol. 19, No. 2 (Sep., 1988), pp. 310-334Published by: Cambridge University Presson behalf of Department of History, National University

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    Vol. XIX, No. 2 Journal of Southeast Asian Studies September 1988

    Living Standards and the Distribution of Income in ColonialIndonesia: A Review of the Evidence

    ANNE BOOTHIntroduction

    One of the most widely held views about Indonesia, and especially Java, in thenineteenth century was that such economic growth as occurred did not benefit the massof the indigenous population, whose living standards almost certainly declined. Manyscholars have drawn attention to the evidence that per capita rice production fell after1880 as proof that living standards were definitely falling in the last two decades of thecentury, while others have not hesitated to draw the bolder conclusion that livingstandards declined almost continually after 1800:

    One theme stands out most prominently in Javanese society during this time: thetheme of involution and reaction.... Despite the promises of the changing colonialpolicies to further the individual welfare of the Javanese, conspicuously littlewas done in this regard. Instead the Javanese farmer became gradually moreimpoverished throughout the whole of the nineteenth century, with a particularlysevere drop in living standards in the second half of the liberal period (1885-1900).l

    If these assertions appear extreme, it is worth recalling that among the harshest criticsof the colony's performance in the late nineteenth century were Dutch colonialadministrators. Writing in 1900, Assistant-Resident van Heutz declared that

    During the past century the Netherlands has succeeded in reducing to completepoverty a very diligent and cultured people, which is endowed with a great capacityfor development, in a land thatmay be called an ideal example of tropical fertility.The poverty of the Javanese is so abject that it deserves to become proverbial.2

    Largely as a result of views such as these, the colonial authorities initiated a newera in economic policy after 1900. The so-called ethical period in Dutch colonialpolicy was remarkable in that itwas probably the first attempt by any European colonialgovernment to implement the kind of economic policies which we would think oftoday as developmentalist . Indeed one Dutch historian has recently declared that

    development was the prime mandate of the Ethical Policy .3 A number of specialistservices were established and charged with implementing irrigation development,agricultural extension, rural credit, indigenous education, public health and landsettlement outside Java. In both size and prestige, these services began to eclipse

    'P.B.R. Carey, Aspects of Javanese History in the 19th Century , in The Development ofIndonesian Society, ed. Harry Aveling (St. Lucia: University of Queensland Press, 1979), p. 10.

    2As cited by J. Homan van der Heide in Chr. L.M. Penders, Indonesia: Selected Documents onColonialism and Nationalism 1830-1942 (St. Lucia: University of Queensland Press, 1977), p. 60.

    3J. van Doom, The Engineers and the Colonial System: Technocratic Tendencies in the Dutch EastIndies, Comparative Asian Studies Programme, Monograph 6 (Rotterdam: Erasmus University, 1982),p. 2.


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    Living Standards and theDistribution of Income inColonial Indonesia 311the traditional administrative service and assume the role of a developmentaltechnocracy .4

    But their achievements were disappointing. In a lecture delivered to students of theBandung Institute of Technology in 1927, the prominent colonial administrator JanBoeke observed that the population of Java has reacted to all these welfare policies inonly one clear way: by growing in size like a flash flood .5 Although the two decadesfrom 1905 to 1925 had seen quite rapid economic growth in Indonesia and a substantialincrease in government expenditure, particularly in sectors such as irrigation, riceyields per harvested hectare in Java remained stubbornly constant, and the improvedcultivation practices preached by the official extension service were having littleappreciable effect on the food consumption of the mass of the people. Thus even beforethe full impact of the Great Depression hit Indonesia in the 1930s, the ethical policieswere increasingly being viewed with scepticism, and in business quarters, with mistrustas spendthrift socialism. When the economic downturn of the early 1930s forced severebudget cuts, itwas development spending, rather than salaries and perquisites of thecivil service, which were pruned the hardest.

    The main aim of this paper is to review the evidence on living standards and incomedistribution in the years from the implementation of the cultuurstelsel to the capitulationof the Dutch in 1942. Did the nineteenth century really witness a steady decline in livingstandards, especially in Java? What effect did the ethical policies have? Did thedepression of the 1930s lead to severe falls in living standards, or did the contraction ofthe

    export economy have little effect on the mass of the population? And lastly, did theconsiderable economic growth and change which occurred in the last century of colonialrule lead to a growing gap between rich and poor, both within and between ethnicgroups?Trends in Living Standards inNineteenth-Century Java

    A cursory reading of the descriptions of Raffles and Crawfurd might suggest that inthe first decade of the nineteenth century, the Javanese lived in a state of subsistenceaffluence in an environment of abundance, and that society consisted in the mainof relatively isolated, homogeneous village units, within which there was muchmutual cooperation for the purposes of agricultural and handicraft production and theconstruction and maintenance of infrastructure, but which had little contact with higherauthorities or the monetised economy. Such a view is obviously an oversimplification.Many historical and anthropological studies have stressed that Javanese society by theearly nineteenth century was highly stratified, with the most powerful members of thevillage often directly linked by a variety of bonds of patronage or outright coercion to

    4For further discussion see Van Doom, op. cit., and also P. Boomgaard, The Welfare Services inIndonesia, 1900-42 , Itinerario X (1) (1986): 57-82.5J. Boeke, Objective and Personal Elements in Colonial Welfare Policy , in Indonesia: The Concept

    of Dualism in Theory and Policy (The Hague: Van Hoeve, 1966).

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    312 Anne Boothsupra-village authorities.6 Indeed itwas precisely because these linkages already existedin a society that was both authoritarian and hierarchical that the Dutch were sodramatically successful in increasing production of export crops after 1830. Carey hasdescribed at length the economic conditions prevailing over much of south-centralJava on the eve of the Java War; the picture is one of a peasantry subjected to a heavyburden of taxes in cash and kind exacted by a complex network of officials stretchingfrom village to kraton.1 Raffles's well-meaning attempts to impose a fixed land tax onthe cultivator, based on the productivity of his land, had foundered in the absence ofproper cadastral surveys; instead the tax was assessed in an arbitrary fashion in additionto, rather than in place of, other imposts and the requirement of cash payments wasforcing the cultivators to greater reliance on moneylenders. The situation was madeworse in the early 1820s by poor weather and cholera epidemics.

    If conditions were already this bad in the early 1820s, even before the Java Warstarted, one wonders how they could have become worse in the following decade, afterthe imposition of the cultuurstelsel. Between the mid-1820s and 1840, export volumefrom Java increased at well over ten per cent per annum. It seems reasonable to assumethat to achieve annual output growth of this magnitude, there must have been a similargrowth in the amount of labour used, and this must have had some detrimental impacton food production.8 Boomgaard has in fact suggested that per capita rice productionfell quite steeply between 1815 and the latter part of the 1830s, although he acknowledgesthe unreliability of the data. Using the official rice production series which began in the

    mid-1830s, Elson has argued that there was some per capita increase inrice production,particularly in the late 1840s, which may appear surprising, given that this was theperiod of famine in several residencies. Boomgaard also argues that per capita riceavailability rose during the 1840s compared with the 1830s, but stresses that itwas stillwell below the levels prevailing in the first two decades of the nineteenth century.9 Oneexplanation for the improved foodcrop production growth after 1840 is that the growthin export volume slowed dramatically; Van Ark's index shows an annual growth ofunder two per cent per annum between 1840 and 1870.

