1. Administration in 1900. The administrative machinery which had served well enough for a policy of laisser-faire in Java was quite inadequate for a constructive policy of building up human welfare throughout the archipelago, and quite unsuited for the creation of an autonomous state; the present century has seen therefore a rapid succession of reforms, revisions, readjustments (hervorming, herziening, herschikking) which many officers who have survived them seem to regard as a wakeful nightmare that has never let them go to sleep. Before describing the reforms it may be well then to recall the administrative system at the beginning of the century.

The supreme authority rested with the Colonial Minister responsible to Parliament. In India government was vested in the Governor-General, but in legislation and certain other matters he was required to consult, and ordinarily to act with, the Council of India, comprising a Vice-President and four Members, all officials. The several branches of civil administration were distributed among five Departments: Internal Administration; Education, Religion and Industry; Civil Public Works; Finance; and Justice. The law provided for a Council of Directors, but in fact their opinion was taken in writing and they never met for mutual discussion. The machinery of central administration comprised also the General Chamber of Accounts, and the Secretariat. The administrative Civil Service, which was quite distinct from the Secretariat, was distributed territorially, and included distinct European and Native Services, in different cadres and with different functions.

1. Fall of Van den Bosch. By 1850, the succession of famines in India, the stagnation of production and consumption, and the slower rate of increase of the European population were all signs that the impulse to production given by the Culture System was fading; but new developments in the Netherlands, in shipping, commerce and manufacture, showed that private enterprise was ready to take its place. The Culture System was passing, not because it failed, but because it succeeded, and not because of distress in India, but because of a new balance of power at home; it had achieved all that Van den Bosch had promised, in Europe as well as in the East. In India few could, or dared, criticize it, but in the Netherlands it had called into existence a politically-conscious Liberal middle class, increasingly dissatisfied with the financial administration, first in Europe and then in the Colony; this class aimed originally at obtaining the power of the purse at home and, later, at obtaining control over colonial profits. During the period of transition there were three stages: (i) Liberal Opposition to the Crown (1840–48); (ii) Liberal Opposition to the Colonial Government—the“Colonial Opposition” (1848–62); and (iii) the triumph of Liberalism (1862–70).

In 1815 the Dutch had willingly given William a blank cheque, and, up to 1830, even his lavish expenditure did not shake their confidence; but when, after eight years of war and an addition of f. 300 million to the burden of debt, he was compelled in April 1839 to arrange terms with Belgium rather less favourable than he could have had in 1830, his people were more critical.

1. The New Economic Constitution. In 1900, after fifty years of Liberalism, production for export was almost confined to Java, almost wholly agricultural, and almost wholly Dutch; capitalist investments in India were on a small scale and almost entirely the surplus profits of local Dutch enterprise; agricultural production had made great progress, but despite a rapid growth of planting enterprise, there was little variety of produce, and the native contribution towards agricultural production for export, except as manual labourers, was negligible; mineral development was in its infancy and industrial development was still less advanced; commerce and banking, after a brief period of prosperity, were stagnating, with the wholesale business and banking proper in European, and mainly in Dutch hands, with Chinese as middlemen and money-lenders, and with the Natives restricted to petty retail trade.

When the depression of 1900 gave the death-blow to the policy of laisser-faire the new ethical or constructive policy aimed at changing all this; at developing the Outer Provinces as well as Java, and at utilizing the resources of the State to further economic progress, not only in agriculture, but in mineral production and in industry and commerce, both directly by State enterprise, and indirectly by building up material wealth and human welfare. Van Deventer announced the theme with a triple programme of Irrigation, Emigration, Education, and Idenburg and his successors at the Colonial Office, together with Van Heutsz and subsequent Governors-General, re-echoed it in elaborate variations, gradually working out a comprehensive project of wealth and welfare by developing the soil, the forests and the mines, and encouraging agriculture, industry and commerce, and especially by promoting the advancement of the people through education, improving public health, providing credit facilities, and protecting the peasant and labourer against exploitation by the capitalist.

