Manajemen | Fakultas Ekonomi Universitas Maritim Raja Ali Haji 00074910600632369
Bulletin of Indonesian Economic Studies
ISSN: 0007-4918 (Print) 1472-7234 (Online) Journal homepage: http://www.tandfonline.com/loi/cbie20
Surplus mobilisation in farm agriculture: A
comparison of Java and Japan, 1870–1940
Pierre van der Eng
To cite this article: Pierre van der Eng (2006) Surplus mobilisation in farm agriculture: A
comparison of Java and Japan, 1870–1940, Bulletin of Indonesian Economic Studies, 42:1,
35-58, DOI: 10.1080/00074910600632369
To link to this article: http://dx.doi.org/10.1080/00074910600632369
Published online: 18 Jan 2007.
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Date: 18 January 2016, At: 21:40
Bulletin of Indonesian Economic Studies, Vol. 42, No. 1, 2006: 35–58
SURPLUS MOBILISATION IN FARM AGRICULTURE:
A COMPARISON OF JAVA AND JAPAN, 1870–1940
Pierre van der Eng*
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Australian National University
This paper compares the degree to which farm agriculture surpluses in pre–World
War II Java and Japan were mobilised for non-agricultural investment through taxation, landlordism and private savings. It also compares government efforts in both
countries to spur productivity and farm income in rice agriculture through improvements in irrigation structures and the development and dissemination of seedfertiliser technology. The pressure of the land tax, the spread of tenant farming, and
the degree to which rural savings were deposited were significantly lower in Java
than in Japan. Pre-war conditions in rice agriculture were less conducive in Java than
they were in Japan to the development and dissemination of seed-fertiliser technology, which could spur farm productivity and contribute to surplus mobilisation.
INTRODUCTION
One of the foundations of Japan’s rapid economic development during the 20th
century was established during the Meiji era (1868–1912). This was the acceleration
of agricultural development, particularly in rice farming, to facilitate the production of a surplus of agricultural produce over what was required for subsistence.
Hayami et al. (1991: 5) concluded: ‘Such institutions as the land tax and landlordism served to squeeze agricultural surpluses out to the non-agricultural sector.’
The surpluses were invested in non-agricultural production, particularly manufacturing, and thus helped to trigger the process of modern economic growth in
Japan. At the same time, government support of rice farming contributed to a
rapid increase in agricultural labour productivity and assisted in narrowing the
rural–urban income gap. Although challenged by scholars such as Francks (1992:
149–57), who called for greater attention to the dynamic rather than passive participation of farm households in this process through off-farm employment, this
argument is still predominant in Japan’s historiography.
The core Indonesian island of Java was in several ways comparable to Japan
before World War II. Among the similarities were high population density, high
economic dependence on irrigated rice agriculture, and a mountainous geography. The Dutch colonial government established a range of services to further
*
I am grateful to Kees van der Meer, Anne Booth, Toshihiko Kawagoe and two anonymous referees for their comments on earlier versions of this paper.
ISSN 0007-4918 print/ISSN 1472-7234 online/06/010035-24
DOI: 10.1080/00074910600632369
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Pierre van der Eng
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the development of farm agriculture, including irrigation improvements and
facilities for agricultural research, extension and education (Cribb 1993).1 These
seem to be similar to the services that facilitated agricultural development in
pre-war Japan.
Supported by the intersectoral transfer of resources from agriculture, Japan
experienced an almost continuous process of growth during and after the Meiji
era. Its real GDP per capita grew at an annual average of 1.9% between 1870 and
1940, compared with 0.8% in Indonesia (Maddison 1995: 196–7, 204–5). Given the
noted similarities between Japan and Java, this paper seeks to establish whether
the policies that furthered productivity improvement in farm agriculture and sustained intersectoral surplus transfer in Japan had the same effect in Java. Any
sweeping comparison is difficult, because the two countries are not comparable
in other respects that impacted on their development experience.
The next section discusses a few basic similarities and differences between prewar Java and Japan, including productivity in agriculture. The following section
elaborates the role of the land tax in mobilising the surplus, and the next does the
same for the level of land rent paid by tenant farmers to landlords. The paper goes
on to explain why, despite similarities, policies aimed at furthering farm agriculture had a more profound impact in Japan than in Java.
SOME SIMILARITIES AND DIFFERENCES
Table 1 indicates that the population of Java was always smaller in the study
period than that of Japan. Population density on land used for agricultural purposes was much lower in Java than in Japan, with Java reaching levels in the 1970s
that were comparable with those of Japan in the early 1900s. In Japan arable land
barely increased, while Java’s land surplus did not run out until the 1930s.2 The
level of GDP per capita in Japan and Indonesia was comparable in the 1880s. A
higher rate of economic growth in Japan resulted in increasing divergence in the
GDP per capita of the two countries after 1890.
Table 2 shows that structural change was slower in Indonesia than in Japan: agriculture remained more important in Indonesia’s economy than in Japan’s, in terms
of both employment in Java and country-wide output. This suggests that Japan’s
pre-war growth was based more on the development of the non-agricultural sectors, particularly manufacturing, while Indonesia’s depended to a greater extent on
the production of agricultural commodities for export and domestic consumption.
1 This paper uses the term ‘farm agriculture’ to distinguish agricultural production by
farm households from that of plantations in Java. The distinction between the two is based
on legal terms, as the largely foreign-owned plantations were not allowed to own land, but
could only rent farm land or hold 75-year leases. Plantation companies faced a very different operating environment from farm households, and are for that reason excluded from
the analysis in this paper. Any concern about the interaction between plantation sugar cane
production and farm agriculture may be allayed with the observation that in 1931 a maximum of just 6% of all irrigated land was under sugar cane in the whole of Java (Van der
Eng 1996: 52–3). Most was land rented from farmers, who thus worked 94% of all irrigated
land or 97.5% of all farm land in Java.
2 Population density in the whole of Indonesia’s Outer Islands remained stable throughout, owing to the vast land reserves.
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Surplus mobilisation in farm agriculture: Java and Japan, 1870–1940
37
TABLE 1 Some Economic Variables Comparing Java/Indonesia and Japan,
1880–1990
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Population
(millions)
People per Hectare of
Arable Land
GDP per Capitaa
(1985 PPP dollars)b
Java
Japan
Java
Japan
Indonesia
Japan
1880–89
24.1
36.6
4.9
7.7
530
561c
1890–99
27.3
39.9
5.1
8.1
537
660
1900–09
30.8
43.8
4.9
8.4
575
753
1910–19
40.0
49.2
5.0
8.8
699
918
1920–29
39.4
55.5
4.7
9.2
818
1,140
1930–39
44.3
64.5
4.9
10.8
844
1,339
1940–49
49.6
71.9
5.5
11.7
610
1,421
1950–59
56.3
83.2
6.0
14.2
773
1,718
1960–69
67.3
93.4
6.9
15.4
850
4,090
1970–79
81.8
103.7
8.5
17.9
1,179
7,763
1980–89
98.8
117.1
11.1
21.4
1,582
10,754
1990–94
110.4
123.6
12.3
23.6
2,349
13,798
a Ten-year averages.
b PPP = purchasing power parity.
c 1885–89.
Sources: Population, Japan: Japan Statistical Yearbook. Arable land, Japan: Hayami et al. (1979), Asian
Productivity Organization (1987), Japan Statistical Yearbook. Population and arable land, Java and Indonesia: Van der Eng (1996), appendices 3 and 4, updated. GDP, Japan: 1885–1940, Ohkawa et al. (1974),
p. 227; 1941–53 linked to Maddison (1995), p. 183; 1954–94 linked to GDP(Q) from Annual Report on
National Accounts of Japan. GDP, Indonesia: Van der Eng (1992), pp. 343–73, updated from Pendapatan
Nasional Indonesia. 1985 benchmark GDP: Summers and Heston (1991).
Table 3 reveals that pre-war land productivity was 2–3 times higher in Japanese agriculture than in Javanese. The main explanation is Japan’s higher population density, which is reflected in the much lower land–labour ratio. This implies
that, in order to achieve the same or a higher level of labour productivity, production per hectare had to be much higher in Japan than in Indonesia. Given the
increase in population density in Japan, farmers were compelled to augment land
productivity in order to meet domestic demand. This did not become urgent in
Java until the 1930s, after the land frontier had been reached and the decline in
the land–labour ratio accelerated. The gradual increase in the land–labour ratio
in Japan suggests that the agricultural sector was then already shedding labour,
while in Java the sector continued to absorb labour.
Labour productivity in farm agriculture was at comparable levels in Java and
Japan in the 1880s (table 3). It increased in Japan, but stagnated in pre-war Java,
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Pierre van der Eng
TABLE 2 Shares of Farm Agriculture in the Economies of Java/Indonesia and Japan,
1880–1995
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Employmenta
GDPb
Java
Japan
Indonesia
Japan
1880
75.0
72.6
43.5
41.3c
1900
75.0
66.5
39.8
33.8
1920
75.0
52.1
34.2
26.8
1940
72.3
42.0
29.7
13.8
1960
66.6
31.2
34.1
8.8
1980
51.0
9.6
22.4
2.3
1995
38.4
5.4
15.2
1.5
a Plantation employment in Java could not be excluded from agricultural employment data. Its share
of agricultural employment was 3.6% in 1905 and 7.9% in 1930, but this includes employment in
processing of agricultural commodities, such as in sugar factories (Van der Eng 1996: 209).
b Share of agriculture calculated from GDP in constant 1983 prices for Indonesia and constant 1934–36
prices for Japan. Agriculture includes fisheries and forestry in the case of Japan and refers to farm
agriculture only in the case of Indonesia, except for 1995.
c 1885.
Sources: Agricultural employment, Japan: 1880–1905, Ohkawa and Shinohara (1979); 1906–40, Ohkawa
et al. (1988), pp. 204 and 210; 1950–95 (population engaged in farming), Japan Statistical Yearbook. Total
employment, Japan: 1880–1940, Ohkawa et al. (1988), pp. 196–200; 1950–95, Japan Statistical Yearbook.
GDP, Japan: 1885–1940, Ohkawa et al. (1974), p. 227; 1940–54, GVA (gross value added) in agriculture
linked to Hayami et al. (1979), pp. 252–3, and total GDP linked to Maddison (1995), p. 183; 1954–95,
GVA in agriculture and total GDP linked to Annual Report on National Accounts of Japan. Employment,
Indonesia: Van der Eng (1996), appendix 3, updated from BPS (1996). GDP, Indonesia: Van der Eng
(1992), updated from Pendapatan Nasional Indonesia.
where increasing land productivity facilitated the absorption of labour in agriculture. Japan surged ahead particularly from the 1950s, when its labour-absorbing
industrialisation resumed. In contrast, Java took time to recover from the setback
of war during the 1940s, at a time when its industrialisation was modest and its
population growth accelerating. Even during the 1980s, labour productivity in
agriculture in Java still lagged more than 60 years behind that of Japan.
