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The Frustrations of Development: British Business and the Late Colonial State in Malaya, 1945–57

  • Nicholas J. White (a1)


The article reassesses the economic role of the late colonial state in Malaya. It seeks to dispel the view that the colonial government served British business interests, and that broad-based development policies only followed independence in 1957. Rather the developmentalist orientation of the state began earlier in the 1940s, and was not fully in accordance with existing economic interests.



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1 This article is a revised version of a paper read at the Anglo-American Conference of Historians, Institute of Historical Research, University of London, 28 June 1995. I am grateful to Drs. David Anderson, Sarah Stockwell, and Lawrence Butler for their incisive responses and comments. Further discussion of business-government relations in late colonial Malaya can be found in my forthcoming book Business, Government, and the End of Empire: Malaya, 19421957 (Kuala Lumpur: Oxford University Press).

2 Morgan's work is a vast 5 volume undertaking published by Macmillan and, despite its neglect of Malaya, provides an authoritative background to many of the issues discussed in this article.

3 Rudner's most important articles discussing the decolonization period are “Rubber Strategy for Post-War Malaya, 1945–48”, Journal of Southeast Asian Studies 1, 1 (1970): 2336; “Malayan Rubber Policy: Development and Anti-Development during the 1950s”, Journal of Southeast Asian Studies 7, 2 (1976): 235–59; “Financial Policies in Post-War Malaya: The Fiscal and Monetary Measures of Liberation and Reconstruction”, Journal of Imperial and Commonwealth History 3, 3 (1975): 323–48; “The Draft Development Plan of the Federation of Malaya, 1950–55”, Journal of Southeast Asian Studies 3, 1 (1972): 6396; “Development Policies and Patterns of Agrarian Dominance in the Malaysian Rubber Export Economy”, Modern Asian Studies 15, 1 (1981): 83105. Some of these papers have recently been published collectively with a new introduction and conclusion as Malaysian Development. A Retrospectivé (Ottawa: Carleton University Press, 1994).

4 Rudner, Malaysian Development, p. 2.

5 For the development of British capitalism in colonial Malaya see Drabble, J. H. and Drake, P. J., “The British Agency Houses in Malaysia: Survival in a Changing World”, Journal of Southeast Asian Studies 12, 2 (1981): 297328; Stahl, K.M., The Metropolitan Organization of British Colonial Trade: Four Regional Studies (London: Faber, 1951), pp. 81121; Allen, G.C. and Donnithorne, Audrey, Western Enterprise in Indonesia and Malaya (London: Allen & Unwin, 1957), pp. 4966; Helten, Jean-Jacques van and Jones, Geoffrey, “British Business in Malaysia and Singapore since the 1870s”, in British Business in Asia since 1860, ed. Davenport-Hines, R. P. T. and Jones, Geoffrey (Cambridge: Cambridge University Press, 1989).

6 Rudner, Malaysian Development, p. 396. This view seems to have influenced other writers such as Colin Barlow who claims that in the rubber industry “Independence” led to an “era of dynamic progress and reconstruction”. The Natural Rubber Industry. Its Development, Technology and Economy in Malaysia (Kuala Lumpur: Oxford University Press, 1978), p. 82.

7 “Conclusion” in Democratizing Japan. The Allied Occupation, ed. Ward, Robert E. and Yoshikazu, Sakamoto (Honolulu: University of Hawaii Press, 1987), p. 432.

8 See, for example, BoE, OV 65/3, Memorandum by Thompson-McCausland, 2 Jun. 1942 and Note by Doll, 13 April 1943; CO 852/625/1, Minute by Caine, 27 October 1944; CO 852/584/9, Minute by Monson, 9 Oct. 1944; CO 852/625/2, Copy of letter from Lyttelton, Minister of Production, to Sir Andrew Duncan, Minister of Supply, 9 Jul. 1945. On the parallel political reordering see Turnbull, C.M., “British Planning for Post-War Malaya”, Journal of Southeast Asian Studies 5, 2 (1974): 239–54; Stockwell, A.J., “Colonial Planning during World War II: the Case of Malaya”, Journal of Imperial and Commonwealth History 2, 3 (1974): 333–51 and British Policy and Malay Politics during the Malayan Union Experiment, 1942–1948 (Kuala Lumpur: Malaysian Branch of the Royal Asiatic Society, 1979), pp. 1738; Lau, Albert, The Malayan Union Controversy, 1942–1948 (Singapore: Oxford University Press, 1991), pp. 2897.

