Of the newcomers, it was the Dutch who would eventually lay the foundations of the Indonesian state, though their initial efforts were pretty shoddy: an expedition of four ships led by Cornelius de Houtman in 1596 lost half its crew, killed a Javanese prince and lost a ship in the process. Nevertheless, it returned to Holland with enough spices to turn a profit.
Recognising the great potential of East Indies trade, the Dutch government amalgamated competing merchant companies into the Vereenigde Oost-Indische Compagnie (VOC; United East India Company). This government-run monopoly soon became the main competitor in the spice trade.
The government’s intention was to bring military pressure to bear on the Portuguese and Spanish. VOC trading ships were replaced with armed fleets instructed to attack Portuguese bases. By 1605 the VOC had defeated the Portuguese at Tidore and Ambon and occupied the heart of the Spice Islands.
The VOC then looked for a base closer to the shipping lanes of the Malaka and Sunda Straits. The ruler of Jayakarta (now Jakarta) in West Java granted the VOC permission to build a warehouse in 1610, but he also granted the English trading rights. The VOC warehouse became a fort, relations between the VOC and English deteriorated, and skirmishes resulted in a siege of the fort by the English and the Jayakartans. The VOC retaliated, razing the town in 1619. They renamed their new headquarters Batavia.
The founder of this corner of the empire was the imaginative but ruthless Jan Pieterszoon Coen. Among his ‘achievements’ was the near total extermination of the indigenous population of the Banda Islands in Maluku. Coen developed plans to make Batavia the centre of intra-Asian trade from Japan to Persia, and to develop spice plantations using Burmese, Madagascan and Chinese labourers.
Although these more grandiose plans failed, he was instrumental in obtaining a VOC monopoly on the spice trade. In 1607 an alliance with the sultan of Ternate in Maluku gave the VOC control over the production of cloves, and the occupation of the Bandas from 1609 to 1621 gave them control of the nutmeg trade.
VOC control grew rapidly: it tookMalaka from the Portuguese in 1641, quelled attacks from within Java, secured the Sumatran ports and defeated Makassar in 1667. The VOC policy at this stage was to keep control of trade while avoiding expensive territorial conquests. An accord was established with the king of Mataram, the dominant kingdom in Java. (Despite having the same name, this Islamic kingdom had nothing to do with the Hindu Mataram dynasty.) This accord allowed only VOC ships (or those with permission) to trade with the Spice Islands.
Unwillingly at first, but later in leaps and bounds, the VOC progressed from being a trading company to being a colonial master. From the late 1600s Java was beset by wars as the Mataram kingdom fragmented. The VOC was only too willing to lend military support to contenders for the throne, in return for compensation and land concessions. The Third Javanese War of Succession (1746–57) saw Prince Mangkubumi and Mas Said contest the throne of Mataram’s King Pakubuwono II. This spelled the end for Mataram, largely because of Pakubuwono II’s concessions and capitulation to VOC demands.
In 1755 the VOC divided the Mataram kingdom into two states: Yogyakarta and Surakarta (Solo). These and other smaller Javanese states were only nominally sovereign; in reality they were dominated by the VOC. Fighting among the princes was halted, and peace was brought to East Java by the forced cessation of invasions and raids from Bali. Thus Java was finally united under a foreign trading company whose army comprised only 1000 Europeans and 2000 Asians.
Despite these dramatic successes, the fortunes of the VOC were soon to decline. After the Dutch–English War of 1780, the VOC spice-trade monopoly was finally broken by the Treaty of Paris which permitted free trade in the East. In addition, trade shifted from spices to Chinese silk and Japanese copper, as well as coffee, tea and sugar, over which it was impossible to establish a monopoly.
Dutch trading interests gradually centred more on Batavia. The Batavian government became increasingly dependent on customs dues and tolls charged for goods coming into Batavia, and on taxes from the local Javanese population.
Smuggling, illicit trade by company employees, the mounting expense of wars in Java and the cost of administering additional territory acquired after each new treaty all played a part in the decline of the VOC. The company turned to the Dutch government at home for support, and the subsequent investigation of VOC affairs revealed corruption, mismanagement and bankruptcy. In 1799 the VOC was formally wound up, its territorial possessions seized by the Dutch government, and the trading empire became a colonial empire.
Around 1830, Dutch control was at a crossroads. Trade profits were in decline, the cost of controlling conflicts continued, and when the Dutch lost Belgum in 1830, the home country itself faced bankruptcy. Any government investment in the East Indies now had to make quick returns, so the exploitation of Indonesian resources began.
A new governor general, Johannes van den Bosch, fresh from experiences with slave labour in the West Indies, was appointed to make the East Indies pay their way. He succeeded by introducing an agricultural policy called the Culture System. This was a system of government-controlled agriculture or, as Indonesian historians refer to it, Tanam Paksa (Compulsory Planting). Instead of paying land taxes, peasants had to either cultivate government-owned crops on 20% of their land or work in government plantations for nearly 60 days of the year. Much of Java became a Dutch plantation, generating great wealth for the Netherlands. For the Javanese peasantry, this forced-labour system brought hardship and resentment. They were forced to grow crops such as indigo and sugar instead of rice, and famine and epidemics swept through Java in the 1840s. In strong contrast, the Culture System was a boon for the Dutch and the Javanese aristocracy. In the ensuing years, Indonesia supplied most of the world’s quinine and pepper, over a third of its rubber, a quarter of its coconut products and almost a fifth of its tea, sugar, coffee and oil. The profits made Java a self-sufficient colony and saved the Netherlands from bankruptcy.
Public opinion in the Neterlands began to decry the deplorable treatment of Indonesians under the colonial government. In response, the Liberal Period was initiated. From 1870, farmers no longer had to provide export crops, and the Indies were opened to private enterprise, which developed large plantations. As the population increased, less land was available for rice production, thereby bringing further hardship. Meanwhile, Dutch profits grew dramatically. New products such as oil became a valuable export due to Europe’s industrial demands. As Dutch commercial interests expanded throughout the archipelago, so did the need to protect them. More and more territory was taken under direct control of the Dutch government.
A new approach to colonial government, known as the Ethical Period, was introduced in 1901. Under this policy it was the Dutch government’s duty to further programmes of health, education and other societal initiatives. Direct government control was exerted on the outer islands. Minor rebellions broke out everywhere, from Sumatera to Timor, but these were easily crushed and the Dutch took control from traditional leaders, thus establishing a true Indies empire for the first time.
New policies were implemented, including the transmigrasi (transmigration) of farmers from heavily populated Java to lightly populated islands. There were also plans for improved communications, agriculture, industrialisation and the protection of native industry. Other policies aimed to give greater autonomy to the colonial government and lessen control from the Neterlands, as well as give more power to local governments within the archipelago.
These humanitarian policies were laudable but ultimately inadequate: public health funding was simply not enough, and while education opportunities for some upper and middle class Indonesians increased, the vast majority remained illiterate. Though primary schools were established and education was theoretically open to all, by 1930 only 8% of school-age children received an education. Industrialisation was never seriously implemented and Indonesia remained an agricultural colony.
