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The Development of the Rubber Market in Pre-World War II Singapore

Published online by Cambridge University Press:  24 August 2009

W.G. Huff
W.G. Huff
Affiliation:
University of Glasgow and Australian National University
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Extract

The growth of the pre-World War II rubber industry in British Malaya is, in contrast to the staple industries of many less-developed countries, exceptionally well-researched. P.T. Bauer and J.H. Drabble have written seminally on the rubber industry, while a number of others, including C. Barlow, have made important contributions. Yet an outstanding feature of the British Malayan industry remains relatively overlooked: the development of the Singapore rubber market.

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Journal of Southeast Asian Studies , Volume 24 , Issue 2 , September 1993 , pp. 285 - 306
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Copyright © The National University of Singapore 1993

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References

This paper benefited from the comments of C. Barlow, R.B. DuBoff, J.M. Gullick and T. Ee Lus, from suggestions made by an anonymous referee and from numerous specific points made by the Associate Editor of this Journal. The interpretation and any errors which may remain are my own.

1 British Malaya comprised the Malay states and Straits Settlements, chiefly Singapore, Penang and Malacca. Malaya was all these areas except Singapore.

2 Major books by the three are Bauer, P.T., The Rubber Industry (London: Longmans, Green, 1948)Google Scholar; Drabble, J.H., Rubber in British Malaya, 1876–1922 (Kuala Lumpur: Oxford University Press, 1973)Google Scholar and Malayan Rubber the Interwar Years (London: Macmillan, 1991)Google Scholar; Barlow, C., The Natural Rubber Industry (Kuala Lumpur: Oxford University Press, 1978)Google Scholar. In addition, there are numerous articles by the three and by Drabble and P.J. Drake cited in the bibliographies of these books.

3 A popular history is Coates, Austin, The Commerce in Rubber (Kuala Lumpur: Oxford University Press, 1987)Google Scholar. Detailed work on the Singapore rubber market begins with the 1950s. For example, see Wilson, Joan, The Singapore Rubber Market (Singapore: Eastern Universities Press, 1958)Google Scholar; Silcock, T.H., “A Note On Futures Trading and the Singapore Rubber Market”, Malayan Economic Review 3, no. 2 (1958): 63–66Google Scholar; Rubber Association of Singapore, The Marketing of Natural Rubber (Singapore: Rubber Association of Singapore, 1974)Google Scholar.

4 Bauer, , Rubber, p. 25Google Scholar.

5 Rees, Graham L., Britain's Commodity Markets (London: Paul Elek Books, 1972), pp. 209–212Google Scholar; Stahl, Kathleen M., The Metropolitan Organization of British Colonial Trade (London: Faber and Faber, 1951), pp. 167, 172Google Scholar.

6 Price, H., “Growth of the Rubber Trade”, in One Hundred Years of Singapore, 2 vols., ed. Makepeace, Walter, Brooke, Gilbert E. and Braddell, Roland St. J. (London: John Murray, 1921), II, p. 85Google Scholar.

7 Ibid., p. 87. In this article, agency house is used as a short form of reference for managing agency house. The main Singapore agency houses were Boustead & Co.; Barlow & Co; Sandilands, Buttery & Co.; Paterson, Simons & Co.; East Asiatic Company; Borneo Company; Harrisons Barker & Co.; Guthrie & Co.; and Sime Darby. The managing agency system is dealt with in Stahl, , Metropolitan Organization, p. 133Google Scholar and see pp. 127, 171; she describes “the modern agency house, with its commercial system in Ceylon and in London, its flotation at either end of plantation companies, and its function of providing a wide range of services over all the stages of growing and processing as well as of insuring, shipping and selling the plantation product”. This is usefully added to by Drabble, J.H. and Drake, P.J., “The British Agency Houses in Malaysia: Survival in a Changing World”, Journal of Southeast Asian Studies 12, no. 2 (1981): 309CrossRefGoogle Scholar. For Malayan estate rubber, an agency house “usually held some shares in each of the various plantation companies under its management. In descending order of involvement, an agency house could be owner, majority shareholder, minority shareholder, contract manager, or secretary to any given rubber producing company Any managerial/secretarial connection with a rubber company … brought lucrative selling and supplying agencies to the agency house.”