1. Introduction. The brief survey which we have just attempted of economic progress in Netherlands India during the present century should illustrate, however inadequately, the energy and success with which the Dutch have applied themselves to discharging one part of their task under the “dual mandate” thrown on them by the course of history—their duty to the world in general of developing the natural resources of this region, la richesse naturelle. We must now attempt a more difficult undertaking, a survey of their efforts and achievements in the other part of the dual mandate—their duty to their subjects of developing la richesse humaine, the human wealth of the peoples for whom they have incurred responsibilities.

At the beginning of the century it was expected, or at least hoped, that the Ethical programme would act like a new Culture System, no less effective for the advancement of the people than that of Van den Bosch for the cultivation of the soil. The main objects of the Ethical policy were to stimulate the material welfare of the people, to strengthen the native social order, and to promote the unification of society. These ends became even more directly the objective of the policy of autonomy, and it is the progress which has been achieved under these heads that we must now try to appreciate.

1. The Theory of the Culture System. When Van den Bosch landed in Java in January, 1830, he had little more than a general idea of what he intended. His two sets of instructions, one secret for him alone and one for the High Government, had been discreetly drafted by Baud with one eye on Elout. For the most part they dwelt, naturally, on the importance of economy, as, for example, by the constitution of local councils to relieve Government of expenditure on local amenities; they also urged the importance of repressing disorder and of attaching the natives to Dutch rule not only, after the customary formula, by protecting them against arbitrary treatment and ill usage but, possibly, by the cautious encouragement of Christianity. They turned chiefly, however, on the increase of production; Van den Bosch was to aim at raising the production of export crops over the whole country to the level of the Preanger, where it was estimated to yield f. 5 per household. They appeared also to impress on him the importance of encouraging European enterprise, but, read between the lines, told him in effect not to encourage it too freely to the detriment of State cultivation; this direction was in fact “a subterfuge” by which Baud dexterously circumvented the probable opposition of Elout.

1. The New Colonial World. By 1900 Liberalism was an outworn creed. But yet it had not failed, any more than the Culture System failed. Just as the Culture System, created by the genius of Van den Bosch to meet the needs of 1830, was swept away by the forces which it called into existence, so was it with the Liberal System, originating in the needs of 1870. It released forces, moral and material, creating a new colonial world, which teemed with problems that on Liberal principles were insoluble.

In this new world the balance of economic power in Java no longer lay with Government but with private capital. In 1870 the few wealthy planters were isolated individuals, but in 1900 the far larger and far wealthier non-official community was directed by a few powerful corporations which could easily take common action to protect their interests; the economic structure was no longer individualist but capitalist. Colonial capital had furnished a Governor-General in s'Jacob (1881–84) and a Colonial Minister in Cremer (1897–1901), and it dominated the whole administration, from the Council of India to the village headman. In 1870 the planters looked to the States-General for support against the Indian Government, but in 1900 colonial capital, closely linked up with capital at home, was impatient of control by the States-General; except for the check of public opinion in the States-General it was all-powerful.

1. The Coming of the Dutch. When, for a second time, it seemed that political and economic power in the archipelago would pass to Islam, the course of events was changed by the arrival of the Dutch. The Dutch never wanted to come East; they were forced to come by the policy of Philip, who profited by his succession to the throne of Portugal in 1580 to close the Portuguese harbours to his rebellious Dutch subjects. This was a grievous blow. For close on a hundred years the Dutch fleets, sailing with their cargoes of herring to the Mediterranean, had brought back from Portugal spices and other tropical produce for the peoples of northern Europe, and these luxuries had become a necessary means of livelihood to the Dutch merchants. Despite the orders of Philip and the protests of their English allies, the Dutch went on trading for some years but, when they found themselves subject “to arrests and all manner of unbearable tyrannies by the King of Spain”, they were compelled to seek new harbours. They tried to make the Indies by the western route, but the English freebooters, Drake, Frobisher, and others, did them more mischief than the most formidable of the Spanish captains. Even after, as Dutch children still learn at school, they had defeated the Armada, they preferred the hazards of the frozen North to challenging the power of Spain in southern seas; not until a succession of disasters frustrated their attempts to find a north-east passage to India did a few merchants of Amsterdam resolve to risk the dangers of the southern route.

