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and every facility for British goods. In view of the large and growing trade, both outwards and homewards, between the United Kingdom and the Dutch East Indies, there should he sufficient scope for a regular weekly service. Such a facility would have a considerable effect in stimulating British mercantile activity in these islands.
The operation of the International Shipping Conferences, as they existed prior to the war, should never be resumed. The feeling throughout the islands is that they worked to the detriment of British mercantile interests.
Local mercantile opinion on the subject is somewhat tersely expressed by the Committee of British Merchants and Bankers in Sourabaya appointed to advise H.M. Consul-General on all questions of enemy trading in Java. They write:--
The shipping rings should be broken, especially those including enemy and Dutch steamship companies, because they cannot be trusted, and are worked to the detriment of British interests.'
Inter-islaud communications, and connections with Singapore and the Straits, were maintained before the war by the steamers of the Dutch Royal Packet Co. and the N.D.L. Both these lines have rendered valuable services in stimulating the development of minor ports, such as Macassar, Padang, Medan, Palembang, Pontianak, and Bandjermasin. In Section I. of this report, the inauguration of British steamship services to take the place of the suspended German steamers has been strongly advocated. In this connection the partner of a leading British house in Java writes:-
"The establishment of a British steamship service between Singapore and the Dutch East Indies to take the place of the N.D.L. runs to the remoter and smaller ports in Borneo, Celebes, &c. is worth consideration. It is generally believed that the service did not pay the N.D.L., but as the vessels were small, the loss, if any, was probably not great. A British service would not be likely to be conducted as cheaply as a German one, on account of the higher pay which is given on board British steamers, but the maintenance of such a service would tend to minimise German and raise British commercial prestige in these parts, and on that account the enterprise might be worth subsidising, especially having in view the natural trade development which may reasonably be anticipated. Were such a service established, it would be necessary for British shipping lines in the United Kingdom to grant facilities to shippers by the issue of through bills of lading to the outer ports in the island, say Gorontalo, Ternate, &c., with transhipment at Singapore, care being taken that the rate of freight would be of such a competitive nature as would encourage the British shippers to patronise the British line. At present considerable quantities of European goods find their way to far outports from Sourabaya." Customs Tariff-The Customs Tariff of the Netherlands Indies is a low tariff imposed for revenue purposes, and all nations, including Holland, the mother country, Free trade does not exist between are subjected to exactly the same treatment.
Articles of food and raw materials are Holland and any of the Dutch Colonies. free, and the duties on manufactured goods average 6 per cent. ad valorem. The following are the rates on a few of the more important classes of articles :-
Tissues and stuffs of cotton, wool and silk
All yarns
Small wares
Iron, steel, and machinery
-
6 per cent. Free.
6
-
-
per cent. Free.
Financial Facilities. Branches of the Chartered Bank of India, Australia, and China, and the Hong Kong and Shanghai Banking Corporation are established at Batavia, Sourabaya, and also in Sumatra, whilst numerous strong Dutch banks operate throughout the islands. The principal of these are the Netherlands Trading Society and the Javasche Bank. The facilities received are quite adequate to the requirements of the ordinary trade in imports and exports and the general agency business. Much more liberal facilities, however, are required in the case of large engineering contracts, the payment on which is frequently deferred until the execution of the contract. In most cases, inasmuch as the work is usually supplied to either the Government, the railways, or reliable estate companies, the security is excellent and the risk small. A British engineer in Java writes:-
The usual payments here are three instalments, but in many cases we have been asked to deliver part of the work, and wait until the following year
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for our first payment. This has occurred here during the last two weeks; the Government requested us to obtain materials, and stipulated that no payment would be made until January 1917. It thus becomes quite impossible for a small firm to enter into such contracts without the steady backing of a bank.'
British engineering interests have been seriously handicapped by the fact that the British Eastern banks have strongly opposed the financing of large contracts over terms of one, two, or three years. The reason for this attitude is plain. The banks aro primarily interested in exchange, and wish to turn over their funds rapidly in the purchase and sale of comparatively short-term bills of three to six months sight. The fact remains, however, that further facilities are needed, and if the British banks on the spot decline to reconsider their attitude, this would apparently be a case for action on the part of a State Credit Institution such as is outlined in Lord Faringdon's report.
There is no doubt whatever that young active business men in the Far East, who start in business on their own account with slender resources, do not receive that paternal help and encouragement from the British banks that is accorded by the German banks to their nationals under similar circumstances. The numbers of energetic British assistants who have opened their own houses in the Netherlands Indies and in the Far East generally during the past decade are alarmingly few. The right men are available, possessed of the requisite ability and the enterprise, but no encouragement is given to them either by their Government or by their banks, and I am convinced that this is one of the greatest handicaps under which British trade in these countries is suffering. It is admitted that there were not sufficient active, steady, and enterprising British houses in the East to cope with the rapid advance of trade during the past few years; still less will they be able to carry out to a successful conclusion that policy of British economic expansion which will be urgently required after the war in order to find markets for the increased production in the United Kingdom. In the national interest it is essential that facilities be given to young Britons of good character, energy and experience to launch out on their own account, and follow the example of those pioneers of British trade in the early days of commercial intercourse in the Far East, whose efforts were the foundation of the great trading companies of to-day.
Local Taxation. British houses in Java with their head offices in Great Britain have always been handicapped through a double incidence of taxation that is, they were obliged to pay income tax to the Dutch Government on their profits earned in the Dutch East Indies, and to the British Government on both their home and also their foreign profits. The result has been that some originally British houses have registered as Dutch firms, and have relegated their home offices to the position of mere buying agencies. Many public-spirited firms do not care to do this, but at the same time they wish to draw attention to the relative disadvantage in which they are placed vis à vis their Dutch competitors.
The
The situation has become much more serious since the outbreak of war. high taxation in Great Britain together with the surrender of excess profits to H.M. Government bearing very heavily indeed on those houses with headquarters in the United Kingdom. Whereas the Dutch manufacturers and merchants are making the same profits as their British rivals, the latter are paying out a considerable proportion in taxation, and the Dutch are building up their reserves and consoli- dating their position. The relative position of British and Dutch merchants in the Netherlands Indies will be appreciably altered after the war to the disadvantage of the former.
British Chambers of Commerce.-British Chambers of Commerce do not exist in the Netherlands Indies, but, since the war, committees, representative of the merchants and bankers, have been elected in the ports to advise H.M. Consul-General on all questions regarding business in general and enemy trading in particular. These bodies have been found to be most useful institutions, and the Sourabaya Committee makes the following recommendation :-
"The Advisory Committees should be permanent institutions, appointed by the British merchants locally, and one member should retire annually in rotation, his place to be filled at the annual meeting."
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