8 “Price, Rubber Trade”, pp. 84–88; ‘S’ “A Plantation Pioneer”, Bulletin of the Rubber Growers'Association 10, no. 9 (1928) (hereafter BRGA): 581Google Scholar. For the results of the auction see Singapore Chamber of Commerce, Annual Report (annual series, Singapore) (hereafter Report), 1912–39 and on the formation of the Rubber Association see Report 1911, pp. 34–35, 1912, pp. 33–36; Rees, , Commodity Markets, pp. 269–70Google Scholar.

9 Darbishire, C.W., “Commerce and Currency”, in One Hundred Years, ed. Makepeace, et al. , II, pp. 54–55Google Scholar. The main sources for the history of rubber marketing and milling in Singapore on which the following draws are Report of the Commission Appointed by the Governor of the Straits Settlements to Enquire into and Report on the Trade of the Colony, 1933–34, 5 vols. (Singapore: Government Printing Office, 1934)Google Scholar (hereafter SSTC 1933–34), I, p. 45Google Scholar; II, pp. 347–56, 410, 422–25, 639, 718–28, 746–55, 794–97; III, pp. 141, 187; IV, pp. 135, 136, 233–34; Devitt, Hugh M., “The Singapore Rubber Market”, BRGA 1, no. 1 (1919): 18–22Google Scholar; Price, “Rubber Trade”, p. 88; Singapore Chamber of Commerce, Report 1926, p. 14Google Scholar; Walling, R.N., Singapura Sorrows (Singapore: Malaya Publishing House, 1931), pp. 111, 115Google Scholar.

10 Report of the Commissions to Enquire into the Public Service, 2 vols. (Singapore: Government Printing Office, 1919), I, p. 189Google Scholar, and see Nathan, J.E., The Census of British Malaya, 1921 (London, 1922), p. 71Google Scholar.

11 Babcock, Glen D., History of the United States Rubber Company (Muncie, Indiana: Indiana University, 1966), pp. 83, 177–78Google Scholar; Macmillan, Allister, Seaports of the Far East, 2nd edn. (London: W.H. & L. Collingridger, 1925), p. 458Google Scholar; Singapore Dollar Directory, 1919 (Singapore, 1919), section III, pp. 36, 38, 68Google Scholar.

12 The Singapore and Straits Directory 1921, pp. 134–254Google Scholar (from 1922, The Singapore and Malayan Directory) (Singapore, annual series) (hereafter Directory).

13 SSTC 1933–34, II, p. 719Google Scholar.

14 Estates were defined as holdings of 100 acres or more, and smallholdings as everything of lesser size.

15 Devitt, “Rubber Market”, p. 18.

16 Ibid., p. 20. See also Drabble, , Rubber in Malaya, p. 119Google Scholar.

17 Directory 1916, p. 138Google Scholar.

18 Holt, E.G., Marketing of Crude Rubber (Washington, D.C.: US Department of Commerce, 1927), pp. 9–10, 12–13, 27–28Google Scholar. On the process of determining deliverable grades prior to the organization of the Rubber Exchange of New York in 1925, see Baer, Julius B. and Saxton, Olin Glenn, Commodity Exchanges and Futures Thiding (New York: Harper & Brothers, 1949), pp. 91–92Google Scholar.

19 SSTC 1933–34, IV, p. 135Google Scholar; II, pp. 353–54. The Rubber Manufacturers Association (RMA), founded in 1929 by amalgamation of the Rubber Institute and the Rubber Association of America, produced its own RMA codes which served as the basis for all consignments to the United States. Heinisch, K.F., Dictionary of Rubber (London: Applied Science Publishers, 1974), p. 442Google Scholar. F.A.Q. stood for fair average quality. Some Singapore firms had established their own grades in overseas markets. For example, Anglo-French & Bendixsens sold 1492 and 1491, which were lower quality than F.A.Q. SSTC 1933–34, II, p. 746Google Scholar.