9 T 220/52, Copy of Sir George Gater to Sir Henry Wilson-Smith, 31 Aug. 1945 reproduced as Document 49 in Stockwell, A.J. (ed.), British Documents on the End of Empire Project Series B, Volume 3, Malaya. Part I: The Malayan Union Experiment, 1942–1948 (London: HMSO, 1995).

10 T 220/52, Wilson-Smith, to Gater, 2 Oct. 1945.

11 Sel RC 170/47, “The Commercial and Industrial Development of Malaya. Paper from the Director, Industry & Commerce, Malayan Union”, ca. January 1947, p. 2.

12 Ibid., p. 3.

13 Ibid., p. 3.

14 The Commissioner-General's office developed from Lord Killearn's Special Commission in Southeast Asia which presupposed a high-level of state intervention in the economic reconstruction of the area; particularly in relation to the rice shortage of 1946–47. See Remme, Tilman, Britain and Regional Cooperation in Southeast Asia, 1945–1949 (London and New York: Routledge/LSE, 1995), pp. 4453, 112–13.

15 The Bandoeng tin pool of 1921 set the tone for the next twenty-five years with four international tin control or restriction schemes and four buffer stocks operating from 1931. Hoong, Yip Yat, The Development of the Tin Mining Industry of Malaya (Kuala Lumpur: University of Malaya Press, 1969), pp. 153283; Baldwin, W.L., The World Tin Market. Political Pricing and Economic Competition (Durham, NC: Duke University Press, 1983), pp. 6667, 73–74; Hillman, John, “Malaya and The International Tin Cartel”, Modem Asian Studies 22, 2 (1988): 237–61. For rubber, while the Rubber Growers’ Association attempted to help itself through the voluntary restriction scheme of 1920–21, government was enlisted to run the compulsory Stevenson scheme from 1922 to 1928 and the International Rubber Regulation Agreement which operated from 1934 until the outbreak of the Pacific War. Drabble, J.H., Rubber in Malaya, 1876–1922. The Genesis of the Industry (Kuala Lumpur: Oxford University Press, 1973), pp. 156–99; idem., Malayan Rubber. The Inter-War Years (London: Macmillan, 1991), pp. 1324; Coates, Austin, The Commerce in Rubber. The First Two Hundred and Fifty Years (Singapore: Oxford University Press, 1987), pp. 207279.

16 Heussler, Robert, Completing a Stewardship. The Malayan Civil Service, 1942–57 (Westport, Conn.: Greenwood Press, 1983), pp. 120–21.

17 Sel RC 170/47, Minute by Ramsay, A.B., 31 Jan. 1947.

18 Tate, Muzaffar, Power Builds the Nation. The National Electricity Board of the States of Malaya and Its Predecessors, Vol. 2, Transition and Fulfilment (Kuala Lumpur: Tenaga Nasional Berhad, 1991), p. 82.

19 Huff, W.G., The Economic Growth of Singapore. Trade and Development in the Twentieth Century (Cambridge: Cambridge University Press, 1994), p. 334.

20 Ibid., pp. 331–32.

21 Holland, R.F., “The Imperial Factor in British Strategies from Attlee to Macmillan, 1945–63”, Journal of Imperial and Commonwealth History 12, 2 (1984): 166–67.

22 “Decolonization, Development and Dependence: A Survey of Changing Attitudes”, in The Transfer of Power in Africa: Decolonization, 1940–60, vol. 1, ed. Prosser Gifford and Wm. Roger Louis (New Haven and London: Yale University Press), p. 487.