Apart from differences in the role of farm agriculture, there are other differences that need to be mentioned, even though it is not possible to indicate exactly
how relevant these factors are to explaining the diverging paths of agricultural
and economic development in the two countries.
Overland transport facilities in Japan had improved considerably during the
Tokugawa (1600–1868) and early Meiji periods, and this enhanced economic integration (Minami 1994: 20–2). Improvements in transport facilities in Indonesia
were largely restricted to Java, but even by 1880 large parts of Java were still land-
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Surplus mobilisation in farm agriculture: Java and Japan, 1870–1940
39
TABLE 3 Productivity in Farm Agriculture in Java and Japan, 1880–1994a
Gross Value Added from Farm Agriculture
(1980 PPP dollars)b
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Per Worker
Per Arable Hectare
Arable Hectares
per Worker
in Farm
Agriculture
Java
Japan
Java
Japan
Java
Japan
1880–89
259
241
366
780
0.71
0.31
1890–99
254
283
383
883
0.66
0.32
1900–09
260
337
400
1,008
0.65
0.33
1910–19
278
433
423
1,136
0.66
0.38
1920–29
261
527
411
1,215
0.64
0.43
1930–39
266
580
439
1,312
0.61
0.44
1940–49
232
489
402
1,163
0.58
0.42
1950–59
239
541
439
1,363
0.54
0.39
1960–69
264
871
513
1,732
0.52
0.50
1970–79
340
1,227
691
1,758
0.49
0.69
1980–89
487
1,505
1,073
1,789
0.45
0.84
1990–94
547
2,089
1,265
1,813
0.43
1.14
a Agricultural output excludes fisheries and forestry, and excludes plantation agriculture in Indo-
nesia. Ten-year averages.
b PPP = purchasing power parity.
Sources: Employment, arable land and real GVA in agriculture, Japan: Hayami et al. (1979), Asian
Productivity Organization (1987), Japan Statistical Yearbook, Annual Report on National Accounts of Japan.
Employment, arable farm land and real GVA in agriculture, Indonesia: Van der Eng (1996), appendices
3, 4 and 1. Agricultural productivity, Japan and Indonesia, linked to a 1980 benchmark estimate of total
GVA in agriculture, converted using 1980 agricultural PPPs in international dollars from Rao (1993),
p. 62. The 1980 GVA benchmark for Indonesia is from the 1980 Input–Output Table (Rp 9,826 billion);
the 1980 share of plantations (7.4%) from Pendapatan Nasional Indonesia was deducted and the remainder allocated to Java with the latter’s share in total regional GDP in agriculture (excluding plantation
agriculture) in Indonesia of 58.05% in 1983 from BPS (1993). The 1980 GVA benchmark for Japan is from
Annual Report on National Accounts of Japan (¥5,823 billion).
locked, and overland transport was difficult and slow. The construction of roads,
railways, bridges and port facilities, and the opening up of rural Indonesia did
not start effectively until after 1890 (Knaap 1989).
Japan was well ahead of Indonesia in terms of education. In Japan, 28% of
children aged 6–12 years went to school in 1873, 41% in 1880 and 81% in 1900
(HSJ 1987, Vol. 5: 212). In Indonesia, 2% of children aged 6–10 years (in all ethnic
groups) attended primary education in 1900, 6% in 1910, 15% in 1920 and 40% in
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Pierre van der Eng
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1941.3 Hence, farming communities in Japan may have been more receptive to
written information as part of agricultural extension efforts than was the case in
Indonesia (see below).
The rate of urbanisation was much higher in Japan. In 1898, 13% of Japan’s
population was living in cities of more than 20,000 people; in 1920 the figure was
23% and in 1940 42% (Bank of Japan 1966: 14–15.) In Indonesia, only 6% of the
population was living in urban areas in 1920, 8% in 1930, 15% in 1961 and 22%
in 1980 (Hugo et al. 1987: 89). Generally, the higher the rate of urbanisation, the
higher is the demand for food in the non-agricultural sectors of the economy. Consequently, the domestic incentive for surplus production in agriculture may have
been higher in Japan than in Indonesia.
It can be argued that Japanese society was more homogeneous than that of Java,
and certainly than that of Indonesia as a whole. By 1880 Japan had a centralised
political system. Its central government could effectively encourage the acceleration of economic development by appealing to fears of being colonised (Hayami et
al. 1991: 63). The expansion of Dutch colonial rule throughout Indonesia was not
completed until the end of the Aceh war in 1904, while national political integration took much longer. Many areas in the Outer Islands were only lightly touched
by colonial rule. Others remained under indigenous princely rule, and were only
indirectly governed by the colonial administration. It is no exaggeration to suggest that the Japanese people were accustomed to personal self-sacrifice, diligence
and communal cooperation for the benefit of overlords. Despite its feudal origins, hard work continued to be a civic virtue in Japan (Hirashima 1980: 139). The
central government could appeal to such traits when it introduced measures to
accelerate economic development. Diversity and the fact that a colonial government acted as the unifying force in the country restricted the effectiveness of such
appeals in Indonesia.
These differences suggest that Japan was better prepared than Indonesia for
rapid economic change. There are other relevant differences. For instance, population growth in Japan has always been low, while Indonesia struggled with
accelerating population growth rates in this period. Indonesia was an exporter
of primary commodities. Growing primary export opportunities drove the rise
in output, but a decline in the terms of trade limited the economic impact of
increasing exports (Birnberg and Resnick 1975). In contrast, Japan lacked natural resources and had to import primary produce. To that end, it had little choice
but to export manufactures. Lastly, Indonesia was a Dutch colony, while Japan
remained independent. Perhaps Indonesia served the economic interests of its
coloniser, while Japan was independent in pegging out its economic policies. Suffice it to say that a wide range of countries, including Indonesia, illustrate that
dependence on primary exports does not necessarily impede economic growth. In
addition, a detailed comparison of economic development in today’s less developed countries led Reynolds (1983: 956–8) to conclude that ‘there is no magic
in independence’—that a non-colonial past was no guarantee of successful economic development.
3 Author’s estimates, based on enrolments and approximations of the share of children
of school age in the population.
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LAND TAX AND PUBLIC INVESTMENT IN INFRASTRUCTURE
In Japan, the 1873 Land Tax Reform Act replaced the payment of tax in kind with
payment in cash. Land tax was henceforth assessed as a percentage of land value.
The value of land was in the first instance determined by village authorities, but
checked by officials of the Ministry of Finance, who applied guidelines to establish a ‘standard value’ of land.4 This ‘standard value’ was calculated as the capitalised value of net farm income, which in turn was estimated as the quantity of
crops that the land could produce multiplied by the local crop price averaged
over the past five years, less 15% for current inputs. The yielding capacity of land
was often established for 20 to 30 villages at a time on the basis of a survey into
the yielding capacity of the land of one ‘typical’ village. There were no deductions
for harvest failure. Periodical revisions of the value of land were planned, but
never carried out. The 1884 Land Tax Law specified the value of land as the value
entered since 1873 on the landownership certificate. Revisions of land value were
a consequence of reclassification or sale of land.
In 19th century Java, farmers paid land tax in cash. The level of taxation was
generally subject to haggling between colonial officials and village authorities. The
1872 Land Tax Ordinance sought to standardise the tax but this proved impracticable (Hugenholtz 1994: 161–3). The tax on irrigated land was notionally based on
its gross rice-yielding capacity. The tax on non-irrigated land was nominal only.
The focus on irrigated land was the main reason why the tax was in practice levied only in Java and not in the Outer Islands, where shifting cultivation systems
made land taxation difficult to administer. Following the successful introduction
of a new land tax system in Priangan Residency in West Java from 1889, the 1907
Land Tax Ordinance introduced the new system in the rest of Java during the
period 1907–24. In effect, arable land used for farm agriculture was measured
and land tax was assessed on the basis of the yielding capacity of the land, which
was gauged using crop cuttings from test plots maintained by the Land Tax Service. The tax level was fixed for 10 years for parcels of land with natural boundaries. One village could contain several parcels and the tax per hectare could vary
within a village. Farmers could be completely or partially exempted from tax payments in the case of harvest failure.
Table 4 shows that the level of land tax per hectare was the same in Java and
Japan during the 1880s. It more than doubled in Japan after 1900, but remained
largely unchanged in Java. Until the 1910s, the burden of the land tax on income
from agricultural production was considerably higher in Japan than in Java. The
actual burden of the land tax in Java was even lower than table 4 indicates: the
estimate of gross value added (GVA) from agriculture in Java excludes a range of
products and is perhaps 20% too low (Van der Eng 1996: 13).
Table 5 shows that until the 1920s land tax revenues occupied a higher share
in the public budget in Japan than in colonial Indonesia, especially in the 1870s
and 1880s. Per capita nominal expenditure in both countries was not very different before 1900. Public outlays in Japan increased significantly thereafter in per
capita terms, while they stagnated for a further 10 years in Indonesia. The importance of the land tax declined substantially in both countries after 1900, while
4 Concise descriptions of the land tax in Japan are offered by Nakamura (1966: 182–96)
and Yamamura (1986).
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Pierre van der Eng
TABLE 4 Land Tax and Farm Agriculture in Java and Japan, 1870–1939a
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Land Tax per Hectare of
Arable Farm Land
(guilders)
Java
Japan
1870–79
4.2
1880–89
Land Tax as % of Nominal Total
Gross Value Added in Farm
Agriculture
Java
Japan
4.6b
–
20.4b
4.7
4.3
5.4
13.2
1890–99
4.2
5.7
4.9
7.8
1900–09
4.0
10.4
4.3
7.2
1910–19
3.8
10.5
2.8
4.8
1920–29
4.8
9.8
2.7
2.2
1930–39
4.1
16.4
4.7
2.4
a
Annual averages. Yen converted to guilders at current exchange rates. GVA in agriculture in Java
excludes plantations, but is not corrected for under-reporting of minor crops.
b
1874–79.