    6See in particular Jan Breman, The Village on Java and the Early Colonial State, Comparative AsianStudies Programme, Monograph 1 (Rotterdam: Erasmus University, 1980) and Ann Kumar, ThePeasantry and the State on Java: Changes of Relationship, Seventeenth to Nineteenth Centuries , inIndonesia: The Making of a Nation, ed. J.A.C. Mackie (Canberra: Research School of Pacific Studies,1980). A further contribution to the debate, which takes issue with Breman's argument is given by

    R. Elson, Aspects of Peasant Life in Early Nineteenth Java', in Nineteenth and Twentieth CenturyIndonesia: Essays in Honour of Professor J.D. Legge, ed. David P. Chandler and M.C. Ricklefs(Monash University: Centre of Southeast Asian Studies, 1986).

    7Peter Carey, The Origins of the Java War (1825-30) , English Historical Review 91: 52-78.8Bart van Ark, Indonesian Export Growth and Economic Development: 117 Years of Empirical

    Evidence, 1823 to 1940, Research Memorandum 189, Faculty of Economics, University of Groningen,May 1986.

    9Peter Boomgaard, Java's Agricultural Production: 1775-1875 , Paper presented to the conferenceon Economic Growth and Social Change in Indonesia, 1820-1940, Groningen, State University, 1984,Table 2, and Children of the Colonial State: Population Growth and Economic Development in Java,1795-1880 (Ph.D. dissertation, Free University, Amsterdam, 1987), Table 6.4. See also R.E. Elson,Peasant Poverty and Prosperity under the Cultivation System in Java , Paper presented to the

    conference on Indonesian Economic History in the Dutch Colonial Era, Canberra, ANU, 1983. Thispaper is forthcoming in Indonesian Economic History in the Dutch Colonial Era, ed. Anne Booth, W.J.O'Malley and Anna Weidemann (Yale University Southeast Asia Studies Monograph).

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    Living Standards and theDistribution of Income inColonial Indonesia 313Further evidence concerning trends and determinants in living standards in the 1840scomes from two studies of famine in Cirebon and Demak-Grobogan, carried out byFernando and Elson.10 Although in both regions there is evidence that rice productionper capita did decline in the famine years, for reasons that were only partly climatic,there are also indications of what Sen has termed entitlement failures.11 Elson in

    discussing the Demak-Grobogan famine has argued that despite drastically loweredrice production from the 1848-49 harvest and the almost total failure of the 1849 secondcrops, food remained in relatively good supply and prices remained remarkably low .12The real problem was that large numbers of people had no means to buy the availablefood. The burden of the land tax and the demands on their time for often unpaid orpoorly paid work on the tobacco plantations, together with the decline in cattle numberswhich involved, inmany cases, the loss of lifetime savings, all meant that even thosewith access to some land had few reserves to tide them over the bad harvest. Thosewith only their labour to sell were in an even worse position.The issue of the burden of the land tax is one which most students of the cultuurstelselhave addressed, although opinions on its effects differ widely. Fasseur has shown thatcrop payments for sugar, indigo and coffee exceeded land tax assessments by awidening

    margin from the late 1830s to 1860; he argues that itwas in fact the crop payments whichdetermined the amount of land tax which was assessed rather than vice versa, as VanNiel has tended to argue.13 But whatever the direction of causation, the fact remainsthat inmost years a high proportion (usually more than 70 per cent) of the cash injectedinto the peasant economy for crop payment was syphoned off again through taxation,which in turn contributed to the fiscal surplus remitted to the Netherlands. Some writershave argued that the rapid growth in so-called indigenous imports (mainly textiles)from 1830 onwards indicated growth in indigenous purchasing power, and by implicationliving standards.14 Certainly the money value of these imports did increase but we haveto correct for changes in prices. If we deflate the value of indigenous imports by theSauerbeck index, we see that their real value did increase but much of the increase

    occurred before 1850 (Figure 1). After 1846 a separate index of world cotton textileprices was compiled by Sauerbeck;15 ifwe use this index to deflate the import figures,

    10Radin Fernando, Famine in Java 1844-50: A New Perspective on the Cultivation System, Centre ofSoutheast Asian Studies Working Paper No. 41 (Melbourne: Monash University, 1980) and R.E.Elson, The Famine in Demak and Grobogan in 1849-50: Its Causes and Circumstances , Review ofIndonesian and Malay Affairs 19 (1): 39-85.

    nAmartya Sen, Poverty and Famines: An Essay on Entitlement and Deprivation (Oxford: ClarendonPress, 1981).

    12Elson, op. cit., The Famine in Demak , p. 10. Much the same argument ismade by Hugenholtz,who claims that the Semarang famine was thus not so much a deficiency famine as in essence a pricefamine. It was not the result of a shortage of food but of total absence of money. See W.R.

    Hugenholtz, Famine and Food Supply in Java, 1830-1914 , in Two Colonial Empires: ComparativeEssays on the History of India and Indonesia in the Nineteenth Century, ed. CA. Bay ley and D.H. A.Kolff (Dordrecht:Martinus Nijhoff, 1986), p. 165.

    13Cees Fasseur, Some Remarks on the Cultivation System in Java , Acta Historiae Nederlandicae 10(1978): 160. See also the same author's essay The Cultivation System and its Impact on the Dutch

    Colonial Economy and the Indigenous Society in Nineteenth Century Java , in ed. CA. Bayley andD.H.A. Kolff, op. cit., pp. 143ff.

    14This argument was made by Reinsma in his 1955 thesis, and quoted approvingly by Fasseur in the1986 paper referred to above.

    15For details of the Sauerbeck price index see A. Sauerbeck, Prices of Commodities and the PreciousMetals , Journal of the Statistical Society XLIX (1986): 581-648.

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    314 Anne Boothwe see that the real value of imports rose in the 1850s but fell sharply after 1862, whenthe American civil war led to a rapid increase in the price of cotton (Figure 1). Overall,the trend in the real value of textile imports was erratic, and probably grew very littlein per capita terms after the early 1850s. Before 1850, at least some of the growth intextile imports could have been due to falling domestic production, as more labour wasrequired for the production of export crops.16Neither do the figures on rice production and consumption give much support to theargument that living standards were improving after 1850. Boomgaard's figures showthat there was little change in production per capita between the late 1820s and 1866-70;he also suggests that while there was an improvement in total calorie intake between1841/45 and 1873/75 this was mainly due to increased dependence on palawija crops.17Scheltema's figures on rice availability per capita after 1850 actually show a slightdecline between 1850 and 1865, although this is almost certainly due to overstatingpopulation growth.18

    Figure 1Deflated Value of Indigenous Imports (Nfl. 00,000)

    300n25020015010050 H


    ? General-*- Textile

    1820 1830?i?

    1840 1850Year

    ?i?1860 1870 1880

    16Boomgaard, op. cit., Children of the Conolial State , pp. 179-80.17Boomgaard, op. cit., Java's Agricultural Production , Table 2 and p. 28.18A.M.P.A. Scheltema, The Food Consumption of the Native Inhabitants of Java and Madura

    (Batavia: Institute of Pacific Relations, 1936), p. 12. The implicit annual average population growth ratefor the years 1850 to 1865 in Scheltema's figures is 2.7 per cent which is far higher than most modemscholars allow. Boomgaard, op. cit., Children of the Colonial State , p. 293, suggests that population

    was growing at about 1.6 per cent per annum after 1850.