20 SSTC 1933–34, I, p. 146Google Scholar; III, p. 140.

21 Ibid., II, p.750.

22 Ibid.

23 Coase, R.H., “The Nature of the Firm”, Economica 4 (1937): 386–405CrossRefGoogle Scholar; and see Loasby, Brian J., “Problem-solving Institutions”, Scottish Journal of Political Economy 37, no. 2 (1990): 197–201CrossRefGoogle Scholar.

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25 Wright, Clifton, Cameos of the old Federated Malay States and Straits Settlements (Ilfracombe, Devon: Arthur H. Stockwell, 1972), p. 137, and see p. 135Google Scholar.

26 Cf. Williamson, Oliver E., “The Vertical Integration of Production: Market Failure Considerations”, American Economic Review 61, no. 2 (1971): 112–23Google Scholar. Similarly, the specialized nature of buying and grading facilities for rubber indicate the scope for appropriable quasi-rents and therefore high contracting costs in the absence of vertical integration. Cf. Klein, Benjamin et al. , “Vertical Integration, Appropriable Rents, and the Competitive Contracting Process”, Journal of Law and Economics 21, no. 2 (1978): 297–326CrossRefGoogle Scholar.

27 SSTC 1933–34, I, pp. 71–88Google Scholar; II, pp. 62, 79, 80; IV, p. 82. On quasi-vertical integration, see The Economics of the Firm, ed. Clarke, Roger and McGuinness, Tony (Oxford: Basil Blackwell, 1987), especially the article by Davies, Steve, “Vertical Integration”, pp. 83–106Google Scholar.

28 Huff, W.G., “Quasi-Vertical Integration, Monopoly and Japanese Competition in Pre-World War II Singapore's Export and Shipping Trades” (forthcoming article to be published in Proceedings of the Eleventh International Economic History Congress, Milan, 1994)Google Scholar.

29 SSTC 1933–34, I, pp. 93–94Google Scholar; II, p. 45.

30 Ibid., II, p. 352.

31 Ibid., II, pp. 746–47, 753, 754; Directory 1930, pp. 8, 16Google Scholar; 1936, pp. 350–51, 501; 1939, pp. 381–82, 555.

32 SSTC 1933–34, II, p. 724Google Scholar.

33 Directory 1930, pp. 1161, 127Google Scholar; 1931, pp. 274, 24; 1939, pp. 309–310, 295, 399.

34 Directory 1930, p. 1148Google Scholar; 1939, p. 285; and see 1931, p. 261. In 1939, three of these firms were the same as in 1930; four of the firms were different.

35 SSTC 1933–34, II, p. 354Google Scholar.

36 Ellis, Thomas Flower, “A Brief Account of the Malay Tin Industry”, Proceedings of the Chemical and Metallurgical Society of South Africa 2 (1897): 11Google Scholar; and see Melville, T.A. “The Post Office and its History”, in One Hundred Years, ed. Makepeace, , et al. , II, pp. 150–53Google Scholar.