Sources: Land tax revenue, Indonesia: Jaarcijfers voor het Koninkrijk der Nederlanden–Koloniën (1878–1921),
continued as Statistisch Jaaroverzicht voor Nederlandsch-Indië (1922–30), Indisch Verslag (1931–40). Land
tax revenue, Japan: HSJ (1987), pp. 268–70. Farm land, Java (irrigated and upland): 1870–79, assumed to
have been 3.6 million hectares, 1880–1939, Van der Eng (1996), appendix 4. Farm land, Japan: Hayami
et al. (1979), p. 258–61. GVA in farm agriculture (food and cash crops, livestock products), Java: Van der
Eng (1996), appendices 1 and 2 (reflated to current prices). GVA in farm agriculture (food and cash crops,
livestock products), Japan: Hayami et al. (1979), pp. 254–6.
public expenditure rose. Increased public revenue from sources other than farm
agriculture allowed the expansion of government expenditure in both countries.
To the extent that increased public expenditure enhanced economic development,
it must have been based on revenues generated by economic expansion outside
farm agriculture.5
Increased public expenditure benefited the development of transport facilities. Soon after the Meiji restoration the Japanese government invested in road
improvement, railway construction and the upgrading of port facilities. In Indonesia, the task was much greater. Large remote parts of Java were land-locked
and roads were in need of improvement. The economic integration of Indonesia,
including Java, depended more on the establishment and improvement of regular domestic shipping lines and port facilities. Until the 1880s, roads and bridges
in Java were constructed almost exclusively with statutory (corvée) labour, which
was levied along with land tax in lieu of income tax. Reliance on wage labour for
5 In Japan the expansion was based on growing public revenues from indirect taxes,
and from non-tax revenues such as surpluses from government enterprises (Minami
1994: 257–60).
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Surplus mobilisation in farm agriculture: Java and Japan, 1870–1940
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TABLE 5 Land Tax and Public Expenditure in Indonesia and Japan, 1870–1939a
Share of Land Tax in Total
Revenue of Central Government
(%)
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Indonesia
Japan
Per Capita Public Expenditure
by Central Government
(guilders)
Indonesia
Japan
1870–79
10.3
79.4b
4.3
3.4a
1880–89
13.9
61.0
4.0
4.1
1890–99
13.1
39.7
3.5
4.3
1900–09
11.2
20.1
3.7
10.3
1910–19
6.8
12.1
7.4
16.5
1920–29
4.1
5.1
14.7
32.8
1930–39
5.9
3.8
9.7
21.2
a Ten-year averages. Yen converted to guilders with current exchange rates. Public revenue refers to
ordinary revenue only.
b 1874–79.
Sources: Land tax and public expenditure, Indonesia: Jaarcijfers voor het Koninkrijk der Nederlanden–
Koloniën (1878–1921), continued as Statistisch Jaaroverzicht voor Nederlandsch-Indië (1922–30), Indisch
Verslag (1931–40). Land tax and public expenditure, Japan: HSJ (1987), pp. 268–70. Population, Indonesia: Van der Eng (1996), appendix 3. Population, Japan: Japan Statistical Yearbook.
this purpose increased thereafter, but public spending in Indonesia was limited at
a time when the Japanese government was able to borrow considerable amounts
overseas to finance infrastructure improvement. In contrast, an expansion of public outlays for the improvement of infrastructure in Indonesia was obstructed by
the costly war in Aceh until 1904, and by the fact that the colonial government
was allowed to borrow only modest amounts. Railway construction started in
Java, but expansion of the railway network was slower than in Japan. The development of Indonesia’s inter-island shipping network, which encompassed ports
in Java, was left to private enterprise.
The two main categories of public revenue in Indonesia were profits from state
monopolies (e.g. salt, opium and pawnshops) and from other government enterprises (e.g. forest exploitation and railways), along with import and export tax,
excise duties and income tax (levied largely on non-Indonesians) (Booth 1980:
92–4). Revenues from land tax and other direct taxes such as the poll tax were of
minor importance. It was technically difficult to increase the land tax burden, as
it was re-assessed every 10 years for 10% of arable land. A rise in tax rates would
have taken 10 years to become effective throughout Java. Moreover, increasing the
tax burden on indigenous Indonesians was politically inopportune. In the 1890s,
the Dutch developed an ‘ethical’ strand in their colonial policy. The tax burden on
the indigenous population was estimated to be 13–18% of average income (Van
Deventer 1904: 165; Huender 1921: 202, 246). Although such estimates were based
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Pierre van der Eng
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on incomplete approximations of average income, they reinforced the reluctance
of the colonial government to increase the tax burden on Indonesians.6
An additional reason for not increasing the indigenous tax burden was that
many Indonesians also paid local taxes. In Japan, local rates raised the tax burden to around 30% of farm production in 1873 and 8% in 1921/22 (Ogura 1963:
184). Comparable data are not available for Indonesia, as a changing proportion
of local taxes was levied in the form of compulsory labour, and taxes could vary
across the country. In 1924 the average cash levy of village taxes in Java was about
27% of the nominal land tax sum (Huender and Meijer Ranneft 1926: 205, 217). It
thus seems unlikely that the inclusion of local taxes in Java would have made up
the difference in table 4 between Java and Japan in terms of land tax as a percentage of GVA in farm agriculture before the 1920s.
Despite restrictions on public borrowing and on increasing the domestic tax
burden, public expenditure in Indonesia increased considerably after 1909. The
expansion was slower than in Japan, as table 5 indicates. The share of the Department of Public Works in the total Indonesian budget increased from 19% in 1905
to 40% in 1921, suggesting that a large part of the increase in public expenditure
was used to improve infrastructure (Booth 1990: 224).
This section has argued that the burden of the land tax was higher in Japan
than in colonial Java until the 1930s. This had implications for public finance.
Until about 1900, the public outlays of the central governments of Japan and Indonesia were at comparable levels, which means that the government in Indonesia
relied more on forms of public revenue other than land tax. Indonesia’s colonial
government was waging a costly war until 1904, while the Japanese government
used its funds for investment in infrastructure. It also furthered the development of industry, commerce, merchant shipping and a retail sales network. After
1905 the government in Indonesia was reluctant to increase the tax burden on the
indigenous population because there was a belief that it was already high. Consequently, public outlays for development purposes such as infrastructure development were lower in Indonesia than in Japan.
LAND TENURE AND PRIVATE MOBILISATION OF CAPITAL
Until the abolition of feudal fiefs and the government announcement in 1871 that
farmers could decide the choice of crops, Japanese farmers were virtually tied to
their land. The removal of the prohibition on the sale and mortgage of farm land
in 1872, and the introduction of a new land tax in 1873, confirmed private ownership of all non-tenured land (Hayami et al. 1991: 64–5). In part as a consequence
of the growing burden of the land tax on incomes during the deflation period of
the 1880s, farm households used their land as collateral to borrow money in order
to pay the tax. Small farmers defaulting on this debt lost their land to creditors.
The high taxes also compelled farm households to increase farm production or
off-farm income. Many borrowed to purchase current farm inputs, or materials
and labour for off-farm ventures. Not all households managed to augment farm
6 Later surveys into the tax burden yielded more complete estimates of income and therefore lower figures; for example, Ochse and Terra (1934: 58) estimated the tax burden to be
6% of the total income of 15 families in Kutawinangun (Kebumen district, Central Java).
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45
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income. Given the rising level of non-agricultural wages in Japan, the less successful small farmers came under growing pressure to sell out to bigger landowners (Ogura 1963: 17–18). They either became tenants on the land they previously
owned, or they tried to find permanent non-agricultural employment.
Colonial Java had three forms of indigenous land ownership, among which
communal ownership dominated until about 1900. Under this system, village
land was periodically redistributed among the villagers who were entitled to a
share. This system did not exist in Japan. The system with changing shares gave
way to communal ownership with fixed shares, as an increasing number of villages with communal land ownership decided to fix the number of shareholders.
New candidates would only be admitted if a share became vacant. At later stages,
communal ownership with fixed shares started to give way to individual ownership (Van der Eng 1996: 145). The expansion of this system forced new generations to cultivate upland areas in remote parts of Java. A surge of people to the
uplands between 1895 and 1920 was facilitated by the improvement in transport
facilities, which tapered off in the 1920s. In these newly cultivated areas, land tenure was largely based on individual ownership.7 The expansion into the uplands
reinforced the effect of communal ownership with fixed shares giving way to
individual ownership. However, where communal ownership continued to exist,
it was difficult for farmers to capitalise on their land by either selling or mortgaging it, because this required the consensus of the village.
The Agrarian Law of 1870 confirmed that Indonesians could sell the land they
owned. However, sales to non-Indonesians (ethnic Chinese and Europeans) were
forbidden, because the colonial government sought to prevent usurious moneylenders (allegedly wealthy ethnic Chinese) from foreclosing on land that farmers
mortgaged (Heslinga 1928: 18–20, 71–3). The law also prevented sugar factories
from luring farmers into selling their land at lump sum bargain prices. Hence, the
1870 Agrarian Law averted the alienation of land owned by Indonesians. It is likely
that private land sales increased in Java with the decline of communal ownership.
The effect of the law was that farmers in Java were less able to capitalise on
their land than their peers in Japan. First, Chinese forestallers of agricultural produce (middlemen who extended credit on the basis of pledges of future crops)
dominated the informal supply of credit. They could not accept land as collateral,
because they were not allowed to take possession formally by foreclosing on it. In
several regions, well-off ethnic Indonesians did accept land as collateral for loans.
In such areas, foreclosing of mortgaged land occurred, but this remained a marginal phenomenon. Concentration of land ownership in Java remained low.
Second, farmers were not able to sell their land for what it was actually worth
to foreign-owned plantations and sugar factories, even though these companies
had the capital and the technology to increase its productivity. Short-term leases
were possible, but these were subject to restrictions imposed by local colonial officials. Some enterprises evaded the law by using Indonesian front men. This practice continued throughout the colonial period, but there are no indications that
this deceit affected large areas of farm land (Jaarsma 1936: 6–18). It remained a
marginal phenomenon.
7 To illustrate this, 60% of irrigated land was individually owned by 1932, compared with
94% of the upland area (CKS 1941: 262).
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Pierre van der Eng
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Thus, tenancy rates were higher in Japan than in Java. In 1872, 29% of farm
land in Japan was operated by tenant farmers; the proportion rose to 44% in
1903 and 48% in 1930 (Kawagoe 1993: 182). Between 1910 and 1940 the share of
farm households in Japan operating fully owned land was around 30%, while
that of households operating fully tenanted land was around 27% (HSJ 1987,
Vol. 2: 32).