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    Living Standards and theDistribution of Income inColonial Indonesia 315Should the growth in population which undeniably occurred after 1815 be treated asevidence of improving living standards, as at least some Dutch officials were inclined to

    do? Such an argument involves an interpretation of the reasons for growing population,and particularly of fertility behaviour, which may not be widely accepted. It implies thatcouples decided to have more children because they in some sense felt better off, i.e.,they regarded children as consumer durables. In fact quite another kind of argumenthas had some currency in the literature in the past few years: this is the notion that thedemands for labour imposed by the cultuurstelsel forced peasant families to have morechildren by abandoning certain customs such as prolonged breast-feeding which tendedto reduce fertility.19 To the extent that this idea has any validity itwould seem to turnthe first argument on its head, as it sees increasing population as the consequence ofdeclining rather than improving economic conditions. At the same time, others wouldargue that the increase in population which occurred in the nineteenth century was atleast partly the result of factors influencing mortality, of which smallpox vaccinationcampaigns were probably the most important.20 Of course it can be argued that areduction in child mortality in itself would increase society's sense of well-being, butsuch an argument is rather different from one which sees population growth as a directresponse to improving economic conditions.On balance, itwould seem that the growth in the export economy in Java in the yearsfrom 1830 to 1870 brought few obvious material benefits to indigenous society, beyondallowing it to accommodate a growing population, while at the same time graduallyreturning to living standards which were probably not much different from thoseprevailing in the first two decades of the century. Food consumption per worker houralmost certainly declined in calorie terms over these decades, while at the same time lesspreferred staples assumed a greater role in the native diet. The evidence on livingstandards suggests that the benefits from the remarkable growth in volume and value ofexports which occurred in the 1830s, and the much more modest growth which tookplace from the 1840s to the 1870s accrued either directly to Holland or to a smallminority of Dutch and the indigenous elite in the colony. Indeed most scholars of theperiod do stress that the only real beneficiaries within native society were the villagechiefs and the supra-village elites who were gradually turned into Dutch vassals, therebylosing such legitimacy as they had with their own people.21

    19See in particular Ben White, Demand for Labour and Population Growth in Colonial Java ,Human Ecology 1 (3): 217-36.

    20Peter Boomgaard, Morbidity and Mortality in Java, 1820-1880: Changing Patterns of Disease andDeath , in Death and Disease in Southeast Asia, ed. Norman G. Owen (Singapore: Oxford UniversityPress, 1987) and Children of the Colonial State , pp. 280-81. In the latter work, Boomgaard arguesthat there might also have been some increase in fertility due to changes in the age of marriage.

    21Carey, op. cit., 1979, pp. 83-86. See also R. van Niel, The Effect of Export Cultivations in19th Century Java , Modern Asian Studies XV (1981): 43. For a more extended discussion of theimpact of export growth on the domestic economy in the last century of the colonial period see Anne

    Booth, Foreign Trade and Domestic Development in the Colonial Economy , Paper presented to theconference on Indonesian Economic History in the Dutch Colonial Era, Canberra, ANU, 1983;forthcoming in Booth O'Malley and Weidemann (editors), op. cit. Detailed information on theIndonesian balance of payments from 1820 onwards is given inW. Korthals Altes, Changing Economyin Indonesia, Vol. 7, Table 1.

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    316 Anne BoothChanges in Living Standards in the Liberal and Ethical Periods

    How much change in living standards came with the new liberal spirit of the 1870s?Certainly the decade from 1874 to 1885 saw a considerable increase in the rate ofgrowth of export production, although the import capacity of this increase wasdiminished by unfavourable commodity terms of trade. However the real value ofimports did accelerate and at least some of this increase would have benefited theindigenous population. Furnivall had pointed to the increase in both cotton goods andrice imports as evidence of growing indigenous prosperity in the 1870s; the increasingrice imports were in addition to increasing home production, so that rice availability

    per capita increased by a remarkable 20 per cent during the decade.22 By 1880 per capitaavailability had reached 120 kg, almost certainly a higher level than that prevailing inJava at any time since the early 1820s.

    Thus itwould seem that living standards did improve for the indigenous populationof Java in the 1870s and early 1880s, in spite of the deterioration in the colony's termsof trade. But the very indicators which were used to demonstrate improving welfareup to 1885 were those seized upon to prove a dramatic decline thereafter. In particularitwas the fall in per capita rice production and availability in Java after 1885 which wasmost cited both by contemporary observers and by subsequent scholars to support theargument that native welfare must have been declining.23 The time series compiled byCreutzberg isparticularly instructive in indicating the trends (Table 1). Not only did riceavailability decline steeply after 1885 (increasing imports did not compensate for fallingdomestic production in Java) but the value of imports of cotton goods also fell in percapita terms, although to a large extent this decline was offset by declining prices.Another piece of evidence frequently adduced was the decline in money wages andemployment opportunities,24 although here the data are not entirely persuasive. InBatavia, for example, the minimum and maximum daily wages paid to coolies weremuch the same in 1900 as in 1885; as prices of wage goods such as rice and cloth werealso much the same (or slightly lower) in these two years, real wages would seem tohave been roughly constant (Table 2).

    Certainly not everyone was persuaded that there had been a deterioration in livingstandards in the decades of the Liberal Policy. Hasselman in his comprehensive reviewof the voluminous reports published in the first decade of the century as a result of the

    Declining Welfare Enquiry, came to the conclusion thatThe general impression given by the reports from the districts? taking into accountthe circumstances under which, after all, the investigation was held ? is thateconomic prosperity has declined in thirteen districts or parts thereof, and that it hasincreased in thirty-two districts or parts thereof. In the other districts the situationhas remained the same... .25

    nJ. Fumivall, Netherlands India (Cambridge University Press, 1944), p. 215 and A.M.P.A.Scheltema, op. cit., p. 12.

    23Homan van der Heide, as cited in Penders, op. cit., pp. 56-58; Van Deventer, as cited in Fumivall,op. cit., p. 214; P. Creutzberg, Het Ekonomisch Beleid inNederlandsch-Indie, Eerste Stuk (Groningen:

    Wolters-Noordhoff NV, 1972), pp. xxxi, 734-35.24Furnivall, op. cit., p. 214.

    ^CJ. Hasselman, Algemeen Overzicht van de Uitkomsten van het Welvaart Onderzoek gehouden opJava an Madoera in. 1904-5 (The Hague: M. Nijhoff, 1914) as cited in Penders, op. cit., p. 90.

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    Year(s) Net Rice Imports(000 tons)ConsumptionPer Capita*(kg)

    Cotton Cloth ImportsPer Capita*CurrentGuilders











    of Java only.bDeflated by textile component of Sauerbeck index.

    Source: P. Creutzberg, Het Ekonomisch Beleidin Nederlandsch-Indie (Groningen: Wolters-Noordhoff,1972), Table facing p. 734.


    Year Batavia Semarang Surabaya Priangan Surakarta PricesRice* Cloth

    1880 50- 601885 20- 501890 20-1001895 40- 601900 25- 50







    Notes: ?Billiton tenders, guilders per quintal.bMadapollam imported, guilders per 24 yards.Sources: Jaarcijfers, 1900, p. 31.

    Rice prices: Changing Economy of Indonesia, Volume 4, Table 1.Cloth prices:Historische Prijzen inNed. Indie Sedertl825.Mededeelingen C.K.S., 166.

