26
fact, I consider that H.M. Government should carefully balance all the circumstances before deciding upon an aggressive post-beiluum policy, which would tend to promote friction and which might recoil upon our own heads. The whole question is an important one, and I would recommend that I.M. Government should make careful investigation in the countries themselves as to the most suitable policy to be adopted after the war in all the Far Eastern markets, having regard to the peculiar circumstances in each case. It is not possible, at this distance, to do more than sketch the broad lines such policy might take.
SUMMARY OF CONCLUSIONS.
1. Although the Netherlands Indies are to some extent a commercial dependency of the Straits Settlements, the direct trade with the outside world has increased enormously of late years, largely as a result of improved shipping facilities. In this increased trade British merchants in Java and the lesser islands have had a considerable share.
2. A noteworthy feature is the paucity of British houses in the market. One or The import two powerful firms do a very large business in sugar and other produce. trade is handled by two or three more British Java houses, but there appears to be an opportunity for young, active men with local experience to commence business on their own account, provided that British banks are willing to be a little more generous in their terms. It is an admitted fact that young but enterprising German merchants, with slender resources, received more encouragement and assistance from their home manufacturers and banks and from their Government than was the case with British subjects under similar circumstances.
3. The strongest competition encountered in the Netherlands Indies before the war was with the Dutch houses, and particularly in textiles. Holland had a large share of the trade in bleached goods, and it is stated that special rebates on Dutch British merchants, by goods were granted by the Dutch shipping companies. constant activity and vigilance were able to hold their own, and the shipments of The market is an open British textiles to Java were increasing at a satisfactory rate. one, and all nations are on the same footing as regards customs duties.
4. German competition was keen throughout the archipelago, not only in German manufactured articles, but in the distribution of British goods. In the iron, steel, engineering and hardware trades the German merchants hold a very strong position, and they were rapidly building up a most satisfactory business in the export of miscellaneous produce. Their position was largely due to :—
(a) Longer credit terins and financial facilities received from their Home banks, and also from Dutch banks, facilities which British banks declined to give. (bi Their monopoly of the sale of aniline dyes and synthetic indigo, which enabled them to force the sales of their textiles and other goods. This weapon is likely to be utilised still more effectively in the future, unless British dyestuff manufacturers can supply the dyes at competitive prices. The principal colours are aniline red and indigo.
(c) The development of the export of the less important articles of produce, such as copra, and the willingness to reside and work up a trade in the more remote parts of the islands, where there was little competition.
(d) The support which in many cases was given to them by British manu- facturers in respect of desirable sole or joint agencies. These agencies were frequently granted because the German merchants had branches and connections in the Outer Possessions, and thus offered a wider field for distribution.
(e) The facilities offered by German shipping lines, both as regards secret rebates, and also in extending local shipping services to certain outports, such as Macassar, where German influence was powerful,
After the war, we may expect intensified German competition in the islands, as it is extremely likely that the leading enemy houses in the Straits will transfer their activities to the Dutch islands.
5. Japanese competition before the war was not serious, but strenuous efforts are being made to work up a trade in the coarser grades of textiles. A very large business is being done in hosiery, underwear, and miscellaneous sundry articles, and local British interests anticipate gradually increasing competition in the future.
27
6. American competition before the war was negligible, but efforts are now being made to introduce United States manufactures. The attempt is not regarded with any concern by local British merchants, who aver that in normal times the high cost of production in the States, and the lack of American marketing and financing facilities enable them to hold their own.
7. British merchants in the Dutch Indies are dependent on steamers which commence loading at Continental ports, and then call to fill up at British ports. This system causes much dissatisfaction on account of frequent "shutting out" of British goods. A regular, fast steamship service under the British flag from Birkenhead and other United Kingdom ports, calling at certain Continental ports, is strongly advocated. British merchants in Java are loud in their denunciation of the Shipping Conference agreements with German and Dutch companies, and urge that they should not be continued after the war.
8. Heavy Imperial taxation, together with local taxation on profits, is bearing very heavily on the British houses, and is seriously handicapping them in competition with the Dutch. Owing to a low basis of assessment (the years 1913 and 1914 being lean years), the profits now being made are claimed by the Government as excess profits. This incidence of taxation is seriously crippling firms who would otherwise be prepared to sink their profits in consolidating and extending their influence.
It appears desirable, in the interests of our post-bellum position in the islands, that such special cases should receive favourable consideration at the hands of H.M. Government in return for guarantees that any profits thus exempted from taxation should be devoted to the strengthening and extending of British interests.
9. In view of the necessity for closer co-operation and collective action on the part of British merchants after the war, and with the object of providing a link between H.M. officials and the mercantile community, it is desirable that purely British Chambers of Commerce be formed at Batavia, Sourabaya, Samarang, and any other ports where there is a sufficiently large British trading community.
10. With a view to the promotion of British mercantile activity in the Netherlanda Indies, I would recommend that a Commercial Intelligence Officer be appointed with headquarters at H.B.M. Consulate-General at Batavia, and that an efficient system of commercial intelligence should be inaugurated by him.
SECTION 3. SIAM.
Sources of Information.—Much of the information contained in this Section has been obtained at personal interviews with the heads of the leading British houses trading in Siam. A memorandum has been received from the Bangkok agent of the Hong Kong and Shanghai Banking Corporation, and the many and valuable works of reference recently published have been consulted.
Extent of Foreign Trade.-While Siam is one of the less important markets of the Far East from the point of view of the total volume of its foreign trade, it never- theless merits careful attention by British commercial interests owing to :---
(a) The steady expansion of the trade with the outside world during the past 15 years as a result of good government and a systematic State policy of economic development; and
(b) The commanding position occupied by local British trading firms, some of which have been established in the country from the date of the first Commercial Treaty concluded with Great Britain in 1855, the treaty which not only regulated trade methods but determined the Siamese Customs Tariff.
The total volume of the sea-borne trade of the country during the last three complete pre-war Siamese years was as follows:-----
1911-12- 1912-13 - 1913-14-
Year.
Total Imports.
5,524,000
5,740,000
6,962,334
Total Exports.
Total Value of Trade.
ť 6,392,000
6,173,000
8,858,921
N.B. The Siamese year extends from April 1st to March 31st.
£ 11,916,000
11,913,000
15,821,000
D2
610