There are no comparable statistics for Indonesia, but tenant farmers in Java constituted only 5.3% of all farmers operating land in 1905 and 3.5% in 1925 (Scheltema 1931: 272–3). Even after World War II, tenant farming remained relatively
marginal in Java (Van der Eng 1996: 147–52). Hence the Agrarian Law of 1870
inhibited the concentration of landholdings and the mobilisation of capital in the
rural economy of Java.
The average rent was probably also higher in Japan than in Java. Japanese
tenants paid on average 50–60% of the harvest to landowners during the years
1878–1932 (Ranis 1959: 448). There were many locally different sharecropping
arrangements in Java, but the average rent was around 40% of production (Scheltema 1931: 303–17; De Waal 1949: 137–57).
Higher tenancy rates and rents suggest that Japanese landowners had funds
available for productive investment. The contribution to industrial growth of the
flow of funds from agriculture in Meiji Japan is still a matter of debate (Minami
1994: 77–81). It is likely that industrial development was financed not only with
agricultural savings, but also with re-invested manufacturing profits and public
funds. Whatever the process, there is solid evidence that many absentee landlords
eventually became engaged in commerce and industry, for which they used land
rent revenues. Hence, landlordism was a precondition for the transfer of surplus
resources from agriculture to industry in Japan.
Japanese farmers were effectively challenged by the government through the
land tax and by landlords through rents to increase production and thus raise
investment capital. They also saved considerable sums themselves. In the form
of loans to urban relatives for the establishment of small ventures, these sums
enhanced the flow of capital out of agriculture (Ranis 1959: 452; Ohkawa et al.
1982: 10–20). The voluntary savings may have been small compared with the reinvested business surpluses and the use of public funds, but after 1900 agricultural savings expanded rapidly, as table 6 suggests.
In colonial Indonesia, most private saving by indigenous people was in the
form of precious metals and gems, which were pawned in times of need. A reliable banking system for small savers did not emerge until after 1904. In Japan there
were already 460 savings banks at the end of the 19th century, which compares to
a total of 85 district banks in Indonesia in 1922, most of which were in Java. The
deposits with this semi-private banking system increased in Indonesia between
1905 and 1929, but table 6 shows that the value of deposits in these institutions
remained much lower than in Japan.
This section has shown that differences in agrarian legislation contributed to
significant differences in the extent of tenant farming in Japan and Indonesia.
Japanese tenants also paid a higher rent than their Indonesian peers. The burden of the land tax and the pressure to pay land rent were probably a strong
incentive for Japanese farmers to increase production. Table 3 showed that agricultural production per worker in Java was comparable to that in Japan in the
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Surplus mobilisation in farm agriculture: Java and Japan, 1870–1940
47
TABLE 6 Deposits and Capital of Popular Credit Institutions in Indonesia and Japan,
1905–1940, End of Yeara
(guilders per 100 population)
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Indonesiab
Japanc
1905
3
5
1910
19
39
1915
58
169
1920
104
928
1925
149
1,747
1930
213
3,157
1935
127
1,261
1940
123
3,406
a Yen converted to guilders at current exchange rates.
b Popular credit banks, village banks and post office saving banks (deposits of Indonesians only).
Most were located in Java.
c Until 1916 only agricultural cooperatives; after that year also the mutual loan and savings banks and
credit associations. The agricultural cooperatives held about 90% of total deposits and capital during
the years 1916–40.
Sources: Financial statistics, Indonesia: Creutzberg (1980), pp. 108–17. Financial statistics, Japan: HSJ
(1987), pp. 171–7. Population, Indonesia: Van der Eng (1996), appendix 3. Population, Japan: Japan
Statistical Yearbook.
1880s. However, on the assumption that the land tax rate was 8% in Japan and
4% in Java, and that 40% of the farm households in Japan and 5% in Java were
tenant farmers who surrendered 50% of their harvest to landowners, it appears
that the average net return per worker was 27% higher in Java in the 1890s.8
This figure indicates the degree by which the average Japanese farmer had to be
more productive than his counterpart in Java to meet tax and rent obligations.
It was not until 1900 that labour productivity in Japan exceeded that in Java by
30% or more, after which the pressure of tax and rent obligations on Japanese
farmers started to abate relative to that on Java owing to productivity growth.
Qualitative evidence suggests that tenant farmers lived in hardship in Japan
until the pressure of taxation started to ease around 1905 and the worst cases of
tenant poverty disappeared (Smethurst 1986: 69). From then onwards, Japanese
farm households augmented agricultural income with other forms of income,
especially financial transfers from family members employed in manufacturing
industry.
8
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Ratio =
(1 - 0.04) × (1 - (0.05 × 0.50)) × GVA per worker in Java
(1 - 0.08) × (1 - (0.40 × 0.50)) × GVA per worker in Japan
= 1.27 ×
GVA per worker in Java
GVA per worker in Japan
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Pierre van der Eng
THE IMPACT OF POLICIES FURTHERING RICE PRODUCTION
Although the land tax and the land rents challenged Japanese farmers to increase
production, the agricultural policies of the government—pertaining to the development and extension of superior rice varieties, irrigation structures, fertiliser
supply and protection from imports—helped farmers to meet this challenge. This
section examines why similar policies in colonial Indonesia did not have the same
impact.
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Seed improvement and agricultural extension
In Meiji Japan, many resident landlords were instrumental in improving the
agricultural methods used by their tenant farmers. They experimented with agricultural techniques, the selection of superior seed, the organisation of farmer
discussion groups (nodankai) and the coordination of collective operation and
maintenance of irrigation works (Ogura 1963: 303–11). ‘Veteran farmers’ (rono)
spread simple but effective improved cultivation techniques (Meiji Noho) and
superior rice varieties. The latter caught on because the irrigation structures which
guaranteed the controlled water supply that these varieties required were already
in place in large parts of Japan. The Japanese government later supported the
veterans and trained them as itinerant agricultural teachers (Hayami et al. 1991:
67–72). It established the National Agricultural Experiment Station in 1893, which
started research based on the Meiji Noho. By 1904 this body had 38 experiment
stations and 110 branch stations, which took over the screening of rice varieties
and started testing the available techniques in other areas. In the 1920s, the first
new rice varieties were selected that were to have practical significance.
The Japanese government increased its control over agricultural development.
It encouraged farmers to organise themselves, which led to the establishment of a
national organisation of farmers’ associations (the Zenkoku Nojikai) in 1894. The
association organised an agricultural information service and promoted farmers’ interests. In 1899 the prefectural governments were instructed to establish
farmers’ groups where they did not exist, and to integrate them into the national
organisation. Landlords and village officials established a farmers’ association in
every village, and membership of these associations became compulsory (Ogura
1963: 303–4). This top-down system facilitated a rapid expansion of the agricultural extension organisation, which worked via the layers of farmers’ associations. There were 5,200 extension workers in Japan by 1914, 10,000 by 1924 and
14,000 by 1933 (Hayami et al. 1991: 108). In contrast to their Indonesian counterparts, Japanese farmers may have been accustomed to authoritarian leadership,
which had been part of life during the Tokugawa era. Japanese people were also
more literate than Indonesians, which may have facilitated self-organisation by
farmers, as well as communication with support services. Extension workers with
adequate qualifications were relatively easy to find.
In 1903 the government instructed the organisations to disseminate to the farmers a uniform number of instructions concerning improved rice cultivation techniques. Extension workers had to supervise the implementation of the instructions.
Prefectural governments issued regulations providing for the arrest of farmers
who failed to implement the measures (Ogura 1963: 16, 165–7). There were cases
of obstruction by farmers, especially tenants, who had to borrow money at high
interest in order to purchase the prescribed seeds and fertiliser.
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49
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The colonial government in Indonesia relied on its local officials for the extension of improved cultivation techniques, until the Agricultural Extension Service
(AES) was formed in 1911 (Van der Eng 1996: 94–8). Agricultural research facilities were first established in 1905 in Bogor. Research at these institutes produced
important results on diseases and pests, but its practical value is difficult to establish (Van der Eng 1996: 70–4). AES officers operated several demonstration fields,
and in cooperation with the research institutes they started the first seed gardens
for screening various crops outside the Bogor area in 1913.
Discoveries of superior crop varieties took until the 1920s. The strong preference of farmers and consumers in most of Indonesia for a particular variety
impeded any crucial breakthrough in rice until the 1930s (Van der Eng 1996: 81–7).
After viable superior seed varieties had been identified, the government established an expanding network of selection and seed gardens in the 1930s for their
multiplication and dissemination. This network continued to expand and disseminate superior rice varieties after Indonesia’s independence, and from the 1960s
contributed to the country’s ‘green revolution’.
The number of personnel in the colonial AES increased from 15 in 1908 to 118
in 1918, 261 in 1930 and 457 in 1942 (Van der Eng 1996: 96). This growth was much
slower than that of extension services in Japan. Two factors impeded a faster expansion. First, there was a fundamental difference in the principles on which agricultural extension methods in Indonesia and Japan were based. Until the establishment
of the AES, colonial officials took personal initiatives to introduce farmers to new
and allegedly better cultivation techniques. They had not been averse to using ‘gentle pressure’ (perintah halus) to achieve their objectives, and this in many cases had
been ineffective in generating long-term change. The AES renounced compulsion,
maintaining that persuasion and demonstration were better approaches.
Second, appropriate knowledge and skilled manpower were very scarce. The
fundamental study of the agronomy and socio-economic conditions of different
parts of Indonesia did not begin until after 1910. The available knowledge was
based on haphazard research by benevolent colonial officials, whose enthusiasm
did not compensate for a lack of appropriate training. The AES gave priority to
the study and collection of basic data on farm agriculture during the first two decades after its establishment. For this purpose Dutch agronomists were stationed
in different regions as itinerant agricultural consultants. They had a free hand
in their regions to do what they thought necessary to encourage farm agriculture. They gradually recruited eligible Indonesian junior officers and gathered
adequate knowledge of the agricultural patterns in different areas on which to
base agricultural extension efforts.
In Japan extension officers were responsible for carrying out instructions from
higher administrative strata. In Indonesia they were multi-functional development
workers, who used a holistic approach to rural development, and who encouraged
rather than ordered farmers to organise themselves in farmers’ groups. Moreover,
their extension policies concentrated not on one crop, as in Japan, but on the crops
that were locally important. The extension approaches were not uniform, but differed according to local circumstances. Gradually, agricultural extension techniques
evolved in colonial Indonesia, such as an embryonic ‘training-and-visit’ system,
which lacked the more coercive, mechanical, top-down procedures that characterised the approach used in Japan, and also in Indonesia after the 1960s.