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    318 Anne BoothIt should of course be remembered that Hasselman was writing this summary someten years after the research was carried out; in the interim general economic conditions

    had improved considerably, and many were probably wondering what all the fuss hadbeen about. Certainly if one accepts rice consumption per capita as the sole criterion oftrends in indigenous living standards then there was a marked deterioration between1885 and 1905, and an improvement thereafter (Table 1). But the expansion in non-ricefoodcrops which occurred after 1880 ensured that there was no mass starvation, eventhough many millions of Javanese must have been forced to change their consumptionpatterns towards non-preferred food staples. Whether consumption of other articlesof mass consumption, such as textiles, actually fell in real terms is more doubtful;certainly the import data do not suggest that a substantial and sustained decline tookplace.

    Almost all the discussion about living standards and levels of welfare during thelatter part of the nineteenth century was conducted in terms of trends in averages; fewif any of the participants seemed concerned with disparities between individuals. Thegeneral impression conveyed by much of the discussion was that the indigenouspopulation in particular could be regarded largely as an undifferentiated mass, and theonly important disparities were between ethnic groups. The most obvious of course wasbetween the indigenous Indonesians and the immigrant Chinese whose commercialpower, according tomost historians of the period, grew substantially during the Liberalera.26 In fact it is clear when we look at the available data that the divisions within theindigenous economy had become quite marked by the turn of the century: Someindication of the extent of the differentiation within the indigenous population isprovided by the data on the size distribution of holdings collected in 1903 as part of theDeclining Welfare Surveys, and summarised by Hasselman.27 These show quite markeddisparities in land ownership, especially inWest Java, where the Gini coefficient oflandholdings was 0.57. For Java as awhole, 71 per cent of holdings surveyed were underone bouw (0.71 ha), but in some residencies, notably the Priangan highlands of WestJava, over 40 per cent of the holdings were larger than one bouw. Although the averageholding size was very small compared with many other parts of Asia, the variation bothbetween and within regions was quite considerable. As land was the main economicasset of the indigenous population, this would suggest that disparities within nativesociety in income and wealth were far from negligible.

    We do not have any data set from the nineteenth century as comprehensive asthose collected in the Declining Welfare Study, so it is impossible to detect trends inconcentration of land ownership prior to 1900. But the Declining Welfare Study showedclearly that in those residencies where a substantial proportion of the land was stillunder rotating tenures, their effect inmost cases was to reduce considerably inequalitiesin the distribution of land.28As the proportion of land under these rotating tenures inJava declined in the late nineteenth and early twentieth century, and as the market for

    26See e.g. Carey, op. cit., 1979, p. 95.27Hasselman, op. cit., Appendix R.28This point is dealt with in my forthcoming monograph, Agricultural Development in Indonesia,

    Table 3.10. In a residency such as Surabaya, where 66 per cent of all operators were cultivating landunder rotating communal shares, and usually operating quite small holdings, the effect of including theirholdings with those under individual titles was to reduce the Gini coefficient of holdings from 0.537 to0.411.

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    Living Standards and theDistribution of Income in Colonial Indonesia 319land developed, and land sales accelerated, it seems probable that access to landbecame more skewed. In his study of Pasuruan residency, Elson argues that by the endof the nineteenth century, in those places where social barriers to land alienation wereweaker, the play of economic forces and circumstances was beginning to create greaterdisparities inwealth than had ever before been the case .29

    Although agriculture was still the main occupation and primary source of income forthe great majority of the labour force in Indonesia at the turn of the century, the labourforce data published in 1905 indicate that in Java almost 30 per cent gave their primaryoccupation as non-agricultural. Of those who gave agriculture as their main occupation,18 per cent had further sources of income from non-agricultural activities.30 We can infact use the data on the revenues from the tax on incomes from trades and professions,available from the mid-1870s, to determine the extent to which a relatively well-to-do,non-agricultural merchant and professional class was emerging in Java in the lastdecades of the nineteenth century, and examine its ethnic composition. This tax wasonly aminor revenue earner, accounting for little more than two per cent of governmentrevenue in 1881, which indicates the smallness of the base, and the bulk of the taxpayerswere indigenous Indonesians. In 1874, the first year in which comprehensive dataconcerning the tax were published in the Koloniaal Verslag, over 90 per cent of thetaxpayers were Indonesian, and the balance foreign Asians, mainly Chinese. Althoughthe distribution of foreign Asian taxpayers was more skewed towards the higher incomebrackets, a substantially higher absolute number of indigenous taxpayers was in thehigher income brackets (Table 3). This in fact continued to be the case until 1890;however by 1905, foreign Asian taxpayers accounted for more than half of those withassessable incomes in excess of 2500 guilders per annum, in spite of the fact that theystill comprised less than 10 per cent of all taxpayers, and their numbers had in fact beengrowing less rapidly than those of indigenous taxpayers.The data on the distribution of taxpayers by assessed income over the three decadesup to 1905 show how different was the experience of the indigenous Indonesians andthe Chinese. Whereas the average taxable incomes of the two groups were not verydifferent in 1874, by 1905 the average foreign Asian (mainly Chinese) taxpayer wasearning four times the assessable income of the average Indonesian (Table 3). In realterms the average assessable income of Indonesian taxpayers had almost certainlyfallen, while that of the foreign Asian had risen. Given that the bulk of the Indonesiantaxpayers would have been small businessmen, artisans and employees in bothgovernment and private enterprise, it seems that real living standards of this class of theindigenous population fell over the final decades of the nineteenth century. By contrastthat of foreign Asian businessmen must have improved quite dramatically.This evidence would suggest that the Chinese business community was much moresuccessful in exploiting such opportunities as were available in late nineteenth-centuryJava than were indigenous Indonesians, in spite of the fact that the Chinese were still asmall community, apparently not growing as fast as the indigenous population. Was thisthe result of their superior business acumen and entrepreneurial skills, or were theydeliberately favoured, and the indigenous business sector deliberately discriminatedagainst, by Government? In his discussion of the growing economic role of the Chinese

    29R.E. Elson, Javanese Peasants and the Colonial Sugar Industry (Singapore: Oxford University Press,1984), pp. 176-77.^hese data are taken from the tabulations in the Koloniaal Verslag, 1907, Appendix A.

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    320 Anne BoothTABLE 3


    Assessable Income 1874 1890 1905(guilders) Indone- Foreign Indone- Foreign Indone- Foreignsians Asians sians Asians sians Asians

    Under 50 38.7 25.6 46.4 13.3 60.8 15.050- 100 6.8 34.2 34.2 29.1 25.6 28.6

    100- 25027.4 26.9 16.3 38.8 11.7 37.1250- 1250 6.6 12.0 2.8 16.4 1.7 16.6

    1250-500 0.1 0.3 0.1 0.7 0.1.62500- 5000 0.1 0.3 0.1 0.7 0.1.75000-10,000 0.1 0.1 _ 0.2.3

    Over 10,000 _____ 0.2

    Total00 100 100 100 10000Average Assessment 2.67 7.32 1.98 10.81 1.51 12.31

    per taxpayer(guilders)

    Average Taxable 134 183 99 270608Income3(guilders)

    Note: Calculated on the basis of the following tax rates: income of indigenous Indonesians weretaxed at 2% per annum and those of foreign Asians at 4% per annum.

    Source: Koloniaal Verslagen, 1875 Appendix 0; 1891, Appendix 00; 1906, Appendix EE.

    in the later part of the nineteenth century, Fumivall emphasized that in 1855 they werebrought under the European Civil Code inmost of their commercial transactions, andthis gave them both higher social standing, and one presumes, superior access to creditcompared with indigenous businessmen. They were also able to procure a monopolyover the opium shops, pawnshops and gambling houses, so much of the newly createdwealth as went to the Javans passed on immediately to the Chinese .31 In addition theyincreasingly supplied the European demand for competent subordinates on low

    wages and filled many of the available clerical and sales jobs inEuropean enterprises.From these jobs they in turn began to organize and control indigenous industry, ofwhich batik was the pre-eminent example; as imported cloth increasingly replacedlocally produced varieties, the Chinese were able to extend their control over suppliesof imported inputs to control over the entire industry.