37 SSTC 1933–34, II, p. 750Google Scholar.

38 Directory 1931, pp. 27, 160Google Scholar.

39 Holt, , Marketing, p. 190Google Scholar.

40 SSTC 1933–34, II, p. 354Google Scholar.

41 Ibid., II, p. 719.

42 Ibid., II, p. 354.

43 On interlinked deals, see Platteau, Jean-Philippe and Abraham, Anita, “An Inquiry into Quasi-credit Contracts: The Role of Reciprocal Credit and Interlinked Deals in Small-scale Fishing Communities”, Journal of Development Studies 23, no. 4 (1987): 461–90CrossRefGoogle Scholar; Bell, Clive, “Credit Markets and Inter-linked Transactions”, in Handbook of Development Economics, ed. Chenery, H.B. and Srinivasan, T.N. (Amsterdam: North Holland, 1988)Google Scholar. The concept of book-keeping barter is developed in Huff, W.G., “Bookkeeping Barter, Money, Credit and Singapore's International Rice Trade, 1870–1939”, Explorations in Economic History 26, no. 2 (1989): 161–89CrossRefGoogle Scholar and “Editor's Note”, Explorations in Economic History 27, no. 3 (1990)Google Scholar.

44 SSTC 1933–34, II, p. 794Google Scholar. For a description of the rubber produced by native cultivators in the Outer Provinces in 1925, see Figart, David M., The Plantation Rubber Industry in the Middle East (Washington: US Department of Commerce, 1925), pp. 263, 268Google Scholar. In 1990, Indonesian smallholder rubber was said to contain bits of railway and even turtle shells. “Indonesia Taps into Tyre Makers' Needs”, Financial Times, 16 01 1990Google Scholar. In this article, references to the Financial Times are to the London edition.

45 Data for exports of wet, slab rubber from Netherlands India are from Jaaroverzicht van den In- en Uitvoer van Nederlandsch-Indië, deel II: Buitengewesten, , Mededeelingen van het Centraal Kantoor voor de Statistiek (Batavia), annual series, 1926–1933Google Scholar.

46 See also Soliva, R., An Economic View of Rubber Planting (Singapore: Kelly & Walsh, 1931), p. 132Google Scholar; Tengwall, T.A., “History of Rubber Cultivation and Research in the Netherlands Indies” in Science and Scientists in the Netherlands Indies, ed. Honig, Pieter and Verdoorn, Frans (New York: Board for the Netherlands Indies, Surinam and Curacano, 1945), p. 351Google Scholar.

47 Jaaroverzicht van den In- en Uitvoer van Nederlandsch-Indië, deel II: Buitengewesten, , Department van Lanbuow, Nijverheid en Handel. Mededeelingen van het Centraal Kantoor voor de Statistiek, 1928–1929Google Scholar.

48 Huff, “Bookkeeping Barter”, pp. 180–83.

49 Cator, W.J., The Economic Position of the Chinese in the Netherlands Indies (Oxford: Basil Blackwell, 1936), pp. 72, 136, 175–76, 245Google Scholar; Ee-Leong, Tan, “Dr. Lee Kong Chian (1893–1967)”, Annual of the China Society of Singapore (1964–1967), p. 7Google Scholar.

50 SSTC 1933–34, II, p. 794Google Scholar.

51 Ibid. The Dutch rubber syndicate is described in Holt, , Marketing, pp. 89–90Google Scholar.

52 Huff, , “Entrepreneurship and Economic Development in Less Developed Countries”, Business History 31, no. 4 (1989): 86–97CrossRefGoogle Scholar.

53 Directory 1911, pp. 176–77Google Scholar; 1921, p. 201; Chinese Commercial Directory of Singapore, Penang, Malacca, Kuala Lumpur, Batupahat, Muar (Singapore, 1932)Google Scholar, section D. When Singapore Chinese firms added rubber to produce trade, the tendency for the name of the firm, if not always of the chop, to change often conceals this continuity. SSTC 1933–34, II, p. 362Google Scholar.

54 SSTC 1933–34, II, p. 794Google Scholar.

55 Nathan, J.E., “Changes in the flow of trade”, Manchester Guardian Commercial, special section on British Malaya, 19 02 1925, p. 24Google Scholar; Department of Agriculture, Industry and Commerce, Netherlands Indies, “Native Rubber Cultivation in the Netherlands East Indies”, BRGA 13, no. 11 (1931): 487Google Scholar; SSTC 1933–34, IV, pp. 233–34Google Scholar.