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Pierre van der Eng
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ISSN: 0007-4918 (Print) 1472-7234 (Online) Journal homepage: http://www.tandfonline.com/loi/cbie20
Surplus mobilisation in farm agriculture: A
comparison of Java and Japan, 1870–1940
Pierre van der Eng
To cite this article: Pierre van der Eng (2006) Surplus mobilisation in farm agriculture: A
comparison of Java and Japan, 1870–1940, Bulletin of Indonesian Economic Studies, 42:1,
35-58, DOI: 10.1080/00074910600632369
To link to this article: http://dx.doi.org/10.1080/00074910600632369
Published online: 18 Jan 2007.
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Date: 18 January 2016, At: 21:40
Bulletin of Indonesian Economic Studies, Vol. 42, No. 1, 2006: 35–58
SURPLUS MOBILISATION IN FARM AGRICULTURE:
A COMPARISON OF JAVA AND JAPAN, 1870–1940
Pierre van der Eng*
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Australian National University
This paper compares the degree to which farm agriculture surpluses in pre–World
War II Java and Japan were mobilised for non-agricultural investment through taxation, landlordism and private savings. It also compares government efforts in both
countries to spur productivity and farm income in rice agriculture through improvements in irrigation structures and the development and dissemination of seedfertiliser technology. The pressure of the land tax, the spread of tenant farming, and
the degree to which rural savings were deposited were significantly lower in Java
than in Japan. Pre-war conditions in rice agriculture were less conducive in Java than
they were in Japan to the development and dissemination of seed-fertiliser technology, which could spur farm productivity and contribute to surplus mobilisation.
INTRODUCTION
One of the foundations of Japan’s rapid economic development during the 20th
century was established during the Meiji era (1868–1912). This was the acceleration
of agricultural development, particularly in rice farming, to facilitate the production of a surplus of agricultural produce over what was required for subsistence.
Hayami et al. (1991: 5) concluded: ‘Such institutions as the land tax and landlordism served to squeeze agricultural surpluses out to the non-agricultural sector.’
The surpluses were invested in non-agricultural production, particularly manufacturing, and thus helped to trigger the process of modern economic growth in
Japan. At the same time, government support of rice farming contributed to a
rapid increase in agricultural labour productivity and assisted in narrowing the
rural–urban income gap. Although challenged by scholars such as Francks (1992:
149–57), who called for greater attention to the dynamic rather than passive participation of farm households in this process through off-farm employment, this
argument is still predominant in Japan’s historiography.
The core Indonesian island of Java was in several ways comparable to Japan
before World War II. Among the similarities were high population density, high
economic dependence on irrigated rice agriculture, and a mountainous geography. The Dutch colonial government established a range of services to further
*
I am grateful to Kees van der Meer, Anne Booth, Toshihiko Kawagoe and two anonymous referees for their comments on earlier versions of this paper.
ISSN 0007-4918 print/ISSN 1472-7234 online/06/010035-24
DOI: 10.1080/00074910600632369
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© 2006 Indonesia Project ANU
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Pierre van der Eng
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the development of farm agriculture, including irrigation improvements and
facilities for agricultural research, extension and education (Cribb 1993).1 These
seem to be similar to the services that facilitated agricultural development in
pre-war Japan.
Supported by the intersectoral transfer of resources from agriculture, Japan
experienced an almost continuous process of growth during and after the Meiji
era. Its real GDP per capita grew at an annual average of 1.9% between 1870 and
1940, compared with 0.8% in Indonesia (Maddison 1995: 196–7, 204–5). Given the
noted similarities between Japan and Java, this paper seeks to establish whether
the policies that furthered productivity improvement in farm agriculture and sustained intersectoral surplus transfer in Japan had the same effect in Java. Any
sweeping comparison is difficult, because the two countries are not comparable
in other respects that impacted on their development experience.
The next section discusses a few basic similarities and differences between prewar Java and Japan, including productivity in agriculture. The following section
elaborates the role of the land tax in mobilising the surplus, and the next does the
same for the level of land rent paid by tenant farmers to landlords. The paper goes
on to explain why, despite similarities, policies aimed at furthering farm agriculture had a more profound impact in Japan than in Java.
SOME SIMILARITIES AND DIFFERENCES
Table 1 indicates that the population of Java was always smaller in the study
period than that of Japan. Population density on land used for agricultural purposes was much lower in Java than in Japan, with Java reaching levels in the 1970s
that were comparable with those of Japan in the early 1900s. In Japan arable land
barely increased, while Java’s land surplus did not run out until the 1930s.2 The
level of GDP per capita in Japan and Indonesia was comparable in the 1880s. A
higher rate of economic growth in Japan resulted in increasing divergence in the
GDP per capita of the two countries after 1890.
Table 2 shows that structural change was slower in Indonesia than in Japan: agriculture remained more important in Indonesia’s economy than in Japan’s, in terms
of both employment in Java and country-wide output. This suggests that Japan’s
pre-war growth was based more on the development of the non-agricultural sectors, particularly manufacturing, while Indonesia’s depended to a greater extent on
the production of agricultural commodities for export and domestic consumption.
1 This paper uses the term ‘farm agriculture’ to distinguish agricultural production by
farm households from that of plantations in Java. The distinction between the two is based
on legal terms, as the largely foreign-owned plantations were not allowed to own land, but
could only rent farm land or hold 75-year leases. Plantation companies faced a very different operating environment from farm households, and are for that reason excluded from
the analysis in this paper. Any concern about the interaction between plantation sugar cane
production and farm agriculture may be allayed with the observation that in 1931 a maximum of just 6% of all irrigated land was under sugar cane in the whole of Java (Van der
Eng 1996: 52–3). Most was land rented from farmers, who thus worked 94% of all irrigated
land or 97.5% of all farm land in Java.
2 Population density in the whole of Indonesia’s Outer Islands remained stable throughout, owing to the vast land reserves.
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Surplus mobilisation in farm agriculture: Java and Japan, 1870–1940
37
TABLE 1 Some Economic Variables Comparing Java/Indonesia and Japan,
1880–1990
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Population
(millions)
People per Hectare of
Arable Land
GDP per Capitaa
(1985 PPP dollars)b
Java
Japan
Java
Japan
Indonesia
Japan
1880–89
24.1
36.6
4.9
7.7
530
561c
1890–99
27.3
39.9
5.1
8.1
537
660
1900–09
30.8
43.8
4.9
8.4
575
753
1910–19
40.0
49.2
5.0
8.8
699
918
1920–29
39.4
55.5
4.7
9.2
818
1,140
1930–39
44.3
64.5
4.9
10.8
844
1,339
1940–49
49.6
71.9
5.5
11.7
610
1,421
1950–59
56.3
83.2
6.0
14.2
773
1,718
1960–69
67.3
93.4
6.9
15.4
850
4,090
1970–79
81.8
103.7
8.5
17.9
1,179
7,763
1980–89
98.8
117.1
11.1
21.4
1,582
10,754
1990–94
110.4
123.6
12.3
23.6
2,349
13,798
a Ten-year averages.
b PPP = purchasing power parity.
c 1885–89.
Sources: Population, Japan: Japan Statistical Yearbook. Arable land, Japan: Hayami et al. (1979), Asian
Productivity Organization (1987), Japan Statistical Yearbook. Population and arable land, Java and Indonesia: Van der Eng (1996), appendices 3 and 4, updated. GDP, Japan: 1885–1940, Ohkawa et al. (1974),
p. 227; 1941–53 linked to Maddison (1995), p. 183; 1954–94 linked to GDP(Q) from Annual Report on
National Accounts of Japan. GDP, Indonesia: Van der Eng (1992), pp. 343–73, updated from Pendapatan
Nasional Indonesia. 1985 benchmark GDP: Summers and Heston (1991).
Table 3 reveals that pre-war land productivity was 2–3 times higher in Japanese agriculture than in Javanese. The main explanation is Japan’s higher population density, which is reflected in the much lower land–labour ratio. This implies
that, in order to achieve the same or a higher level of labour productivity, production per hectare had to be much higher in Japan than in Indonesia. Given the
increase in population density in Japan, farmers were compelled to augment land
productivity in order to meet domestic demand. This did not become urgent in
Java until the 1930s, after the land frontier had been reached and the decline in
the land–labour ratio accelerated. The gradual increase in the land–labour ratio
in Japan suggests that the agricultural sector was then already shedding labour,
while in Java the sector continued to absorb labour.
Labour productivity in farm agriculture was at comparable levels in Java and
Japan in the 1880s (table 3). It increased in Japan, but stagnated in pre-war Java,
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Pierre van der Eng
TABLE 2 Shares of Farm Agriculture in the Economies of Java/Indonesia and Japan,
1880–1995
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Employmenta
GDPb
Java
Japan
Indonesia
Japan
1880
75.0
72.6
43.5
41.3c
1900
75.0
66.5
39.8
33.8
1920
75.0
52.1
34.2
26.8
1940
72.3
42.0
29.7
13.8
1960
66.6
31.2
34.1
8.8
1980
51.0
9.6
22.4
2.3
1995
38.4
5.4
15.2
1.5
a Plantation employment in Java could not be excluded from agricultural employment data. Its share
of agricultural employment was 3.6% in 1905 and 7.9% in 1930, but this includes employment in
processing of agricultural commodities, such as in sugar factories (Van der Eng 1996: 209).
b Share of agriculture calculated from GDP in constant 1983 prices for Indonesia and constant 1934–36
prices for Japan. Agriculture includes fisheries and forestry in the case of Japan and refers to farm
agriculture only in the case of Indonesia, except for 1995.
c 1885.
Sources: Agricultural employment, Japan: 1880–1905, Ohkawa and Shinohara (1979); 1906–40, Ohkawa
et al. (1988), pp. 204 and 210; 1950–95 (population engaged in farming), Japan Statistical Yearbook. Total
employment, Japan: 1880–1940, Ohkawa et al. (1988), pp. 196–200; 1950–95, Japan Statistical Yearbook.
GDP, Japan: 1885–1940, Ohkawa et al. (1974), p. 227; 1940–54, GVA (gross value added) in agriculture
linked to Hayami et al. (1979), pp. 252–3, and total GDP linked to Maddison (1995), p. 183; 1954–95,
GVA in agriculture and total GDP linked to Annual Report on National Accounts of Japan. Employment,
Indonesia: Van der Eng (1996), appendix 3, updated from BPS (1996). GDP, Indonesia: Van der Eng
(1992), updated from Pendapatan Nasional Indonesia.
where increasing land productivity facilitated the absorption of labour in agriculture. Japan surged ahead particularly from the 1950s, when its labour-absorbing
industrialisation resumed. In contrast, Java took time to recover from the setback
of war during the 1940s, at a time when its industrialisation was modest and its
population growth accelerating. Even during the 1980s, labour productivity in
agriculture in Java still lagged more than 60 years behind that of Japan.