    31Furnivall, op. cit., p. 213.

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    Living Standards and the Distribution of Income inColonial Indonesia 321

    Just as there appears to be a consensus in the literature that welfare was declining inthe final years of the nineteenth century, so is there general agreement that there was a

    marked improvement in the decade or so before the outbreak of the First World War.Once again the main indicators used are trends in per capita availability of rice, andtrends in imports of consumer goods such as cloth. The time series prepared byCreutzberg, and reproduced in Table 1, show an increase of 17 per cent in per capitarice availability between 1903-1907 and 1913-17, in part due to the growth in domesticproduction, and in part due to rapid growth in imports. In the same period, cottoncloth imports also increased in real terms. The rapid growth in imports of such basicconsumption staples as rice and cloth, at the same time as domestic output was growing,suggests that per capita indigenous income growth in the decade up to 1914 must havebeen quite rapid. It would also suggest that the income growth was fairly widely shared,in that the lower income groups would have been those with the highest income elasticityof demand for basic staples. If they had experienced little or no income growth, it isunlikely that average consumption would have increased so rapidly.After 1906, the tax on business and professional incomes was modified somewhat,and all taxpayers with assessable incomes under 50 guilders per annum were exempt.By 1910, there were almost one million Indonesian taxpayers in Java with assessableincomes over 50 guilders (Table 4). This large increase compared with the 1905 datacan be explained by a combination of factors: inflation32 would have pushed somepeople over the tax threshold, while at the same time real incomes were growing inthese years and tax administration probably improved after the changes of 1906.Although the Chinese taxpayers still had an average assessable income well over twice


    Java Outer IslandsIndigenous Chinese Indigenous Chinese

    Average Assessed Incomes (Guilders Per Annum)10177 13827

    Gini Coefficient of Assessed Incomes0.22.47 0.21.29

    Percentage Distribution of Taxpayers93 7 38 62

    Percentage Distribution of Top 5% of Taxpayers573 128

    Source: Jaarcijfers, 1910, pp. 38-39.

    32There is no general cost-of-living index for this period, but the rice index reported in ChangingEconomy of Indonesia, Vol. 4, Table 1 (1913 = 100) rose from 72.7 to 86.1 between 1905 and 1910.

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    322 Anne Booththat of the indigenous taxpayers, and were disproportionately concentrated in thehigher income brackets, over half the taxpayers in the top 5 per cent of the incomedistribution (some 25,000) were Indonesians (Table 4). It was really only in the veryhighest assessable income bracket, over 1000 guilders per annum, that Chinese taxpayersdominated. The distribution of assessable income, as shown by the Gini coefficients,was in fact much more unequal for Chinese taxpayers than for Indonesian; in theChinese case a relatively small proportion of taxpayers accounted for a large share ofassessed income (Table 4). Outside Java, a much higher proportion of taxpayers wereChinese, and they dominated the highest centiles of the income distribution. But thiswas probably due to the fact that indigenous taxpayers outside Java were brought intothe tax net only quite slowly; itwas not until the 1920s that their incomes were taxed onthe same basis as the Chinese. As we shall see in the next section, the income tax datafor the inter-war period offer important clues on trends in the distribution of nonagricultural incomes both within ethnic groups, and between races and regions.Living Standards and Income Distribution in the Inter-war Period

    In spite of the fact that the 1920s saw a rapid growth in export production from bothlarge estates and smallholders, and in spite of Polak's calculation that in real terms percapita income accruing to Indonesians grew steadily from 1921 to 1928,33 there is stillmuch support in the contemporary literature for Kahin's judgement that even prior tothe depression the general level of economic welfare was declining, while at the sametime itwas being obliged to shoulder a heavier burden of taxes .34 As always, colonialofficials were guided in their concern about living standards by trends in per capita riceavailability. We have already noted that a rapid increase in rice availability, due at leastin part to growth in imports, indicated rising per capita incomes in the decade before1914 (Table 1). Scheltema's series show that by 1930 per capita rice availabilityhad fallen back to 95 kg per annum, compared with 117 kg in 1915.35 This decline isconfirmed by the series on food availability published by the Central Bureau ofStatistics in the inter-war years, which show amarked drop in per capita rice availabilityand an increase in that of inferior staples such as corn and root crops (Table 5).

    According to the studies on calorie availability from the main foodcrops reported byVan de Koppel, the increase in production of non-rice staples allowed per capita calorieintake to be roughly maintained until the late 1920s, when it dropped sharply.36In an influential report published in 1921, Huender argued that the rise inmoneyincomes experienced by peasant families in the immediate post-war era was insufficientto compensate for the rapid inflation, so their situation ... has either remained thesame or has deteriorated . Certainly real wages declined in the early 1920s, for bothurban and rural workers, as money wages failed to keep up with rising prices (Table 6).Like many colonial civil servants, Huender was disturbed by the fact that tax revenueswere not increasing more rapidly (the real value of government revenues declinedbetween 1913 and 1920, and the budget deficit increased with alarming speed after 1915,

    33J.J. Polak, The National Income of the Netherlands Indies, 1921-39 (New York: Institute of PacificRelations, 1943), as reprinted in Changing Economy of Indonesia, Vol. 5, Table 16.4.

    ^George M. Kahin, Nationalism and Revolution in Indonesia (Ithaca: Cornell University Press,1952), p. 25.

    35Scheltema, op. cit., p. 12.^C. van de Koppel, Eenige Statistische Gegevens , in De Landbouw in den Indischen Archipel,

    Vol. 1, ed. C.J.J. van Hall and C. van de Koppel (The Hague: Van Hoeve, 1946), p. 369.

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    Living Standards and theDistribution of Income inColonial Indonesia 323

    necessitating heavy borrowing abroad), but was adamant that the tax burden onIndonesians should not be increased. Yet there can be little doubt that their tax burdendid increase during the 1920s and 1930s; because the revenues accruing from the maintaxes falling on indigenous incomes, especially the land tax, were quite inelastic withrespect to falling incomes, the ratio of taxes to income base steadily grew.37

    However, it is far from clear that the increase in the burden of taxation on indigenousincomes was the only, or themost important, reason for the decline inrice consumptionper capita which occurred in the 1920s, and was perceived as indicating a decline inpopular welfare.38 We have already noted that rising per capita incomes in the decadebefore 1914 were accompanied by a rapid increase inrice availability, due at least partlyto a rapid growth in imports (Table 1). In seeking the reasons for the failure of theethical policy to continue to raise living standards after the First World War, Wertheimstressed the high rate of capital outflow through remitted profits after 1920, and thefailure to invest in improving production technologies in foodcrop agriculture or inother activities where the Indonesian population earned the bulk of their livelihood.39But these observations, while undeniably valid, do not explain the decline in per capitaconsumption of basic commodities which took place in the 1920s, when, in spite of theincrease in remittances abroad and the disappointingly slow increase in foodcropproduction in Java, per capita real incomes accruing to Indonesians were on averagestill growing. A more important reason for the decline in rice consumption appears tohave been increasing inequality in the distribution of incomes among the indigenouspopulations both of Java and the Outer Islands.

