Dutch Bank Transactions with Chinese Traders in the Dutch East Indies: The Java Sugar Trade and the 1917 Sugar Crisis

Yuko Kudo ()
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Yuko Kudo: Rikkyo University

Chapter Chapter 1 in Modern Global Trade and the Asian Regional Economy, 2018, pp 3-31 from Springer

Abstract: Abstract This paper examines the trade in Java sugar, a major export of the Dutch East Indies, to ascertain the nature of the relationship between Chinese traders and Dutch banks from a financing perspective. Focusing on Semarang in Central Java, the center of the Chinese merchant-based sugar trade, the paper clarifies the mechanism by which sugar moved from mill to purchasing dealer to export. It particularly focuses on the changes in purchasing by Chinese traders triggered by the 1917 sugar crisis late in the First World War. Prior to the sugar crisis, Dutch banks and Chinese traders had a relationship of interdependence: with export sugar serving as collateral, banks provided funding to traders who secured buyers for the export sugar. However, with the start of World War I, the large sums of money flowing into the market from the banks led to rampant speculation by the traders, which in turn engendered a crisis when sugar prices dropped in 1917. In the wake of this crisis, the Dutch banks established the Java Association of Sugar Producers (Vereenigde Javasuiker Producenten: VJSP) in Surabaya to centralize sales of Java sugar. In the 1920s, VJSP established sales controls, prioritizing sales to European companies and to the Japanese trading companies newly entering the market. At the same time, the Dutch banks restricted the supply of funds to the Chinese traders, seeking to suppress speculation through a careful selection of suppliers and by supplying funds indirectly through the mediation of a Chinese bank. Semarang’s Chinese traders thus fell into two distinct categories—powerful traders who had their own capital and overseas sales experience, and the small- and medium-sized traders—while the market shrank to small-scale transactions centered principally on resale.

Keywords: Bank; Chinese; Dutch East Indies; Sugar; Trade (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:spr:msschp:978-981-13-0375-3_1

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DOI: 10.1007/978-981-13-0375-3_1

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