1. The Economic Environment. The year 1870 stands out in red letters in the chronicles of Netherlands India by reason of the Agrarian Law and Sugar Law, but it stands out even more conspicuously in world history by the revolution in economic relations, and therefore in social and political relations, between East and West which followed on the opening of the Suez Canal. The 'sixties were notable for improvements in communications : telegraphy, opened to the public in 1856; a modern postal service, inaugurated in 1862; the first few miles of railway in 1867; and on the high seas steamers were beginning to threaten the supremacy of the new clipper sailing ships. But the completion of the Suez Canal in 1869 changed the whole economic environment of Netherlands India, and the great achievement of Liberalism was that it enabled the Netherlands to profit by the change.

2. Economic Policy. From 1815 to 1870 the Dutch were struggling against adverse circumstances to develop the potential wealth of Java to the profit of the Netherlands. Muntinghe, Du Bus and Van den Bosch all agreed in regarding the colony as a staatsbedrijf, a State enterprise; it was the old tradition of Dutch government, both in Europe and in the East. They agreed also that a policy of laisser-faire would lead to an expansion of the area under rice and a growth in imports, but in imports of British goods, with a growing preponderance of British influence; and they held that some plan therefore was necessary for the protection of Dutch interests.

1. The Revolution. In 1795 the constitution of the United Provinces, designed originally to maintain a balance of power between rival States leagued against a common enemy, had come to represent a balance of privilege between the Stadhouder and the hereditary civic aristocracy, the Regents. But during the eighteenth century the Republic, which had withstood the arms of France, surrendered to its culture, its musicians and dancing-masters, cooks, barbers and philosophers. Montesquieu, with his clear and logical doctrine of the division of power between Legislature, Executive and Judiciary, lighted up the shadows of the unwieldy constitution; Voltaire taught men to scoff at privilege, and Rousseau proclaimed the sovereignty of the people. Under the impact of these ideas the age-long struggle between Stadhouder and Regents took a fresh turn, and a new party, claiming to be Patriots, further complicated civic strife by introducing a democratic element, which inclined alternately to one side or the other, and opposed the privileges of both.

The Patriots, though disunited, were agreed on preferring France to England, whereas the Stadhouder, William V, had English sympathies, and, as the outcome of a disturbance in 1787, many Patriots had to seek refuge in France. Among these was Daendels, who was destined to imprint his strong personality on Java. In 1792, when the Jacobins declared war on the United Provinces, Dumouriez, accompanied by Daendels at the head of a Batavian Legion, proclaimed that he was coming to help the Dutch shake off the yoke of Orange;“we shall pass through your rich provinces” he said, “as friends and brothers”.

1. Plural Societies. No one can be so conscious as the present writer of the inadequacy of this attempt to trace the development of social and economic life in Netherlands India, so manifold are its aspects, and so voluminous the material which the zeal and industry of the Dutch have placed at the disposal of the student; but it may be permissible to hope that this study has served at least to throw into relief the interest which attaches to Netherlands India as an example of a plural society; a society, that is, comprising two or more elements or social orders which live side by side, yet without mingling, in one political unit. In this matter Netherlands India is typical of tropical dependencies where the rulers and the ruled are of different races; but one finds a plural society also in independent states, such as Siam, where Natives, Chinese and Europeans have distinct economic functions, and live apart as separate social orders. Nor is the plural society confined to the tropics; it may be found also in temperate regions where, as in South Africa and the United States, there are both white and coloured populations. Again, one finds a plural society in the French provinces of Canada, where two peoples are separated by race, language and religion, and an English lad, brought up in an English school, has no contact with French life; and in countries such as Ireland where, with little or no difference of race or language, the people are sharply divided in their religious allegiance.