    A valuable source of information on disparities within the indigenous population inJava is the report on tax burdens compiled by Meijer Ranneft and Huender;40 theyestimate earnings for the main socio-economic groups in both urban and rural areas(Table 7). Their data indicate quite substantial differences between these groups, andbetween urban and rural areas. But a comparison with the income tax data for 1925shows how marked was the disparity between ethnic Indonesians on average, andChinese and European income taxpayers. Even Indonesian households in cities, whowere much more affluent than those in smaller towns and rural areas, had an averagehousehold income which was little more than 60 per cent of the average taxable incomeof Chinese taxpayers. The income tax data can also be used to estimate disparities intaxable income for each ethnic group; the Gini coefficients show higher incomedisparity for European and Chinese taxpayers than for Indonesian (Table 8).

    37Huender, op. cit., as cited in Penders, op. cit., p. 93.^See Anne Booth, The Burden of Taxation in Colonial Indonesia in the Twentieth Century ,Journal of Southeast Asian Studies, Vol. XI (1), March 1980, Table 6.39W.F. Wertheim, Indonesian Society in Transition (The Hague: Van Hoeve, 1956), p. 87.^J.W. Meijer Ranneft and W. Huender, Belastingdruk op de Inlandsche Bevolking (Weltevreden:Landsdrukkerij, 1926).

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    TABLE 5FOOD AVAILABILITY PER CAPITA IN JAVA, 1913-39Year Rice Corn Root- Pulses Calories Protein

    Crops (thousands (kg(kg per year) per year) per year)

    1913 102 29 97 10 n.a. n.a.1921-30 89 43 168 7 64341931 86 41 152 8 61041932 86 40 156 7 61531933 86 46 153 7 62241934 78 37 149 7 56421935 85 42 163 6 61631936 83 45 176 7 63941937 78 40 165 7 59831938 85 39 187 8 64441939 83 40 191 8 6403Sources: Statistisch Jaaroverzicht van Nederlandsch-Indie (SJO), various issues.

    Indisch Verslag (IV) Vol. II, various issues.


    (1921= 100)Rural Labourers* Urban Labourers?on Public Workers on Public Workers

    1913 100001920 5181921 7171922 8831923 9061924 817

    Notes: Deflated by rural Java index of 12 foodstuffs.bDeflated by Batavia retail price index.

    Source: SJO, 1927.

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    Living Standards and the Distribution of Income inColonial Indonesia 325TABLE 7



    1.Sharecroppers2.Agricultural0Labourers3. Small

    Landowners4. Cooliesc5.Medium

    Landowners6. Artisans and

    SmallTraders7. ReligiousOfficials8.Workers in

    European andChineseEnterprises


    Servants12.Large Tradersand FactoryOwners

    Rural Towns Cities%of Av. Income Av. %of Av. Income Av. %of Av. Income Av.

    Population* Per Capita Family Population* Per Capita Family Population* Per Capita Family(guilders) Size (guilders) Size (guilders) Size


































































































    7.9Notes: Percentages do not quite add to 100; residual population is unspecified.

    bBatavia, Meester Correlius, Bandung, Semarang, Surabaya.distinction between these categories is acknowledged to be somewhat unclear.

    Source: Meijer Ranneft and Huender (1926), p. 10.

    Although it does not appear possible to obtain data for later years on the distributionof Indonesian incomes, such as Meijer Ranneft and Huender provided for 1925, theincome tax data offer important clues on changes in income distribution over the nextfifteen years. By 1930 about five per cent of the adult ethnic Indonesian population inJava were paying the income tax, and about 22 per cent outside Java (Table 9). As theassessed income per capita in 1930 was substantially higher than Polak's estimate ofaverage income per employed Indonesian, it is safe to assume that income taxpayers inJava as a group represented a relatively affluent segment of the Indonesian population.In fact Kahin has argued that, by the mid-1920s, the great majority were salariedofficials, or private sector employees.41 It is clear when we compare the changes inaverage income per Indonesian worker during the 1920s computed from Polak's datawith those in average assessed income per taxpayer that the latter grew rapidly relative

    41Kahin, op. cit., pp. 29-30.

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    326 Anne BoothTABLE 8


    Category of Average IncomeGiniPopulation Per Annum/ IndexPer Family/TaxpayerRural Indonesians3 223Urban Indonesians3 348City Indonesians3 608IndonesianTaxpayers0 251 0.37ChineseTaxpayers0 1051 0.53European Taxpayers*5 5528 0.51Total Taxpayers11 576 0.67Notes: inequality indexes not calculated from data in Table 7 as no information is available on disparities within each socio-economic group.

    bRefers to assessed income per taxpayers. Agricultural incomes notincluded.

    Source: Meijer Ranneft and Huender (1926), p. 10; SJO (1928).

    to the former, both in Java and the Outer Islands (Table 9). This would suggest thatethnic Indonesian taxpayers, already in 1920 a relatively high-income group in Java,although not elsewhere, experienced faster income growth than other workers, thuswidening the disparities within the indigenous population.Thus it is possible that the modest growth which took place in real per capita incomesof indigenous Indonesians, especially in Java, during the 1920s was offset by a risingburden of taxation and worsening distribution of income as between income taxpayersand the rest, a division which was broadly consistent with business people and nonagricultural salary workers on the one hand and small-scale artisans, casual labourersand all those employed in agriculture on the other. As a result of this, per capita riceconsumption in Java fell back in the 1920s from the levels which had been achieved inthe previous decade. We d? not have any data on food availability outside Java in thesedecades; it could be argued that as Indonesian incomes were growing more rapidlyoutside Java in the 1920s, the decline in living standards was less marked. But on theother hand, the faster population growth probably meant that per capita income growthwas slower than in Java. In addition, the estimates made by G?tzen suggest that the taxburden on indigenous incomes outside Java was considerably higher than in Java.42 Thefact that the disparity between average

    income per employed Indonesian and averageassessed income per taxpayer grew more rapidly outside Java might indicate thatinequality grew, although taxable incomes were almost certainly underassessed in 1920(Table 8).

    42L. G?tzen, Volksinkomen en Belasting , Koloniale Studien 17 (1933): 473.

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    Living Standards and theDistribution of Income inColonial Indonesia 327TABLE 9INDIGENOUS INDONESIAN INCOMETAX ASSESSMENTS, 1920-39

    Taxpayers as aPercentage oftheAdult Population(1)

    Income perTaxpayer(2)

    AverageIncome perEmployedIndonesian

    (3)(2) as a

    Percentageof (3)Java1920193019341939a

    Outer Islands1920193019341939a









    Notes: aChange in assessment procedures after 1934 excluded all salary and wage earners earning lessthan 900 guilders per annum.b1920 data on employed Indonesians derived from data given by Polak (C.E.I., Vol. 5, Table15,6) for 1930, reduced by growth rates of adult population between 1920 and 1930. 1921income figures given by Polak adjusted back to 1920 using Java retail price index.Source: SJO and IV, various issues.