Apart from differences in the role of farm agriculture, there are other differences that need to be mentioned, even though it is not possible to indicate exactly
how relevant these factors are to explaining the diverging paths of agricultural
and economic development in the two countries.
Overland transport facilities in Japan had improved considerably during the
Tokugawa (1600–1868) and early Meiji periods, and this enhanced economic integration (Minami 1994: 20–2). Improvements in transport facilities in Indonesia
were largely restricted to Java, but even by 1880 large parts of Java were still land-
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Surplus mobilisation in farm agriculture: Java and Japan, 1870–1940
39
TABLE 3 Productivity in Farm Agriculture in Java and Japan, 1880–1994a
Gross Value Added from Farm Agriculture
(1980 PPP dollars)b
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Per Worker
Per Arable Hectare
Arable Hectares
per Worker
in Farm
Agriculture
Java
Japan
Java
Japan
Java
Japan
1880–89
259
241
366
780
0.71
0.31
1890–99
254
283
383
883
0.66
0.32
1900–09
260
337
400
1,008
0.65
0.33
1910–19
278
433
423
1,136
0.66
0.38
1920–29
261
527
411
1,215
0.64
0.43
1930–39
266
580
439
1,312
0.61
0.44
1940–49
232
489
402
1,163
0.58
0.42
1950–59
239
541
439
1,363
0.54
0.39
1960–69
264
871
513
1,732
0.52
0.50
1970–79
340
1,227
691
1,758
0.49
0.69
1980–89
487
1,505
1,073
1,789
0.45
0.84
1990–94
547
2,089
1,265
1,813
0.43
1.14
a Agricultural output excludes fisheries and forestry, and excludes plantation agriculture in Indo-
nesia. Ten-year averages.
b PPP = purchasing power parity.
Sources: Employment, arable land and real GVA in agriculture, Japan: Hayami et al. (1979), Asian
Productivity Organization (1987), Japan Statistical Yearbook, Annual Report on National Accounts of Japan.
Employment, arable farm land and real GVA in agriculture, Indonesia: Van der Eng (1996), appendices
3, 4 and 1. Agricultural productivity, Japan and Indonesia, linked to a 1980 benchmark estimate of total
GVA in agriculture, converted using 1980 agricultural PPPs in international dollars from Rao (1993),
p. 62. The 1980 GVA benchmark for Indonesia is from the 1980 Input–Output Table (Rp 9,826 billion);
the 1980 share of plantations (7.4%) from Pendapatan Nasional Indonesia was deducted and the remainder allocated to Java with the latter’s share in total regional GDP in agriculture (excluding plantation
agriculture) in Indonesia of 58.05% in 1983 from BPS (1993). The 1980 GVA benchmark for Japan is from
Annual Report on National Accounts of Japan (¥5,823 billion).
locked, and overland transport was difficult and slow. The construction of roads,
railways, bridges and port facilities, and the opening up of rural Indonesia did
not start effectively until after 1890 (Knaap 1989).
Japan was well ahead of Indonesia in terms of education. In Japan, 28% of
children aged 6–12 years went to school in 1873, 41% in 1880 and 81% in 1900
(HSJ 1987, Vol. 5: 212). In Indonesia, 2% of children aged 6–10 years (in all ethnic
groups) attended primary education in 1900, 6% in 1910, 15% in 1920 and 40% in
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40
Pierre van der Eng
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1941.3 Hence, farming communities in Japan may have been more receptive to
written information as part of agricultural extension efforts than was the case in
Indonesia (see below).
The rate of urbanisation was much higher in Japan. In 1898, 13% of Japan’s
population was living in cities of more than 20,000 people; in 1920 the figure was
23% and in 1940 42% (Bank of Japan 1966: 14–15.) In Indonesia, only 6% of the
population was living in urban areas in 1920, 8% in 1930, 15% in 1961 and 22%
in 1980 (Hugo et al. 1987: 89). Generally, the higher the rate of urbanisation, the
higher is the demand for food in the non-agricultural sectors of the economy. Consequently, the domestic incentive for surplus production in agriculture may have
been higher in Japan than in Indonesia.
It can be argued that Japanese society was more homogeneous than that of Java,
and certainly than that of Indonesia as a whole. By 1880 Japan had a centralised
political system. Its central government could effectively encourage the acceleration of economic development by appealing to fears of being colonised (Hayami et
al. 1991: 63). The expansion of Dutch colonial rule throughout Indonesia was not
completed until the end of the Aceh war in 1904, while national political integration took much longer. Many areas in the Outer Islands were only lightly touched
by colonial rule. Others remained under indigenous princely rule, and were only
indirectly governed by the colonial administration. It is no exaggeration to suggest that the Japanese people were accustomed to personal self-sacrifice, diligence
and communal cooperation for the benefit of overlords. Despite its feudal origins, hard work continued to be a civic virtue in Japan (Hirashima 1980: 139). The
central government could appeal to such traits when it introduced measures to
accelerate economic development. Diversity and the fact that a colonial government acted as the unifying force in the country restricted the effectiveness of such
appeals in Indonesia.
These differences suggest that Japan was better prepared than Indonesia for
rapid economic change. There are other relevant differences. For instance, population growth in Japan has always been low, while Indonesia struggled with
accelerating population growth rates in this period. Indonesia was an exporter
of primary commodities. Growing primary export opportunities drove the rise
in output, but a decline in the terms of trade limited the economic impact of
increasing exports (Birnberg and Resnick 1975). In contrast, Japan lacked natural resources and had to import primary produce. To that end, it had little choice
but to export manufactures. Lastly, Indonesia was a Dutch colony, while Japan
remained independent. Perhaps Indonesia served the economic interests of its
coloniser, while Japan was independent in pegging out its economic policies. Suffice it to say that a wide range of countries, including Indonesia, illustrate that
dependence on primary exports does not necessarily impede economic growth. In
addition, a detailed comparison of economic development in today’s less developed countries led Reynolds (1983: 956–8) to conclude that ‘there is no magic
in independence’—that a non-colonial past was no guarantee of successful economic development.
3 Author’s estimates, based on enrolments and approximations of the share of children
of school age in the population.
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Surplus mobilisation in farm agriculture: Java and Japan, 1870–1940
41
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LAND TAX AND PUBLIC INVESTMENT IN INFRASTRUCTURE
In Japan, the 1873 Land Tax Reform Act replaced the payment of tax in kind with
payment in cash. Land tax was henceforth assessed as a percentage of land value.
The value of land was in the first instance determined by village authorities, but
checked by officials of the Ministry of Finance, who applied guidelines to establish a ‘standard value’ of land.4 This ‘standard value’ was calculated as the capitalised value of net farm income, which in turn was estimated as the quantity of
crops that the land could produce multiplied by the local crop price averaged
over the past five years, less 15% for current inputs. The yielding capacity of land
was often established for 20 to 30 villages at a time on the basis of a survey into
the yielding capacity of the land of one ‘typical’ village. There were no deductions
for harvest failure. Periodical revisions of the value of land were planned, but
never carried out. The 1884 Land Tax Law specified the value of land as the value
entered since 1873 on the landownership certificate. Revisions of land value were
a consequence of reclassification or sale of land.
In 19th century Java, farmers paid land tax in cash. The level of taxation was
generally subject to haggling between colonial officials and village authorities. The
1872 Land Tax Ordinance sought to standardise the tax but this proved impracticable (Hugenholtz 1994: 161–3). The tax on irrigated land was notionally based on
its gross rice-yielding capacity. The tax on non-irrigated land was nominal only.
The focus on irrigated land was the main reason why the tax was in practice levied only in Java and not in the Outer Islands, where shifting cultivation systems
made land taxation difficult to administer. Following the successful introduction
of a new land tax system in Priangan Residency in West Java from 1889, the 1907
Land Tax Ordinance introduced the new system in the rest of Java during the
period 1907–24. In effect, arable land used for farm agriculture was measured
and land tax was assessed on the basis of the yielding capacity of the land, which
was gauged using crop cuttings from test plots maintained by the Land Tax Service. The tax level was fixed for 10 years for parcels of land with natural boundaries. One village could contain several parcels and the tax per hectare could vary
within a village. Farmers could be completely or partially exempted from tax payments in the case of harvest failure.
Table 4 shows that the level of land tax per hectare was the same in Java and
Japan during the 1880s. It more than doubled in Japan after 1900, but remained
largely unchanged in Java. Until the 1910s, the burden of the land tax on income
from agricultural production was considerably higher in Japan than in Java. The
actual burden of the land tax in Java was even lower than table 4 indicates: the
estimate of gross value added (GVA) from agriculture in Java excludes a range of
products and is perhaps 20% too low (Van der Eng 1996: 13).
Table 5 shows that until the 1920s land tax revenues occupied a higher share
in the public budget in Japan than in colonial Indonesia, especially in the 1870s
and 1880s. Per capita nominal expenditure in both countries was not very different before 1900. Public outlays in Japan increased significantly thereafter in per
capita terms, while they stagnated for a further 10 years in Indonesia. The importance of the land tax declined substantially in both countries after 1900, while
4 Concise descriptions of the land tax in Japan are offered by Nakamura (1966: 182–96)
and Yamamura (1986).
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Pierre van der Eng
TABLE 4 Land Tax and Farm Agriculture in Java and Japan, 1870–1939a
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Land Tax per Hectare of
Arable Farm Land
(guilders)
Java
Japan
1870–79
4.2
1880–89
Land Tax as % of Nominal Total
Gross Value Added in Farm
Agriculture
Java
Japan
4.6b
–
20.4b
4.7
4.3
5.4
13.2
1890–99
4.2
5.7
4.9
7.8
1900–09
4.0
10.4
4.3
7.2
1910–19
3.8
10.5
2.8
4.8
1920–29
4.8
9.8
2.7
2.2
1930–39
4.1
16.4
4.7
2.4
a
Annual averages. Yen converted to guilders at current exchange rates. GVA in agriculture in Java
excludes plantations, but is not corrected for under-reporting of minor crops.
b
1874–79.