23 List of members in CO 852/510/29.

24 CO 852/588/10, Memorandum by Pedler, 10 Aug. 1944, and Minutes by Cohen and Caine, 11 and 14 Aug. 1944.

25 Ibid., Minute, 29 Aug. 1944. See also Butler, Lawrence J., “Economic Development and the ‘Official Mind’: the Colonial Office and Manufacturing in West Africa, 1939–51” (Ph.D. diss., University of London, 1991), pp. 204219, 237–45.

26 Fieldhouse, D.K., “The Labour Governments and the Empire-Commonwealth, 1945–51”, in The Foreign Policies of the British Labour Governments, 1945–51, ed. Ovendale, Ritchie (Leicester: Leicester University Press, 1984), pp. 95102.

27 Butler, “Economic Development and the ‘Official Mind’”, chs. 4–5.

28 Schenk, Catherine R., Britain and the Sterling Area. From Devaluation to Convertibility in the 1950s (London: Routledge/LSE, 1994), p. 89.

29 The Draft Development Plan of the Federation of Malaya (Kuala Lumpur: Government Printer, 1950), Part II, Tables B(I) and B(II).

30 Ibid., para. 39 and Part I, ch. Ill, para. 284, 436–48.

31 CO 717/165/2, Enclosure in Hone to Paskin, 16 Oct. 1948.

32 For the genesis of this project see Rubber Growers’ Association Council Minutes (hereafter RGACM), 54, 6 Sept. 1943.

33 The New Malaya and You (London: Lindsay Drummond, 1945), p. 84.

34 CO 852/919/4, Memorandum of 27 Jan. 1947, in Pyke to Clauson, 17 Feb. 1947.

35 For an authoritative account of “Groundnuts” see Morgan, David, The Official History of Colonial Development. Volume 2: Developing British Colonial Resources, 1945–51 (London: Macmillan, 1980), pp. 226319.

36 RGACM, 58, 7 Jul. 1947, Report of Malaya Committee, App. B. “Planting and Replanting”.

37 CO 852/919/4, Minute by Lewis, 9 Oct. 1947.

39 For the specific provisions of these two schemes see Rudner, “Rubber Policy During the 1950s”.

40 E.g., Chairman's Address to United Sua Betong Rubber Estates, 8 Jun. 1955.

41 BT 258/52, Note by Fisher, Nancy, 23 Aug. 1957, “Visit to Malaya and Singapore, July 1957”.

42 For in-depth analyses of the tin control scheme, see Chee, Siew Nim, “The International Tin Agreement of 1953”, Malayan Economic Review 2, 1 (1957): 3953, and Baldwin, W.L., The World Tin Market: Political Pricing and Economic Competition (Durham, NC: Duke University Press, 1983), pp. 7484.

43 Federation of Malaya, Federal Legislative Council Proceedings, 27–28 Jan. 1954.

44 For the historic antagonism of the Cornish firms to government-directed cartelization, see Hillman, “Malaya and the International Tin Cartel”.

45 Federation of Malaya, Federal Legislative Council Proceedings, 27–28 Jan. 1954; see also statement by Sir Fergusson, Ewen, Chairman, Straits Trading Co. in Financial Times, 7 May 1953 and BT 161/30, Enclosure to Kiddle, Malayan Chamber of Mines to Fergusson, Ministry of Materials, 11 Mar. 1953.

46 Federation of Malaya, Federal Legislative Council Proceedings, 27–28 Jan. 1954. Old Market Square was Kuala Lumpur's financial centre.

47 E.g., Financial Times, 17 Dec. 1956. “Company Meetings: Sungei Besi Mines and Ayer Hitam Tin Dredging. Mr. G.W. Simms’ Statements”.

48 See White, Business, Government and the End of Empire, ch. 3.

49 MU 12271/47 Pt. VI.

50 Federation of Malaya, Federal Legislative Council Proceedings, 26 July 1950 cited in White, Nicholas J., “Government and Business Divided: Malaya, 1945–57”, Journal of Imperial and Commonwealth History 22, 2 (1994): 262.