    It is sometimes asserted that the depression years saw some improvement inindigenous living standards, especially in Java where the collapse of the sugar industry,although depriving many workers of their wage employment opportunities, alsorestored over 100,000 hectares of well-irrigated land to foodcrop cultivation. However,this had no immediate impact on foodcrop production, which grew less rapidly between1930 and 1935 than in the 1920s. Per capita availabilities of both rice and otherfoodstuffs also fell after 1930, and by 1934 total calorie availability had fallen by morethan 10 per cent compared with the 1920s average (Table 5). In addition, the depressionyears saw amarked increase in the burden of taxation on the Indonesian population; inparticular the landtax assessments in Java did not decline as rapidly as food prices or thereal value of foodcrop production, so that the real value of the tax increased.43

    Whether the distribution of income among the Indonesian population worsened inthe early 1930s, especially in Java, is difficult to establish. Between 1930 and 1934 therewas a sharp drop in the proportion of the Indonesian population paying the income tax,but the real value of their assessed income more than doubled, at the same time asaverage per capita incomes declined in real terms.44 Whereas in 1920, the average

    43Anne Booth, op. cit., 1980, Figure 1.^The data assembled by Polak (op. cit., Table 16.4) show that the real income accruing to indigenousIndonesians in Java grew by about seven per cent between 1929 and 1935, while over the same yearspopulation grew by 9.3 per cent.

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    328 Anne BoothIndonesian taxpayer had an assessed income which was only 15 per cent higher than theaverage income per employed worker, by 1934 itwas almost five times as high (Table9). In fact the bulk of the Indonesian income taxpayers on Java were salary earners,whose money incomes were not reduced at the same rate as prices fell. As a group theythus must have improved their position relative to the average, although their numbersfell. Indeed all wage earners fortunate enough to have kept their jobs during these years(and they were probably the more senior and better-paid employees) appear to haveenjoyed a considerable improvement in real wages, as the wage data from the Javanesesugar industry make clear. By 1934, skilled workers were earning over twice as muchper day as they did in 1930 if the rural Java food index is used as a deflator; all male andfemale workers on average were earning 50 per cent more, although numbers employedhad declined by more than half (Table 10).45


    Males FemalesIndex of Real' Daily WagesForemen All Workers


    (1921= 100)Female








    Note: Deflated by Java 12 food commodity index.Sources: SJO, IV, various issues.

    45In his study of the impact of the depression on the indigenous economy, van Laanen argues that thegap between rich and poor, between purchasing agents/money lenders and debtors became irrefutably

    wider. There is no doubt that in many areas in the archipelago the income distribution became moreuneven. To support this argument, Van Laanen points out that the falling price level meant that thosewho kept their employment usually experienced an increase in real incomes. See J.T.M. van Laanen,The World Depression (1929-35) and the Indigenous Economy in Netherlands India, Occasional Paper13 (Townsville: James Cook University, Centre for Southeast Asian Studies, 1982), p. 13.

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    Living Standards and theDistribution of Income inColonial Indonesia 329It is more difficult to explain the stagnating per capita rice consumption in Javabetween 1935 and 1939 (Table 5), given that real per capita income of the Indonesian

    population on Java grew over these years by 15 per cent, and that the tax burden onIndonesian incomes was somewhat reduced, compared to earlier in the decade. After1935 Java became a net exporter of rice for the first time since the 1870s; by 1936-40 netexports from Java averaged 94,000 tons (C.E.I. Vol. 4, Table 6). This was the result ofgovernment controls on rice imports, which led to a diversion of Javanese rice to theOuter Islands to replace imports. However if this had been done at the expense ofdemand in Java, there should have been a sharp jump in rice prices relative to otherprices, and there is no evidence that this occurred. It ismore probable that the growthin Indonesian incomes which occurred after 1935 accrued mainly to a relatively smallgroup of government and private sector employees with a low income elasticity ofdemand for rice. For example, the growth in large-scale industry in the latter part of the1930s led to the emergence of a small but highly-paid class of industrial workers whoseearnings were more than six times those of workers in small industry.46Wertheim in fact argued that, in the last few years of Dutch rule, greater socialdifferentiation went hand in hand with impoverishment for many people , although hedid not manage to produce any convincing evidence for this assertion.47 Perhaps themost interesting information on disparities between Indonesians in the late 1930s is thatcollected in the investigations into the living standards of plantation labourers andemployees of the Batavia Municipality.48 The calorie and protein consumption datashow that the most

    glaring disparitywas between supervisory staff

    andfactory labourersliving on the plantation on the one hand, and field and factory labourers living off the

    plantation, and local farmers, on the other; even the Batavia coolies had calorie orprotein intakes well above those of the farmers and field labourers (Table 11).

    But although it seems probable that income disparities among indigenous Indonesiansgrew during the inter-war years, there can be no doubt that itwas disparities betweenrather than within ethnic groups which continued to be most obvious in the late colonialIndonesian economy. We have already drawn attention to the 1925 data (Table 8);although we do not have similar data for a later year, Polak's study showed thatdisparities in income per worker between the ethnic groups widened.49 By 1939, aEuropean worker earned on average 61 times, and a Chinese worker 8 times, what anIndonesian earned. Of course this simply reflected the fact that the Europeans occupiedthe highly-paid positions in government and business while the Chinese dominated tradeand those sections of industry and commerce not controlled by the Europeans. However the income tax data suggest that, particularly in Java, even the small share thatIndonesians had in the non-agricultural economy was declining in the inter-war period.In 1920 85 per cent of income taxpayers in Java were Indonesian, and although theywere concentrated in the bottom income groups, almost 37 per cent of taxpayers in thetop decile of the income distribution were Indonesian (Table 12). By 1934 this had

    46H.J. van Oorschot, De Ontwikkeling van de Nijverheid in Indonesia (The Hague: Van Hoeve, 1956),p. 102.

    47Wertheim, op. cit., p. 95.^ The Living Conditions of Municipally Employed Coolies in Batavia in 1937 , in The IndonesianTown: Studies in Urban Sociology (The Hague: Van Hoeve, 1958); R. van Niel (translator), LivingConditions of Plantation Workers and Peasants on Java in 1939-40 (Ithaca: Cornell University ModernIndonesia Project Translation Series, 1956).49J.J. Polak, op. cit., p. 75.

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    330 Anne Boothfallen to 16 per cent, and by 1939 to 11 per cent. This indicates a considerable relativedecline in the role of Indonesians in the more lucrative non-agricultural sectors of theeconomy, whether as employees or as self-employed workers.Kahin has used the income tax data to support the arguments that the Indonesian urbanmiddle class was, by the 1930s, extremely small and almost entirely noncapitalistic .50Certainly it is true that a very high percentage of income accruing to Indonesians in Javawith an income over 900 guilders in 1935 and 1939 was from salaries and wages (Table13). But at least some of these were in large industrial enterprises, run along capitalistlines; in fact Sitsen claimed that 25 per cent of managerial positions in private industrywere occupied by Indonesians by 1940.51 Outside Java many more taxpayers were selfemployed. It is also important to note that Indonesian taxpayers grew as a percentageof the total outside Java in the 1930s, rather than declined as in Java. Even in 1939, theyaccounted for 40 per cent of taxpayers in the top five per cent of the assessable incomedistribution, compared with less than six per cent in Java (Table 12). The disparitybetween Java and the Outer Islands is also apparent from the data on non-wage incomesassessed for the income tax. Of the assessed income accruing from non-wage sourcesunder 900 guilders per annum, almost 85 per cent was earned by Indonesians, of whomthe great majority were outside Java (Table 14). While it is true that most of thesetaxpayers outside Java were in the lowest income bracket, where the average assessedincome was little more than Polak's estimate of the average income per employedworker in 1939 (107 guilders), Indonesians still accounted for a higher proportion thaneither Chinese or Europeans in the income brackets between 200 and 900 guilders. But


    (late 1930s)Calories Protein(per day) (grams per day)

    Plantation Labourers (Living-in)Field labourers 1964 52Factory labourers 2017 53Supervisory/skilled 2132 58

    Plantation Labourers (Living-off)Field labourers 1283 32Factory labourers 1399 36Supervisory/skilled 1983 52

    Farmers 1391 35

    Batavia Municipality LabourersEarning 30 cents/day 1581 38

    Sources: See Footnote 48.

