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return for his assistance. The German house therefore receives 50 per cent. of its claim, say 500, and a further 5007. in return for its services, or, in other words, the claim of 1,000. is paid in full, Dutch merchants have also been known to take similar action. Such dishonest practices are rendered possible by the fact that long experience has proved to both merchants and bankers the advisability of accepting a compromise rather than place the native in the bankruptcy court, which takes anything from four to six years to wind up a native estate.
This unsound system of long credits has been the main factor in building up the German trade in the archipelago. It has enabled the local enemy merchant to compete to some extent in the distribution of British piece goods, as he was able to extend his sales to a wide circle of speculative, financially weak dealers, and he relied upon his own acumen and sharp practice, together with the help of his home banks, to extricate himself should financial difficulties arise. The position of the British shipper from Manchester was secured, inasmuch as under the system he received cash against documents in London or Hamburg, but the local British merchant on the spot suffered.
2. The most formidable competition experienced from German houses has been in heavy engineering, machinery, iron, steel, and hardware generally. Germany largely controls the imports of these articles, and British firms, so far, have competed at great disadvantage. In the past 30 years representatives of German sugar machine works have secured a very large portion of the important trade in supplying the equipment of local plants. This has been due partly to the very easy terms of payment allowed, which often extends over several years, but is largely attributable to the fact that the Germans quoted and supplied exactly what the mills required, and their representatives were able to supply many more details than the ordinary British salesman, who had often very little experience, and frequently attempted to force would-be purchasers to take standard patterns and dimensions instead of quoting for local requirements.
A typical case is the celebrated German firm of Orenstein & Koppel, Arthur Koppel, which maintains its own branch in Java, and conducts a large trade in light railways, iron, and steel. This firm frequently delivers from stock one or two locomotives, and has usually some 2,000 to 3,000 tons of rails in its godowns. A large business is done in light railways, bridges, and other supplies for sugar plantations and factories, and these goods are sold on credit at terms extending to as much as five years. The goods are shipped from Germany, free of finance, and remittances are made direct to the Deutsch-Asiatische Bank through their local agents, Messrs. Behn, Meyer & Co. In like manner the agents for Krupps do an immense business in railway material, bridges, iron and steel, &c. Recently their stocks were upwards of 8,000 tons in Sourabaya alone, and they are reputed to have power at any time to undercut in price any local firm desirous of entering into competition. A large trade is handled by the sole agents for Mannesmann tubes, Messrs. Linde, Teves & Co., who have branches at no less than seven ports throughout the islands. The metal and hardware import is largely in the hands of Carl Schlieper & Co., of Remscheid, and is conducted through their Java branch.
British manufacturers cannot hope to compete in this business after the war unless they are prepared to adopt an expansive policy, to treat their agents on more liberal terms, and in return to insist on the pushing of their interests throughout the Outer Possessions as well as in Java. They should be prepared to send out expert representatives to adopt a more liberal policy of sample consignments, to revise their catalogues and literature in accordance with the needs of the buyer, and above all they should be prepared to graut credit in cases of large contracts where there is reasonable security, such as is the case in the sugar and other factories. The granting of credit in such cases is on a very different plane to that accorded to unstable dealers in piece goods and sundries. The British Eastern banks have not looked with favour on such schemes in the past, because they are exchange banks pure and simple, and rely upon exchange rather than upon interest for their profits, but this would appear to be a case where a State bank of the nature of that recommended by Lord Faringdon's Committee might be of distinct advantage. With the expansion of tea and rubber cultivation of late years among the islands, the gradual development of the Outer Possessions, and consequent extension of means of communication, the Dutch East Indies are likely to become a still more important market for machinery and plant of all kinds. It is hoped that, after the war, German finance will be very much crippled, and consequently the elaborate system of credit, which has been her
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mainstay in this important field, will probably require to be curtailed. This will afford an opportunity for British manufacturers to develop their schemes of expansion and at the same time, it is hoped, will remove the more objectionable features of the trade.
3. The control of the import of aniline dyes and synthetic indigo has been used by the Germans as a lever to further the sales of their piece goods and other commodities. The total imports of dyestuffs into Java in 1912 amounted to 250,000OZ. This trade, in itself, was a lucrative one for the local German houses, inasmuch as no financial risks were entailed, and very full commissions were granted by the dye manufacturers. The Germans, however, utilised their monopoly to the fullest extent by declining to sell their dyes to the native dealers except in conjunction with sales of textiles or other imported articles. It should be noted that the bulk of the imports of grey and bleached fabrics and yarus into the islands are afterwards dyed by the natives, while for the peculiar process of "batticking" (ie., native printing with wax) a wide range of shades is demanded. The staple trade in textiles is therefore dependent upon an adequate supply of dyestuffs. Native indigo and other vegetable dyes are obtainable at cheap prices; but these cannot compete with the imported synthetic dyestuffs :—
(1) In the case of plain, direct dyeing, by reason of the longer process required;
and
(2) In the case of batticking, on account of the limited range of shades
obtainable.
Even with the present exorbitant prices for synthetic dyestuffs, native dyes are only used as a stopgap.
It is only to be expected that, after the war, Germany will be forced to utilise her superiority in dye production to the greatest advantage, but it is hoped that some The alleviation of the situation may be obtained from British dye manufacturers. two principal colours required in Java are aniline red and indigo.
4. Two distinct features of German trade have been the zeal with which German merchants have stimulated the export of miscellaneous articles of produce, and their readiness to reside and work up a business in the more remote island ports, which are at present in the early stages of development. These characteristics are noticeable throughout all the markets of the Far East. The two forms of activity go hand-in- hand, and are prompted by the following considerations :-
(1) British and other European merchants already control a large share of the trade in the main ports, which are largely developed, and where competition is the keenest.
(2) The undeveloped portions of the various markets offer the greatest field for expansion, and if only an export traile can be secured in their produce, the return trade in imports is bound to follow.
(3) Throughout the Far East it is precisely the miscellaneous articles such as oil-bearing seeds, copra, hides, &c., which have found a ready market on the continent, and the result has been the shifting of the entrepôt trade in these products from London to Hamburg, Rotterdam, and other continental ports.
(4) It is realised that having established a sound trade without serious competition, and by dint of considerable perseverance and endurance-for residence in the undeveloped portions of the Far East entails a lonely life, and the absence of most of the amenities and many of the comforts of civilised existence, and here I speak from considerable personal experience their position will be sufficiently strong to make a bold bid for the bulk staple trade in the great ports.
This tendency towards the decentralisation of German efforts to the Outer Possessions has been successfully carried out for some years. A notable example is the case of Macassar, the capital of Celebes, which is rapidly increasing in importance, and is keenly competing with Singapore, particularly in copra. German activities are most noticeable, and these have been stimulated by the excellent service of N.D.L. steamers to Singapore, and by the fact that the German-Australian line made it a port of call in order to attract the direct shipments of produce, and to divert the trade from the Straits. The Dutch are actively co-operating in the development of the more backward islands by a system of improved steamer connections under the flag of the Royal Packet Company. In 1913 there were only three British residents in
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