56 SSTC 1933–34, II, p. 795Google Scholar.

57 Ibid., V, p. 46; Malaya, , Foreign Imports and Exports 1933 (Singapore, 1934), p. 406Google Scholar.

58 SSTC 1933–34, II, pp. 721, 896–97Google Scholar; Nathan, “Flow of Trade”, p. 24.

59 See Huff, W.G., “Sharecroppers, Risk, Management, and Chinese Estate Rubber Development in Interwar British Malaya”, Economic Development and Cultural Change 40, no. 4 (1992): 743–73CrossRefGoogle Scholar.

60 Archives and Oral History Department, Singapore, Pioneers of Singapore (Singapore, 1984), interview with Lee Seng Gee (B000040/08), pp. 12, 63Google Scholar.

61 Archives and Oral History Department, Singapore, Pioneers of Singapore (Singapore, 1984), interview with Tan Ee Leong (A000003/21), pp. 29–30, 104Google Scholar; Tan Ee Leong interview with the author, 7 August 1972.

62 Straits Settlements, Report of the Commissions on the Present State of Trade Depression and the Extension of Credit Facilities (Singapore: Government Printing Office, 1921), pp. xi, 167Google Scholar. On methods of financing rubber exports to the United Kingdom and United States, see Holt, , Marketing, p. 29Google Scholar; SSTC 1933–34, I, pp. 222–27Google Scholar.

63 Stifel, Laurence D., “The Growth of the Rubber Economy of Southern Thailand”, Journal of Southeast Asian Studies 4, no. 1 (1973): 118–19, 130CrossRefGoogle Scholar.

64 The story may be traced in Malaya, , Foreign Imports and Exports (Singapore), annual series, 1933–1937Google Scholar; Malaya, , The Foreign Trade of Malaya (Singapore), annual series, 1938–1939Google Scholar; “Report on the Workings of the Rubber Regulation Scheme in the Islands of Singapore and Penang”, Annual Departmental Report of the Straits Settlements, 1935 (Singapore, 1936), II, pp. 417–27Google Scholar; 1936 I, pp. 903, 908; 1937 I, pp. 925, 933–36, 938; 1938 I, pp. 375–76; The Straits Times, 26 Feb. 1935; SSTC 1933–34, V, pp. 46–47Google Scholar; Boeke, J.H., The Structure of the Netherlands Indian Economy (New York: Institute of Pacific Relations, 1942), pp. 116–18Google Scholar; Rothe, Cecile G.H., “Commodity Control in Netherlands India”, in Commodity Control in the Pacific Area, ed. Holland, W.L. (London: George Allen & Unwin, 1935), pp. 302–306Google Scholar.

655 SSTC 1933–34, II, p. 796Google Scholar.

66 Malaya, , Foreign Imports and Exports, 1933–1937Google Scholar.

67 Netherlands India, Central Bureau of Statistics, Statistical Pocket Book of Indonesia (Batavia, 1941), p. 80Google Scholar.

68 For example, see Sen, Hon Sui, Economic Pattern in the Seventies (budget speech) (Singapore: Ministry of Culture, 1972), p. 23Google Scholar; Economic Committee, The Singapore Economy: New Directions (Singapore-Ministry of Trade and Industry, 1986), pp. 139–43, 177–92Google Scholar. For analysis of these developments see Huff, W.G., “Patterns in the Economic Development of Singapore”, Journal of Developing Areas 21, 3 (1987): 305–326Google Scholar.

69 On the concept of natural comparative advantage and its main determinants, see Arndt, H.W., “Comparative Advantage in Trade in Financial Services”, Banca Nazionale del Lavoro Quarterly Review no. 164 (03 1988): 61–78Google Scholar; Hindley, Brian and Smith, Alisdair, “Comparative Advantage and Trade in Services”, The World Economy 7, no. 4 (1984): 369–89CrossRefGoogle Scholar; Lall, Sanjaya, “The Third World and Comparative Advantages in Trade Services”, in Theory and Reality in Development, ed. Lall, Sanjaya and Stewart, Francis (London: Macmillan, 1986), pp. 122–38CrossRefGoogle Scholar.