Sources: Land tax revenue, Indonesia: Jaarcijfers voor het Koninkrijk der Nederlanden–Koloniën (1878–1921),
continued as Statistisch Jaaroverzicht voor Nederlandsch-Indië (1922–30), Indisch Verslag (1931–40). Land
tax revenue, Japan: HSJ (1987), pp. 268–70. Farm land, Java (irrigated and upland): 1870–79, assumed to
have been 3.6 million hectares, 1880–1939, Van der Eng (1996), appendix 4. Farm land, Japan: Hayami
et al. (1979), p. 258–61. GVA in farm agriculture (food and cash crops, livestock products), Java: Van der
Eng (1996), appendices 1 and 2 (reflated to current prices). GVA in farm agriculture (food and cash crops,
livestock products), Japan: Hayami et al. (1979), pp. 254–6.
public expenditure rose. Increased public revenue from sources other than farm
agriculture allowed the expansion of government expenditure in both countries.
To the extent that increased public expenditure enhanced economic development,
it must have been based on revenues generated by economic expansion outside
farm agriculture.5
Increased public expenditure benefited the development of transport facilities. Soon after the Meiji restoration the Japanese government invested in road
improvement, railway construction and the upgrading of port facilities. In Indonesia, the task was much greater. Large remote parts of Java were land-locked
and roads were in need of improvement. The economic integration of Indonesia,
including Java, depended more on the establishment and improvement of regular domestic shipping lines and port facilities. Until the 1880s, roads and bridges
in Java were constructed almost exclusively with statutory (corvée) labour, which
was levied along with land tax in lieu of income tax. Reliance on wage labour for
5 In Japan the expansion was based on growing public revenues from indirect taxes,
and from non-tax revenues such as surpluses from government enterprises (Minami
1994: 257–60).
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Surplus mobilisation in farm agriculture: Java and Japan, 1870–1940
43
TABLE 5 Land Tax and Public Expenditure in Indonesia and Japan, 1870–1939a
Share of Land Tax in Total
Revenue of Central Government
(%)
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Indonesia
Japan
Per Capita Public Expenditure
by Central Government
(guilders)
Indonesia
Japan
1870–79
10.3
79.4b
4.3
3.4a
1880–89
13.9
61.0
4.0
4.1
1890–99
13.1
39.7
3.5
4.3
1900–09
11.2
20.1
3.7
10.3
1910–19
6.8
12.1
7.4
16.5
1920–29
4.1
5.1
14.7
32.8
1930–39
5.9
3.8
9.7
21.2
a Ten-year averages. Yen converted to guilders with current exchange rates. Public revenue refers to
ordinary revenue only.
b 1874–79.
Sources: Land tax and public expenditure, Indonesia: Jaarcijfers voor het Koninkrijk der Nederlanden–
Koloniën (1878–1921), continued as Statistisch Jaaroverzicht voor Nederlandsch-Indië (1922–30), Indisch
Verslag (1931–40). Land tax and public expenditure, Japan: HSJ (1987), pp. 268–70. Population, Indonesia: Van der Eng (1996), appendix 3. Population, Japan: Japan Statistical Yearbook.
this purpose increased thereafter, but public spending in Indonesia was limited at
a time when the Japanese government was able to borrow considerable amounts
overseas to finance infrastructure improvement. In contrast, an expansion of public outlays for the improvement of infrastructure in Indonesia was obstructed by
the costly war in Aceh until 1904, and by the fact that the colonial government
was allowed to borrow only modest amounts. Railway construction started in
Java, but expansion of the railway network was slower than in Japan. The development of Indonesia’s inter-island shipping network, which encompassed ports
in Java, was left to private enterprise.
The two main categories of public revenue in Indonesia were profits from state
monopolies (e.g. salt, opium and pawnshops) and from other government enterprises (e.g. forest exploitation and railways), along with import and export tax,
excise duties and income tax (levied largely on non-Indonesians) (Booth 1980:
92–4). Revenues from land tax and other direct taxes such as the poll tax were of
minor importance. It was technically difficult to increase the land tax burden, as
it was re-assessed every 10 years for 10% of arable land. A rise in tax rates would
have taken 10 years to become effective throughout Java. Moreover, increasing the
tax burden on indigenous Indonesians was politically inopportune. In the 1890s,
the Dutch developed an ‘ethical’ strand in their colonial policy. The tax burden on
the indigenous population was estimated to be 13–18% of average income (Van
Deventer 1904: 165; Huender 1921: 202, 246). Although such estimates were based
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on incomplete approximations of average income, they reinforced the reluctance
of the colonial government to increase the tax burden on Indonesians.6
An additional reason for not increasing the indigenous tax burden was that
many Indonesians also paid local taxes. In Japan, local rates raised the tax burden to around 30% of farm production in 1873 and 8% in 1921/22 (Ogura 1963:
184). Comparable data are not available for Indonesia, as a changing proportion
of local taxes was levied in the form of compulsory labour, and taxes could vary
across the country. In 1924 the average cash levy of village taxes in Java was about
27% of the nominal land tax sum (Huender and Meijer Ranneft 1926: 205, 217). It
thus seems unlikely that the inclusion of local taxes in Java would have made up
the difference in table 4 between Java and Japan in terms of land tax as a percentage of GVA in farm agriculture before the 1920s.
Despite restrictions on public borrowing and on increasing the domestic tax
burden, public expenditure in Indonesia increased considerably after 1909. The
expansion was slower than in Japan, as table 5 indicates. The share of the Department of Public Works in the total Indonesian budget increased from 19% in 1905
to 40% in 1921, suggesting that a large part of the increase in public expenditure
was used to improve infrastructure (Booth 1990: 224).
This section has argued that the burden of the land tax was higher in Japan
than in colonial Java until the 1930s. This had implications for public finance.
Until about 1900, the public outlays of the central governments of Japan and Indonesia were at comparable levels, which means that the government in Indonesia
relied more on forms of public revenue other than land tax. Indonesia’s colonial
government was waging a costly war until 1904, while the Japanese government
used its funds for investment in infrastructure. It also furthered the development of industry, commerce, merchant shipping and a retail sales network. After
1905 the government in Indonesia was reluctant to increase the tax burden on the
indigenous population because there was a belief that it was already high. Consequently, public outlays for development purposes such as infrastructure development were lower in Indonesia than in Japan.
LAND TENURE AND PRIVATE MOBILISATION OF CAPITAL
Until the abolition of feudal fiefs and the government announcement in 1871 that
farmers could decide the choice of crops, Japanese farmers were virtually tied to
their land. The removal of the prohibition on the sale and mortgage of farm land
in 1872, and the introduction of a new land tax in 1873, confirmed private ownership of all non-tenured land (Hayami et al. 1991: 64–5). In part as a consequence
of the growing burden of the land tax on incomes during the deflation period of
the 1880s, farm households used their land as collateral to borrow money in order
to pay the tax. Small farmers defaulting on this debt lost their land to creditors.
The high taxes also compelled farm households to increase farm production or
off-farm income. Many borrowed to purchase current farm inputs, or materials
and labour for off-farm ventures. Not all households managed to augment farm
6 Later surveys into the tax burden yielded more complete estimates of income and therefore lower figures; for example, Ochse and Terra (1934: 58) estimated the tax burden to be
6% of the total income of 15 families in Kutawinangun (Kebumen district, Central Java).
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Surplus mobilisation in farm agriculture: Java and Japan, 1870–1940
45
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income. Given the rising level of non-agricultural wages in Japan, the less successful small farmers came under growing pressure to sell out to bigger landowners (Ogura 1963: 17–18). They either became tenants on the land they previously
owned, or they tried to find permanent non-agricultural employment.
Colonial Java had three forms of indigenous land ownership, among which
communal ownership dominated until about 1900. Under this system, village
land was periodically redistributed among the villagers who were entitled to a
share. This system did not exist in Japan. The system with changing shares gave
way to communal ownership with fixed shares, as an increasing number of villages with communal land ownership decided to fix the number of shareholders.
New candidates would only be admitted if a share became vacant. At later stages,
communal ownership with fixed shares started to give way to individual ownership (Van der Eng 1996: 145). The expansion of this system forced new generations to cultivate upland areas in remote parts of Java. A surge of people to the
uplands between 1895 and 1920 was facilitated by the improvement in transport
facilities, which tapered off in the 1920s. In these newly cultivated areas, land tenure was largely based on individual ownership.7 The expansion into the uplands
reinforced the effect of communal ownership with fixed shares giving way to
individual ownership. However, where communal ownership continued to exist,
it was difficult for farmers to capitalise on their land by either selling or mortgaging it, because this required the consensus of the village.
The Agrarian Law of 1870 confirmed that Indonesians could sell the land they
owned. However, sales to non-Indonesians (ethnic Chinese and Europeans) were
forbidden, because the colonial government sought to prevent usurious moneylenders (allegedly wealthy ethnic Chinese) from foreclosing on land that farmers
mortgaged (Heslinga 1928: 18–20, 71–3). The law also prevented sugar factories
from luring farmers into selling their land at lump sum bargain prices. Hence, the
1870 Agrarian Law averted the alienation of land owned by Indonesians. It is likely
that private land sales increased in Java with the decline of communal ownership.
The effect of the law was that farmers in Java were less able to capitalise on
their land than their peers in Japan. First, Chinese forestallers of agricultural produce (middlemen who extended credit on the basis of pledges of future crops)
dominated the informal supply of credit. They could not accept land as collateral,
because they were not allowed to take possession formally by foreclosing on it. In
several regions, well-off ethnic Indonesians did accept land as collateral for loans.
In such areas, foreclosing of mortgaged land occurred, but this remained a marginal phenomenon. Concentration of land ownership in Java remained low.
Second, farmers were not able to sell their land for what it was actually worth
to foreign-owned plantations and sugar factories, even though these companies
had the capital and the technology to increase its productivity. Short-term leases
were possible, but these were subject to restrictions imposed by local colonial officials. Some enterprises evaded the law by using Indonesian front men. This practice continued throughout the colonial period, but there are no indications that
this deceit affected large areas of farm land (Jaarsma 1936: 6–18). It remained a
marginal phenomenon.
7 To illustrate this, 60% of irrigated land was individually owned by 1932, compared with
94% of the upland area (CKS 1941: 262).
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Pierre van der Eng
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Thus, tenancy rates were higher in Japan than in Java. In 1872, 29% of farm
land in Japan was operated by tenant farmers; the proportion rose to 44% in
1903 and 48% in 1930 (Kawagoe 1993: 182). Between 1910 and 1940 the share of
farm households in Japan operating fully owned land was around 30%, while
that of households operating fully tenanted land was around 27% (HSJ 1987,
Vol. 2: 32).
