FREE TRADE . COLONIES: THE DUTCH EXAMPLE

Commonwealth and Foreign

By S. F. VAN OSS (Editor, Haagsche Post) %VITEN looking at a map of Asia one sees its south-eastern part, opposite Singapore, covered by a vast group of islands, which, as it were, form stepping-stones from Malacca, on the Asiatic mainland, to Australia. The greater part of this archipelago is Dutch territory, known as Dutch India. Outside Holland its geographical extent is realised by few. From the eastern end to the western of the archipelago is a space of 3,300 English miles, a little more than the distance from Gibraltarto-Siberia; and twice as far as London is from Moscow. Another significant fact, often overlooked, is that Singapore juts out to close proximity to the three most important islands of the archipelago, namely, Sumatra, Java and Borneo. The superficial area of the Dutch-India islands as a whole is approximately eight times that of Great Britain. Java is about as large as England, and has roughly the same population-40,000,000 ; its capital, Batavia, was founded by the Dutch in 1619.. The other islands are far less populous, and 'have together some 20,000,000 inhabitants. Sumatra, developed with growing intensity, is the largest, and indeed one of the largest on earth ; next comes Borneo, whose northern part is a British Protectorate ; then Celebes, especially renowned for its costly spices, and New Guinea, whose eastern half is partly in Australian ownership and partly under Australian mandate. Bali should also be men- tioned, as an old seat of Buddhistic art and culture. The smaller islands are numbered by the score.

These 60,000,000 people vary greatly, ethnologically and culturally. Many centuries of civilisation separate the animistic Papuans of New Guinea from the highly cultivated intellectuals of Java, where noble families existing in con- tinuous line for more than a thousand years are no rarity. The task of governing populations showing such marked differences in intellectual and moral status has not been an easy one ; but the Dutch, like the British, have a natural Ability, developed through an experience of three centuries, for giving a lead to populations who cannot take a place ,among independent nations, with all this implies. It is generally and generously admitted that in their archipelago the Dutch have both culturally and economically achieved a work of which they may well be proud.

The economic importance of Dutch India becomes at once apparent from the variety and bulk of its products, tropical raw materials and foodstuffs. Their export volume reached its peak in 1929, with 10,000,000 tons—the load of, say, a thousand big steamers—to the value of 1,500,000,000 gulden, .Say £200,000,000. In 1935 the bulk diminished slightly, to 9;500,000 tons ; but the money value showed a colossal drop, to less than 500,000,000 gulden. The fall in world prices for tropical products can hardly be better demon- strated than by this shrinkage in value to almost one-third for virtually the same. bulk in goods. The . fall was not entirely due to the general demoralisation of world markets; part of it must also he attributed to the difficulties of many countries as regards money remittances, and still. more to the obstacles which leading countries placed in the way of importing tropical produce not originating in their own colonies.

" It' is worth while to cite statistics regarding the principal products of the Dutch East Indies, comparing 'quantities And values for 1929, the peak year, and 1935, when the trough of the depression seems to have been reached : • • Some Quantity Value leading Exports. (in 1,000 'tons). (million gulden).

1929. 1935. 1929. 1935.

Mineral Oils

3,830 5,100 180 85 Sugar ..

2,460 1,046 306 35 Rubber ..

322 320 237 70 Tin

42 28 79 35 Tea

83 74 86 37 Coffee

83 83 70 19 • Tobacco ..

75 50 83

.45

Copra

• •

465 490 98 26

These figures demonstrate strikingly, in the first place. the fatal fall in prices. Technically the development of agricultural and Mineral resources in Duteh India stands admittedly high, and production costs, if not lower than anywhere else, are at least as low. But with market Prices below the mininmin cost of production, a great many well-run enterprises, which in better times had prudently built up large reserves, were threatened with gradual submersion, not only in these islands, but throughout the earth's tropical regions ; and so international measures imposed themselves upon the various nations interested. International agree- ments for the restriction of production were readied as regards tea, tin and rubber. In respect of sugar many attempts have been made, but so far without success. For Java, which, apart from Peru, is the only great sugar- producing country without protected markets, the lack of international regulation of sugar-production means the annihilation of vast sums of capital invested, and a con- siderable lowering of the purchasing-power of large numbers of the native population ; the annual production capacity of this highly-developed and magnificently-managed industry is no less than 3,000,000 tons. But the entire unprotected sugar market can today only consume 2,500,000 tons, and there are other producers besides Java. (World sugar con- sumption is 26,000,000 tons.) And this has compelled the Dutch-Indian Government to restrict Java's production to 1,400,000 tons, so that one-half of an ultra-modern and cheaply-working plant has had to be shut down.

The sugar situation was only one of many very serious pro- blems with which the Government had to grapple owing to the world crisis. At first these problems mainly concerned exports from Dutch India, but as -a legieal .eonsequenee difficulties in its import trade soon arose. For, as exports suffered, purchasing power waned, and the population began to buy all kinds of cheap articles from countries which saw their opportunity. but which could not take payment in Dutch-India produce of equivalent value. Apart from a sudden disequilibratim of the Colonial budget—met by appropriate if drastic measures, chiefly economies, which very soon again made budgets balance—this led to difficulties for the trade with the Mother Country.; and thus the Batavia Government were compelled to prescribe quotas for some articles of daily use. However, these were restricted to imports making less than 24 per cent. of the total, which later in 1935 came to 275 million gulden, or a little less than • 140,000,000. And it is important to note that the principle of "proportionality " was fully adhered to. There was no. discrimination against any country, and " most-favoured- nation " clauses were strictly observed. However dillicult times and problems might be, the old Dutch Colonial principle of equal economic rights for all was most rigidly upheld.

Today as much as ever Dutch Colonial policy adheres to this traditional policy, and Holland's tropical territories remain in the fullest sense freely open to foreign capital, foreign labour and foreign goods. Customs duties remain wholly "fiscal "—i.e., for purposes of revenue, and equal for all. They are not designed to protect home industries, nor to give anyone preference ; not even the Mother Country. Free trade Colonies, therefore, all Dutch Colonies remain, crisis or no crisis. The traditional broadmindedness with which other nationals have always been received in the Dutch Indies has enabled many British mercantile houses and enterprises to become established there. Many mill:ons of British capital have been invested out there. For this reason alone England is deeply interested in the future of these fertile and populous isles ; apart from the fact that even now British exports to them reach 25 million gulden per annum, and imports 30 million. These figures will undoubtedly expand again when the recovery, which is now happily setting in, makes further progress. The further peaceful economic development of the vast island. empire between the Indian and Pacific. Oceans is not merely a narrow national Dutch interest. It is of world importance.