Java. The sugar industry and its scripophily

By Michael Fraikin

Published January 2, 2021

Last Change April 25, 2023

As the other articles in the series this is meant to provide an overview of the evolution of the sugar industry in the region and of the topic from a scripophily perspective. The information on the Javanese industry is very largely based on Roger Wiseman's phd thesis "Three Crises. Management in the Colonial Java Sugar Industry". I would also like to thank Joost Veldman who not only spent part of his life in Indonesia but is also a long-time collector of Dutch-Indies scripophily and a plantation industry veteran for his very helpful comments.

It is not precisely known when sugar cane was introduced to the island of Java that is now part of Indonesia but that certainly happened before contact with Europeans and possibly some variants of the plant may have been growing on the island before the arrival of humans. But it is known that the Dutch East Indies Company (V.O.C.) encouraged its local cultivation by releasing land to Chinese sugar manufacturers. As early as around 1710 there were some 130 sugar mills owned by more than 80, mostly Chinese, entrepreneurs in the area around Batavia. Because the producers were obliged to deliver the sugar to the V.O.C. the industry did not really develop and even almost completely disappeared in the Napoleonic era.  The growth of a major industry began in the 19th century under British and Dutch administration. By the end of the 19th century Java was the largest sugar producer from cane in the world (670,000 tons in 1901) and retained an important position up to the Japanese occupation during WWII. After the war and independence the importance of the island dwindled and today Indonesia is relying on imports to meet much of its sugar demand - partially also because Indonesians are said to have a sweet tooth - soft drinks are sweeter there and the famous clove cigarettes have sweetened filters.

Typical examples of scripophily from sugar companies active on Java from one of the early pieces to independent Indonesia

Whilst some aspects of sugar production are universal and broadly the same for cane and beet sugars the cultivation of cane is totally different and Java was in some ways unique. Initially the British who were in possession of Java during the Napoleonic wars distributed land to sugar planters who initially and in keeping with the times ran quite small and artisanal operations - at least seen from a later perspective. The Dutch from 1816 ran the sugar economy differently - the colonial administration was from 1830 under the "Cultivation System" responsible for growing and harvesting of cane and its delivery to the privately owned factories which in turn had to deliver a sugar quota for export to the government. The land on which the cane was grown was owned by local farmers and its purchase by the companies or by "Europeans" was prohibited. From 1870 this system was being phased out and the companies were themselves increasingly running the planting and harvesting as well as the selling of sugar. What however remained was a requirement to rent land from Indonesian landowners and throughout the period and different from all other countries I have come across there was a legal requirement to have alternation of crops - which meant that companies had to restore the land after each harvesting to be ready for an alternate use - usually rice. One problem for the industry all over the world - competition for raw material - was solved by the colonial administration that created zones for each factory in which only that factory was allowed to grow cane. New factories were set up only on new territory or when swamp land was made fit for agriculture. Whilst there is no doubt that Java and its inhabitants were exploited there were no slaves during the periods nor indentured labourers or people imported into the country to work on the plantations and land ownership remained with Javanese.

Whilst the overwhelming majority of factories were owned by Dutch corporations and families a notable minority was owned by Chinese families and two factories by an Indonesian princely family (the so called principalities differed from the rest of Java in a number of ways and effectively retained a feudal system into the 1920s). Virtually all however were managed by "Europeans" - often newcomers from the Netherlands with advanced education and technical trainig - which was only later also available to a quite limited degree in Java. There were also experts and entrepreneurs coming from other European countries including the leading manufacturer towards the end of the 19th century - Germany. An apparent exception were teams of Chinese sugar cookers who were masters of their art and worked in closely knit teams. Before and especially after WWI Japanese capital also began to play a role.

For all the 19th century and at least up to the Japanese occupation sugar companies on Java - like everywhere else - tended to become larger, more efficient and more technologically advanced. Whilst the average factory of the year 1900 would have produced about 3500 tons sugar annually its German equivalent would have produced about 5000 tons. This however still means that the Javanese companies were on average very large enterprises in their area and compared to most other countries growing cane. Approximately 90,000 permanent staff and 1 million temporary staff  would have worked in the industry around the year 1900.

Growing cane and producing sugar from it was a very capital intensive business. The required machinery, the workers and the land needed to be paid for and the comparatively long growing period of cane meant that any sugar sales would only come in much later - creating a large financing requirement. Whilst initially virtually all factories were privately owned this later evolved for a number of reasons. On the one hand companies grew and increasingly needed more professional management and on the other it seems that the families that initially frequently lived on-site tended to prefer living either in cities on Java or in the Netherlands and of course the growth of the industry attracted fresh capital - usually from the Netherlands. A system where capital intensive companies operate in a cyclical industry and have limited access to fresh capital - as privately owned companies typically do - is inherently unstable. Significant falls in sugar prices or drops in volumes would create crises.

Differentiation evolved. The ownership, the management and the financing of the factories could be with different participants who increasingly spread across factories and across functions. Initially the owners would practically always operate the factories (and typically only one) and be financed by a specialist company.

In 1884 the global industry ran into trouble. The rapid expansion of beet sugar production in beet growing countries like Germany, Austria-Hungary and Russia led to a collapse in prices. This wreaked havoc on Java (and practically everywhere else) as far as the sugar industry is concerned. As a consequence many factories were unable to service their debts and came to be owned at least in part by financing companies or by newly established owning companies and over the next decades increasingly factories went from being owned by families to being owned and run by corporations. In the aftermath the Javanese industry was troubled by a disease of the cane plant - Sereh - causing significant losses to the affected plantations.