There are no comparable statistics for Indonesia, but tenant farmers in Java constituted only 5.3% of all farmers operating land in 1905 and 3.5% in 1925 (Scheltema 1931: 272–3). Even after World War II, tenant farming remained relatively
marginal in Java (Van der Eng 1996: 147–52). Hence the Agrarian Law of 1870
inhibited the concentration of landholdings and the mobilisation of capital in the
rural economy of Java.
The average rent was probably also higher in Japan than in Java. Japanese
tenants paid on average 50–60% of the harvest to landowners during the years
1878–1932 (Ranis 1959: 448). There were many locally different sharecropping
arrangements in Java, but the average rent was around 40% of production (Scheltema 1931: 303–17; De Waal 1949: 137–57).
Higher tenancy rates and rents suggest that Japanese landowners had funds
available for productive investment. The contribution to industrial growth of the
flow of funds from agriculture in Meiji Japan is still a matter of debate (Minami
1994: 77–81). It is likely that industrial development was financed not only with
agricultural savings, but also with re-invested manufacturing profits and public
funds. Whatever the process, there is solid evidence that many absentee landlords
eventually became engaged in commerce and industry, for which they used land
rent revenues. Hence, landlordism was a precondition for the transfer of surplus
resources from agriculture to industry in Japan.
Japanese farmers were effectively challenged by the government through the
land tax and by landlords through rents to increase production and thus raise
investment capital. They also saved considerable sums themselves. In the form
of loans to urban relatives for the establishment of small ventures, these sums
enhanced the flow of capital out of agriculture (Ranis 1959: 452; Ohkawa et al.
1982: 10–20). The voluntary savings may have been small compared with the reinvested business surpluses and the use of public funds, but after 1900 agricultural savings expanded rapidly, as table 6 suggests.
In colonial Indonesia, most private saving by indigenous people was in the
form of precious metals and gems, which were pawned in times of need. A reliable banking system for small savers did not emerge until after 1904. In Japan there
were already 460 savings banks at the end of the 19th century, which compares to
a total of 85 district banks in Indonesia in 1922, most of which were in Java. The
deposits with this semi-private banking system increased in Indonesia between
1905 and 1929, but table 6 shows that the value of deposits in these institutions
remained much lower than in Japan.
This section has shown that differences in agrarian legislation contributed to
significant differences in the extent of tenant farming in Japan and Indonesia.
Japanese tenants also paid a higher rent than their Indonesian peers. The burden of the land tax and the pressure to pay land rent were probably a strong
incentive for Japanese farmers to increase production. Table 3 showed that agricultural production per worker in Java was comparable to that in Japan in the
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Surplus mobilisation in farm agriculture: Java and Japan, 1870–1940
47
TABLE 6 Deposits and Capital of Popular Credit Institutions in Indonesia and Japan,
1905–1940, End of Yeara
(guilders per 100 population)
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Indonesiab
Japanc
1905
3
5
1910
19
39
1915
58
169
1920
104
928
1925
149
1,747
1930
213
3,157
1935
127
1,261
1940
123
3,406
a Yen converted to guilders at current exchange rates.
b Popular credit banks, village banks and post office saving banks (deposits of Indonesians only).
Most were located in Java.
c Until 1916 only agricultural cooperatives; after that year also the mutual loan and savings banks and
credit associations. The agricultural cooperatives held about 90% of total deposits and capital during
the years 1916–40.
Sources: Financial statistics, Indonesia: Creutzberg (1980), pp. 108–17. Financial statistics, Japan: HSJ
(1987), pp. 171–7. Population, Indonesia: Van der Eng (1996), appendix 3. Population, Japan: Japan
Statistical Yearbook.
1880s. However, on the assumption that the land tax rate was 8% in Japan and
4% in Java, and that 40% of the farm households in Japan and 5% in Java were
tenant farmers who surrendered 50% of their harvest to landowners, it appears
that the average net return per worker was 27% higher in Java in the 1890s.8
This figure indicates the degree by which the average Japanese farmer had to be
more productive than his counterpart in Java to meet tax and rent obligations.
It was not until 1900 that labour productivity in Japan exceeded that in Java by
30% or more, after which the pressure of tax and rent obligations on Japanese
farmers started to abate relative to that on Java owing to productivity growth.
Qualitative evidence suggests that tenant farmers lived in hardship in Japan
until the pressure of taxation started to ease around 1905 and the worst cases of
tenant poverty disappeared (Smethurst 1986: 69). From then onwards, Japanese
farm households augmented agricultural income with other forms of income,
especially financial transfers from family members employed in manufacturing
industry.
8
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Ratio =
(1 - 0.04) × (1 - (0.05 × 0.50)) × GVA per worker in Java
(1 - 0.08) × (1 - (0.40 × 0.50)) × GVA per worker in Japan
= 1.27 ×
GVA per worker in Java
GVA per worker in Japan
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48
Pierre van der Eng
THE IMPACT OF POLICIES FURTHERING RICE PRODUCTION
Although the land tax and the land rents challenged Japanese farmers to increase
production, the agricultural policies of the government—pertaining to the development and extension of superior rice varieties, irrigation structures, fertiliser
supply and protection from imports—helped farmers to meet this challenge. This
section examines why similar policies in colonial Indonesia did not have the same
impact.
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Seed improvement and agricultural extension
In Meiji Japan, many resident landlords were instrumental in improving the
agricultural methods used by their tenant farmers. They experimented with agricultural techniques, the selection of superior seed, the organisation of farmer
discussion groups (nodankai) and the coordination of collective operation and
maintenance of irrigation works (Ogura 1963: 303–11). ‘Veteran farmers’ (rono)
spread simple but effective improved cultivation techniques (Meiji Noho) and
superior rice varieties. The latter caught on because the irrigation structures which
guaranteed the controlled water supply that these varieties required were already
in place in large parts of Japan. The Japanese government later supported the
veterans and trained them as itinerant agricultural teachers (Hayami et al. 1991:
67–72). It established the National Agricultural Experiment Station in 1893, which
started research based on the Meiji Noho. By 1904 this body had 38 experiment
stations and 110 branch stations, which took over the screening of rice varieties
and started testing the available techniques in other areas. In the 1920s, the first
new rice varieties were selected that were to have practical significance.
The Japanese government increased its control over agricultural development.
It encouraged farmers to organise themselves, which led to the establishment of a
national organisation of farmers’ associations (the Zenkoku Nojikai) in 1894. The
association organised an agricultural information service and promoted farmers’ interests. In 1899 the prefectural governments were instructed to establish
farmers’ groups where they did not exist, and to integrate them into the national
organisation. Landlords and village officials established a farmers’ association in
every village, and membership of these associations became compulsory (Ogura
1963: 303–4). This top-down system facilitated a rapid expansion of the agricultural extension organisation, which worked via the layers of farmers’ associations. There were 5,200 extension workers in Japan by 1914, 10,000 by 1924 and
14,000 by 1933 (Hayami et al. 1991: 108). In contrast to their Indonesian counterparts, Japanese farmers may have been accustomed to authoritarian leadership,
which had been part of life during the Tokugawa era. Japanese people were also
more literate than Indonesians, which may have facilitated self-organisation by
farmers, as well as communication with support services. Extension workers with
adequate qualifications were relatively easy to find.
In 1903 the government instructed the organisations to disseminate to the farmers a uniform number of instructions concerning improved rice cultivation techniques. Extension workers had to supervise the implementation of the instructions.
Prefectural governments issued regulations providing for the arrest of farmers
who failed to implement the measures (Ogura 1963: 16, 165–7). There were cases
of obstruction by farmers, especially tenants, who had to borrow money at high
interest in order to purchase the prescribed seeds and fertiliser.
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The colonial government in Indonesia relied on its local officials for the extension of improved cultivation techniques, until the Agricultural Extension Service
(AES) was formed in 1911 (Van der Eng 1996: 94–8). Agricultural research facilities were first established in 1905 in Bogor. Research at these institutes produced
important results on diseases and pests, but its practical value is difficult to establish (Van der Eng 1996: 70–4). AES officers operated several demonstration fields,
and in cooperation with the research institutes they started the first seed gardens
for screening various crops outside the Bogor area in 1913.
Discoveries of superior crop varieties took until the 1920s. The strong preference of farmers and consumers in most of Indonesia for a particular variety
impeded any crucial breakthrough in rice until the 1930s (Van der Eng 1996: 81–7).
After viable superior seed varieties had been identified, the government established an expanding network of selection and seed gardens in the 1930s for their
multiplication and dissemination. This network continued to expand and disseminate superior rice varieties after Indonesia’s independence, and from the 1960s
contributed to the country’s ‘green revolution’.
The number of personnel in the colonial AES increased from 15 in 1908 to 118
in 1918, 261 in 1930 and 457 in 1942 (Van der Eng 1996: 96). This growth was much
slower than that of extension services in Japan. Two factors impeded a faster expansion. First, there was a fundamental difference in the principles on which agricultural extension methods in Indonesia and Japan were based. Until the establishment
of the AES, colonial officials took personal initiatives to introduce farmers to new
and allegedly better cultivation techniques. They had not been averse to using ‘gentle pressure’ (perintah halus) to achieve their objectives, and this in many cases had
been ineffective in generating long-term change. The AES renounced compulsion,
maintaining that persuasion and demonstration were better approaches.
Second, appropriate knowledge and skilled manpower were very scarce. The
fundamental study of the agronomy and socio-economic conditions of different
parts of Indonesia did not begin until after 1910. The available knowledge was
based on haphazard research by benevolent colonial officials, whose enthusiasm
did not compensate for a lack of appropriate training. The AES gave priority to
the study and collection of basic data on farm agriculture during the first two decades after its establishment. For this purpose Dutch agronomists were stationed
in different regions as itinerant agricultural consultants. They had a free hand
in their regions to do what they thought necessary to encourage farm agriculture. They gradually recruited eligible Indonesian junior officers and gathered
adequate knowledge of the agricultural patterns in different areas on which to
base agricultural extension efforts.
In Japan extension officers were responsible for carrying out instructions from
higher administrative strata. In Indonesia they were multi-functional development
workers, who used a holistic approach to rural development, and who encouraged
rather than ordered farmers to organise themselves in farmers’ groups. Moreover,
their extension policies concentrated not on one crop, as in Japan, but on the crops
that were locally important. The extension approaches were not uniform, but differed according to local circumstances. Gradually, agricultural extension techniques
evolved in colonial Indonesia, such as an embryonic ‘training-and-visit’ system,
which lacked the more coercive, mechanical, top-down procedures that characterised the approach used in Japan, and also in Indonesia after the 1960s.
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Pierre van der Eng
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