51 Centre of South Asian Studies, University of Cambridge, BARLOW 4/8, Enclosure in Letter to F.H. Williams, Kuala Lumpur, 27 Mar. 1947.

52 Stubbs, Richard, “Counter Insurgency and the Economic Factor: The Impact of the Korean War Prices Boom on the Malayan Emergency” (Singapore: Occasional Paper 19, Institute of Southeast Asian Studies, 1974).

53 Sel Sec 742/51, Memorandum by Melliar-Smith, P.L., 6 October 1955.

54 Address at Malayan Chamber of Mines AGM, The Times, 10 Sept. 1953, cited in White, “Government and Business Divided”, p. 263.

55 The Times, 10 July 1951, Letter from Frank Ascoli.

56 Letter of August 1951 in CO 537/7265.

57 Drabble, J.H., “Politics of Survival: European Reactions in Malaya to Rubber Smallholders in the Inter-War Years”, in The Underside of Malaysian History, ed. Rimmer, P.J. and Allen, L.M. (Singapore: Singapore University Press, 1990).

58 See CO 717/206/4 and CO 717/204/1, Minutes by Mackintosh, Anus, 23 and 28 Aug. 1951.

59 Rudner, “Rubber Policy During the 1950s”, p. 247.

60 The present article's findings are supported by P.T. Bauer, who argues that there were “drastic changes” in official policy towards the rubber industry in the years between 1948 and 1957. These began with the lifting of the ban on the new planting in 1947, and were manifested in the “complete turn around in the direction of officially sponsored research” reflecting “recognition of the significance of the smallholdings well before political independence”. As a result, Bauer argues, rubber production was higher than ever by 1960. “Post-War Malayan Rubber Policy: A Comment”, Journal of Southeast Asian Studies 4, 1 (Mar. 1973): 133–38.

61 See Times, Financial Times, Manchester Guardian, and Daily Telegraph, 1 Oct. 1954; Economist, 2 Oct. 1954; CO 1030/57, “Comments by RGA on Report of Fact Finding Mission”, n.d.

62 Federation of Malaya, Federal Legislative Council Proceedings, 27–28 Jan. 1954.

63 Indeed, Malaya's acquiescence to the Geneva scheme of 1953 was largely the work of Oscar Spencer in league with Colonel H.S. Lee, the leading Chinese tin miner who went on to become the Federation's first Finance Minister in 1956.

64 See White, Business, Government and the End of Empire, ch. 4.

65 In an otherwise admirable study of the administrative, economic, political, and social aspects of the guerilla war, Stubbs, Richard has probably underplayed the “economic card”. Hearts and Minds in Guerilla Warfare. The Malayan Emergency, 1948–60 (Singapore: Oxford University Press, 1989).

66 Sel Sec 1068/51, “Memorandum, 10 May 1951”.

67 Rudner, “Rubber Policy During the 1950s”, p. 245; see also his “The State and Peasant Innovation in Rural Development: The Case of Malaysian Rubber” and “Malayan Quandary: Rural Development Policy Under the First and Second Five-Year Plans”, in Readings on Malaysian Economic Development, ed. Lim, David (Kuala Lumpur: Oxford University Press, 1975), pp. 321–31, 80–88.

68 Studies which have emphasized the power of British capital in this period include Puthucheary, James, Ownership and Control in the Malayan Economy (Singapore: Donald Moore for Eastern Universities Press, 1960); Jen, Li Dun, British Malaya. An Economic Analysis (Kuala Lumpur: Institut Analisa Sosial, 1982; first published New York: The American Press, 1955); Jomo, K.S., A Question of Class: Capital, the State and Uneven Development in Malaya (New York: Monthly Review Press, 1988).

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The Frustrations of Development: British Business and the Late Colonial State in Malaya, 1945–57

  • Nicholas J. White (a1)


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