The six major financing companies (Cultuur Mji der Vorstenlande, Handelsvereeniging "Amsterdam", Internatio, Koloniale Bank, Nederlandsche Handel-Mji, and Nederland-Indische Landbouw Mji) - to varying degrees - moved from financing other enterprises to owning and running companies and typically financed their owned or partly owned factories. At the same time corporations sought to own and operate an increasing number of factories unlocking operational and management synergies. So the industry moved from being run by sole proprietors to being dominated by a number of large corporations - that nevertheless remained far from individually controlling the industry. Unlike in other countries sugar exporters played only a smaller role. Specialist plantation companies also existed but were a very marginal phenomenon.

The next major crisis occured during WWI. Initially rising prices were a boon to the industry - but then a severe decline in availabe shipping caused prices to collapse and required expensive storage capacity to be built and run. In the aftermath of WWI the Norwegian trading company "Det Oversöiske Compagnie" became the most attractive (from a scripophily perspective) victim of the price gyrations. Speculative purchases of two subsidiaries active on Java initially coincided with rising prices but then caused the downfall of the parent company in 1921 when prices fell.

The Great Depression in the late 1920s and 1930s again caused major economic decline and hardship. A large number of factories closed, companies at least stopped paying dividends and many collapsed. In response the colonial government tightly regulated production and trade. When at last recovery set in in the second half of the 1930s the industry slowly recovered but approximately half the factories never reopened. WWII and Japanese occupation put a stop to that. The Japanese interned "Europeans" (and with that practically all management) and demolished a number of factories. The Dutch were not able to reimpose their rule on Indonesia after WWII and in the second half of the 1950s Dutch-owned sugar companies were nationalised. As far as I am aware none of the companies of the time has survived producing sugar to today - but I can certainly see evidence for their continued - at least legal - existence after 1945. However I have only few Indonesian (ie companies incorporated in Indonesia) examples in my collection.

The vast majority of Javanese sugar was exported - first to Europe - later and especially after the 1902 Brussels convention that restrained protection and export subsidies increasingly to British-India. By 1920 most of the sugar exported was "white" ie refined sugar and had a high reputation for quality.

In terms of scripophily we can find most types of securities known to Dutch enterprises also issued by sugar companies active on Java. A clear majority of the companies was seated in the Netherlands (usually Amsterdam or The Hague) the remainder was seated in Java (usually Semarang or Surabaya). Compared to typical Cuban, Czech or early German pieces they are quite sober - with the borders usually the only decorative element.

Let us look at some pieces as illustrations of the type of securities: a "Bewijs van Aandeel" (a share) issued by Suikeronderneming Koning Willem II in 1891 (a) - In my view the most decorative Dutch-Indies piece,  a "Bewijs van Deelgerechtigdheid" (a type of hybrid equity security) issued by Cultuur-Ondernemingen van E. Moormann & Co in 1921 (b), the specimen of an Obligatie (a bond - these were rarely issued as securities) issued by Cultuur-Matschappij "Tangkil" in 1896 (c), a Winst-Aandeel (profit share) issued by Cultuur-Matschappij "Wonoredjo" in 1900 (d) and finally a "Certificaat" issued in 1920 representing 1/10th of a share issued by Javasche Cultuur Maatschappij (The "certificaats" in this case are effectively "Dutch Depositary Receipts" issued by an administration company). There are also other types such as a "Recepis" (acknowledging subscription payments - example below) or "Claim Coupons" that give the entitlement to participate in the raising of new capital (example here).

Samples of security types

The pieces were as far as can be seen printed in the Netherlands for companies seated in the Netherlands and

 in Java for those seated there - with very few exceptions. By far the most frequent printing company was Amsterdam printer J.H. de Bussy also publisher of yearbooks for the Javanese sugar industry. Many pieces however do not state the printing company. Almost none of the Dutch-Indies pieces in my collection have any vignette (for an exception see the 1952 vignette of the Cultuur-Maatschappij "Pradjekan-Tangarang" share on the right) and most are monochrome - however they are quite attractive when looked at closely and there is some clear evolution as can be seen in the collection of ornate borders on the pieces and arguably the Java-designed pieces are possibly slightly simpler:


For many companies unissued specimen have survived. Most but not all of them come from the archives of Amsterdam printing company De Bussy who marked them with numbered stamps as can be seen here - for many companies the only surviving material. On a number of occasions the original certificates were lost and replaced with duplicates - sometimes from the original issue (this could be almost 50 years old by then as in this case) sometimes from later issues (example here) as appropriate.

Whereas in many countries pieces in more than one language are common, in the Dutch-Indies context I have come across something unusual: pieces that have been translated into English - for functionally the same thing. Maybe even more perplexing is that there are material differences at least in one example (below). Whereas the Dutch "Recepis" promises four bonus shares for subscribing to four shares - the English share subscription promises one bonus share for the subscription of two shares. I do not know whether this was a mistake or represents different stages of the genesis of the issuance process or whether there is yet a different explanation.

It is not precisely known how many different securities from how many companies have survived or how many existed to start with. My collection currently has over 200 securities from 76 different companies. There were 185 sugar factories in 1912 of which 166 belonged to corporations - but quite a few corporations owned more than one factory. In 1921 there were 113 entities owning 183 factories. By 1930 9 corporations owned 48 factories. Javanese sugar company's certificates are - I believe - a collection opportunity. The more common securities will trade for around 10 Euros and many will be available for 20-30 Euros. Rarely will any cost close to or above 100 Euros. Given that this is a clearly defined area with available material limited to likely less than 100 issuers and at the same time many securities issued in the 19th or early 20th century and it also has an exotic catch to it and in its hey-day was of global importance I think this clearly has potential - especially if one day Indonesians should discover it.