    50Kahin, op. cit., p. 29.51Peter H.W. Sitsen, Industrial Development of the Netherlands Indies, Bulletin 2 (Batavia: Institute

    of Pacific Relations, 1943), p. 58.

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    Living Standards and the Distribution of Income inColonial Indonesia 331Indonesian taxpayers only accounted for about five per cent of assessed incomes over900 guilders, both in Java and elsewhere (Table 14).


    YearJava Outer Islands

    Indonesians Chinese11 Europeans Indonesians Chinese8 Europeans1920

    All TaxpayersTop DecileTop 5%1929

    All TaxpayersTop DecileTop 5%1934

    All TaxpayersTop DecileTop 5%1939

    All TaxpayersTop DecileTop 5%



























    17.8Note : Including other foreign Asians.Sources: SJO, IV, various issues.


    Europeans Chinese? Indigenous TotalJava19351939

    Outer Islands19351939









    Note: Includes other foreign Asians.Sources: IV, 1937, pp. 152-53.

    IV, 1941, pp. 182-83.

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    332 Anne BoothTABLE 14



    Europeans 1.1Chinese3 6.4Indonesians 12.6

    Total 201Outer IslandsEuropeans 0.2Chinese3 8.1Indonesians 71.6

    Total ~19S)Indonesia 100.0

    Note : including other foreign Asians.Source: IV, 1941, pp. 181-86.

    Poverty and Inequality in the Colonial Era: A Summing UpInwhat sense can we say that Indonesians were on average poorer when the Japanese

    arrived in 1942 than when Raffles left in 1815? It seems highly probable that per capitarice consumption was lower; because of deficiencies in both the food production andthe population figures we cannot be dogmatic about trends, but there seems to be littledoubt that per capita rice availability in Java fell in the latter part of the nineteenthcentury, rose again in the decade before 1913, and then fell again through the 1920s and1930s. These developments were not accompanied by recurrent famines, as in South

    Asia, because calorie intake was maintained, or at least not permitted to fall toodrastically, by increased production of corn and cassava which became staplecommodities. But to the extent that neither was preferred to rice by the great majorityof Javanese, their increasing importance in the local diet should be interpreted as a signof diminishing welfare. Outside Java it is impossible to determine trends in per capitafood consumption over time because of lack of data; it seems probable that consumptionrose inmajor rice producing areas, such asWest and North Sumatra and Aceh more orless in step with population, while in some of the main smallholder export crop regionsimports would have risen and fallen in step with trends in smallholder incomes.

    Of course it can be argued that other determinants of welfare should be consideredbesides per capita availability of rice; for example the growth in publicly providedservices such as irrigation, credit, education and health could have at least partiallycompensated for declining consumption of preferred food staples. However, theavailable evidence would suggest that access to these publicly provided services waslimited to a small section of the indigenous population whose living standards almostcertainly improved relative to those of the great majority. Landowners controllingrelatively large parcels of irrigated land (many of whom in Java were village officials),






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    Living Standards and theDistribution of Income inColonial Indonesia 333

    employees of private companies, especially those with some security of tenure, andthose with government jobs would all have improved their position relative to theaverage Indonesian over the last decades of the colonial era. But while the absolutenumbers of Indonesians earning very large incomes (more than ten times the average)almost certainly grew quite rapidly between 1900 and 1940, they remained a tiny fractionof the total population. In 1913 there were fewer than 1000 indigenous Indonesianincome taxpayers in Java with an assessable income of more than 1000 guilders; by1939, when the general price level had returned to roughly that prevailing in 1913, andthe average income per employed Indonesian in Java was roughly 80 guilders, therewere over 19,000. But this still accounted for only 0.1 per cent of the labour force.This would suggest that Kahin's assertion concerning the minuteness of theIndonesian non-agricultural middle and upper classes in the late colonial era wasbroadly correct. Certainly there can be no doubt that the very highest income groupswere almost exclusively European and Chinese, and that in Java the bulk of theIndonesian income taxpayers were salary earners, many of them in government service.But outside Java the great majority of the 1.7 million Indonesian income taxpayers in1939 were not salaried employees, but own account workers. True, most of them wereearning little more than the average income for all indigenous workers, and one cannotquarrel with Kahin's conclusion that economic position in colonial society wasdetermined along ethnic lines .52 But certainly an embryonic entrepreneurial class wasthere, which could respond to the new opportunities provided by political independence.The distribution of income between ethnic groups and within the Indonesian labourforce at the end of the 1930s is summed up inTable 15. At the top of the pyramid were

    European workers, who accounted for 0.4 per cent of the labour force, but whoappropriated 12.6 per cent of national income as computed by Polak. They dominatedthe most senior and best-paying jobs in both the public and private sectors. The onlyeffective challenge to their economic supremacy was posed by the Chinese in trade andcommerce, although even in these areas the European companies dominated theheights, leaving much of the rest of the activity to the Chinese. As far as the indigenousIndonesian labour force was concerned, 63 per cent was employed in small-scaleagriculture (including livestock, fisheries and forestry) while the rest were scatteredthrough a range of occupations, the most important of which were manufacturing, tradeand plantations. The distribution of income between Indonesians revealed less glaringdisparities than between ethnic groups; government employees and large farmers wereon average earning several times the average Indonesian income while small farmersand labourers were earning rather less.

    The distribution of income in the late colonial economy in Indonesia was verydifferent from that found in other parts of Asia. Ifwe compare the Indonesian situationwith Maddison's estimates for India, for example, it is striking how much smaller thevillage (here interpreted as the smallholder agricultural) economy was in Indonesia.53The expatriate share of the non-village economy was, by contrast, much larger, partly

    because the Dutch economic presence was so much larger than that of the British inIndia, and partly because of the importance of the Chinese who had no equivalent in

    52Kahin, op. cit., p. 36.53For a more detailed discussion of the distribution of income in late colonial India and Indonesia, see

    Anne Booth, The Colonial Legacy and its Impact on Post-Independence Planning in India andIndonesia , Itinerario, Vol. X (1), p. 9.

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    334 Anne BoothSouth Asia. The indigenous capitalist, merchant and professional class accounted for alarger share of income in India, and although the small traders, clerical workers andartisans accounted for about the same proportion of national income in both countriesthey were amuch larger part of the labour force in Indonesia. However the small far

    mers, tenants, and landless labourers fared about the same in both countries.


    100.0 TOTAL 00.00.4 Europeans 12.62.4 Chinese 10.0

    97.2 Indonesians 68.9Non-residents3 8.5

    100.0 INDONESIANS 00.00.7 Professional and Business Class 1.0

    10.4 Manufacturing Workers 14.95.4 Traders 6.71.4 Transport Workers6 1.41.7 Domestic Servants 2.32.4 Government Employees 7.57.2 Plantation Workers 7.5

    62.8 Indigenous Agriculture0 52.7( 1.8) (Largearmers).5( 14.6) (Mediumfarmers) 16.2( 22.6) (Smallfarmers) 15.0( 23.7) (Labourers) 16.18.01Other (n.e.i.) 4.9e

    Notes: includes government export income.Includes post and telegraph workers.Includes smallholder export crops and forestry.includes pensioners and undefined activities.cRental income from homes.

    Sources: C.E.I., Vol. 5, Tables 15.1,15.4, Annex 1.Breakdown of indigenous agricultural labour force: As for Table 7.