In 1811 the Dutch lost control of the Indonesian archipelago. The original VOC itself had ceased to exist by 1796 and in 1799 the French-controlled Dutch government, the Batavian Republic, decided that the VOC's possessions in the Malaysian archipelago needed to be ruled according to the latest principles current in Europe. In theory, this meant that a system of rights and liberties had to hold sway and that the indigenous population had to be treated as human beings. In practice, it meant that nice noises were made, but that the economic interests of those who had formerly worked for the VOC and now remained in the Malaysian archipelago would remain important. In the end, events overtook the Dutch administrators and, as noted, in 1811 they lost control of the archipelago to the British, whom they had originally defeated in the 1600s in the first European competition over the Malaysian archipelago.
The Dutch regained control of the Malaysian archipelago on the strength of treaties in 1814 and 1824. After putting down a rebellion by a Javanese prince named Dipa Negara between 1826 and 1830, the Dutch were basically in control of all of the island of Java. This control would allow them to rule Java (and some of Sumatra) directly. Unfortunately, in 1830 the Kingdom of the Netherlands was splintered by rebellion in what is now Belgium. Hostilities, which continued until 1839, drained money from the Dutch treasurey and that money had to be replaced somehow. In 1830 Johannes van den Bosch made a proposal to King William I of the Netherlands for turning the Malaysian archipelago into a money-maker for the young, cash-strapped Kingdom of the Netherlands. He came up with what is now usually termed the Cultivation System or cultuurstelsel in Dutch. This system, which was in effective force from 1831 to 1877 (though laws passed in 1870 spelled its inevitable decline), netted 823 million guilders by one estimate, which works out to a yearly contribution of 18 million guilders for a country whose entire national budget totaled no more than 60 million guilders in the period under consideration.
The system put in place by Van den Bosch was originally not intended to be as exploitative as it turned out to be. With the priority on the profitability of the Dutch East Indies, however, monies that might have gone to improving life for indigenous peoples in the Dutch East Indies went instead to financing the budget of the Kingdom of the Netherlands. What was the system? First, it was oriented towards the production of key cash crops in large quantities: sugar, coffee, tea, tabacco, cinnamon, indigo, cochineal and pepper. Van den Bosch, who believed that peasants in the Malaysian archipelago were fundamentally lazy and needed to be taught work discipline, decided to make the Dutch East Indies colonial government the promoter and organizer of this agricultural enterprise. The colonial government demanded of those areas it ruled directly either 1) payment of the land rent (about 40% of the traditional crop in thedistrict in question, which was frequently rice, produced in a given year) or 2) that 20% of the farmable land be devoted to a designated cash crop (coffee, sugar, indigo, etc.). If the value of the crop produced exceeded the rent on the land, then peasants were actually supposed to receive profit from this. Some peasants were relieved of the duty to work in the fields, but then had to work in the factories run by Europeans and indigenous Chinese for processing the tropical crops for export. The people running these factories were also responsible for advancing the Kingdom of the Netherlands the monies it earned from the Dutch East Indies enterprise. All of the work in the fields and in factories was in theory by free contract negotiated by village headmen, but since the Dutch East Indies government and those running the factories were quite powerful, the terms of negotiation were quite unequal. The result was that the Dutch East Indies became a huge plantation in areas of direct rule such as Java and peasants were forced to work like serfs.
To manage this enterprise, the Dutch East Indies government designed by Van den Bosch made the indigenous nobility employees of the Dutch East Indies government. These individuals, called Regents, were given back their hereditary rights and were also given indigenous assistants to manage the production of crops: wedonos or district heads and assistant wedonos or assistant district heads. Together with the village headmen these people were responsible for supplying the requisite amount of the cash crop specified by the Dutch East Indies government. Alongside these indigenous officials were placed Dutch officials. The head of a given province in the Dutch East Indies was termed a Resident. The Residency was then divided into Divisions or Districts or Afdelingen in which there was one Regent and one Assistant Resident working alongside the Regent. Technically the Assistant Resident was the superior of the Regent, but, as Multatuli/Dekker notes, in reality he lacked the local power of the Regent or the firm support of the Resident if he were interested in preventing abuses in the system.
The results of the Cultivation System were stark. Peasants were forced not just to grow, but also to transport and process the tropical crops. In addition, if a region did not meet its assessed land-tax allotment, the peasants became personally responsible for making up the loss (you can see where tension might develop between headmen and villagers!). In addition, the Javanese managed to produce only one-third of what they needed to under the free labor contracts, so the rest of the labor was essentially forced. Profit-sharing with the peasants only made the Residents, Regents, and other officials push the peasants harder; it did not mean that they saw any benefits. Moreover, since all of the coffee plantations were actually on government-owned land, the peasants working on them actually had to travel fair distances before being able to do the work to which they were assigned.
Postscript: The events on which Max Havelaar is based unfolded in Bantam, in northern Java. The Assistant-Residency was called Bantam-Kidoel and Multatuli/Dekker began work there in 1856. The Regent was named Raden adhipati Karta Negara who was in his lifetime actually worshipped as a holy man. At the time of Multatuli/Dekker's arrival he had been Regent for 30 years, so he had been in power even before the regime of Van den Bosch was in place. Lebak had a population of 74,000 people in 1856 and was one of the poorest Divisions in Java; cash crops like coffee or sugar were not grown there. The actual Governor-General was named Pahud and the Resident was named Brest van Kampen. As it turns out the Dutch East Indies government followed up on Multatuli/Dekker's complaints, but no changes were made while Mutaltuli/Dekker was working in Lebak. The publication of Multatuli/Dekker's book, however, did help end the Cultivation System, which proves that books can change lives no matter what anyone tells you!
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