70 For general discussion of these aspects of marketing, see Timmer, C. Peter, Getting Prices Right: the Scope and Limits of Agricultural Price Policy (Ithaca: Cornell University Press, 1986), pp. 59–72, 136–42Google Scholar. See also Stevens, Robert D. and Jabara, Cathy L., Agricultural Development Principles: Economic Theory and Empirical Evidence (Baltimore: Johns Hopkins University Press, 1988), pp. 331–58Google Scholar.

71 SSTC 1933–34, IV, p. 136Google Scholar. Writing 20 years later, but when the Malayan rubber marketing network was largely the same as that obtaining in the 1930s, the 1954 Mudie Committee also argued that the organization of rubber marketing in Malaya was efficient, judged by two criteria. One was the small difference between prices paid to smallholders in Malaya and Singapore f.o.b. prices. The other was that extensive competition in various stages of marketing and processing rubber kept charges for services low. Federation of Malaya, , Report of the Mission of Enquiry into the Rubber Industry of Malaya (Kuala Lumpur: Government Press, 1954), pp. 42–47Google Scholar.

72 Department of Agriculture, Industry and Commerce, Netherlands Indies, “Native Rubber Cultivation”, p. 487.

73 “Rubber Association to Revamp Trading System”, Straits Times Weekly, 24 11 1990Google Scholar.

74 “Rubber Growers Agree to Work Towards Free Market”, Financial Times, 19 06 1992Google Scholar; “Rubber Prices Stretch Growers' Patience”, Financial Times, 26 11 1992Google Scholar.

75 “Kuala Lumpur Exchange Plans a New Life”, Financial Times, 20 07 1987Google Scholar; see also “NR: New Drive to Promote Markets and Direct Trade”, Malaysian Digest, 31 01 1984Google Scholar; “Rubber Trade to Bypass Singapore”, Singapore Bulletin 15, no. 4 (01 1987): 16Google Scholar.

76 “Indonesia Taps into Tyre Makers' Needs”, Financial Times, 16 01 1990Google Scholar.

77 Singapore, Report of the Department of Commerce and Industry 1954 (Singapore, Government Printer, 1956), p. 14Google Scholar; Singapore, Singapore Trade Statistics (Singapore), annual series, 1969 and 12 1991Google Scholar.

78 “Singapore Aims to be Powerhouse for Rubber Trade”, Straits Times Weekly, 15 02 1992Google Scholar; see also “London Rubber Index Futures Launched”, Financial Times, 29 04 1986Google Scholar and “Changes Considered for Rubber Index Futures”, Financial Times, 1 08 1986Google Scholar.

79 Drake, P.J., “The Development of Equity and Bond Markets in the Pacific Region”, in Pacific Growth and Financial Interdependence, ed. Tan, Augustine H.H. and Kapur, Basant (Sydney: Allen & Unwin, 1986), p. 122Google Scholar.

80 “Crisis of Confidence in Kuala Lumpur”, Financial Times, 6 03 1984Google Scholar; “New Leadership for KLCE” and “Moves to Restore Shattered Confidence”, Financial Times, 19 06 1984Google Scholar; “Malaysia Looks Forward to Revitalised Exchange”, Financial Times, 27 11 1984Google Scholar; “Kuala Lumpur Exchange Plans New Life”, Financial Times, 20 07 1987Google Scholar; “Kuala Lumpur Exchange Plans to Revamp Futures Market”, Financial Times, 1 03 1988Google Scholar.

81 See “Cautious Approach for Jakarta Commodity Exchange”, Financial Times, 15 03 1985Google Scholar. The correspondent observed that “Finding out when the Jakarta Commodity Exchange will open is rather like speculating on futures.” See also Standard Chartered Bank Review (02 1985), p. 28Google Scholar.