The culture system was so successful as a financial expedient, that between the years 1831 and 1875 the colonial revenue yielded surpluses to Holland amounting to 725,000,000 florins. This total seems the more remarkable when we know that from 1838 onwards, the colonial revenue was charged with 200,000,000 florins of the public debt of Holland, being the proportion borne by Belgium before the separation of the two countries, which took place at that date.
In 1876, however, the long series of surpluses ceased, and they have since been replaced by deficits almost as continuous. These deficits are due to three well-ascertained causes: (1) the Achin war, (2) public works, and (3) the fall in the price of sugar and coffee. In order to show that this remarkable change in the financial fortunes of Java is in no way due to the culture system, it is necessary to go somewhat more into detail.
(1) Before the outbreak of the Achin war in 1873, the average expenditure of the Colonial Government for military purposes was 30,000,000 florins annually. During the period 1873-1884 this expenditure rose to an average of 50,000,000 florins, and the total cost of the war during that period amounted to 240,000,000 florins. Since 1884 the expenditure has been reduced by confining the operations of the troops to such as are purely defensive; even then the average annual expenditure has reached 40,000,000 florins.
(2) Since 1875 the construction of railways and of other public works, notably the harbour works at Tanjong Priok, the port of Batavia, has been undertaken by Government. Since the cost has been paid out of current revenue, and not raised by loans, these works have necessitated a further annual expenditure of 8,000,000 florins. The total sum spent in public works between the years 1875-1884, amounting to 75,000,000 florins, is almost exactly equivalent to the deficit incurred during the same period.
(3) In suffering from the competition of France in sugar, and of Brazil in coffee, Java has not been peculiar. The British West Indian colonies are at the present time most disastrously affected by the bounty-fed sugar industry of France, and Ceylon is only just learning how to compensate itself for the diminution of its coffee export by the introduction of a new industry—tea.
As for the general progress of the island, it is sufficiently indicated by the fact that since the date (1831) of the introduction of the system, the population has increased from six to twenty-three millions, and the revenue from thirty million florins to one hundred and thirty-two.
Although the culture system has yielded such satisfactory results, it has been gradually abandoned since 1871.
The reason for this change of policy is the feeling that the system, though necessary originally to develop the resources of the island, is at variance with the best interests of the natives, and hinders the introduction of private enterprise and capital. Increased commercial prosperity is expected to compensate for the loss of revenue caused by the withdrawal of the Government from the work of production. In the mean time, it has been found necessary to impose various new and direct taxes. The most important of these is a poll tax on the natives, which has taken the place of the personal services formerly rendered by them on the Government plantations. Originally imposed in 1871, it yielded two and a half million florins in 1886. Another compensating source of revenue is the growth of the verponding. As already mentioned, this is a tax of three-fourths per cent, on the capital value of house property and industrial plant. It is assessed every three years, and therefore is an accurate test of the growth of private wealth invested in the colony. In the fifteen years from 1871 to 1886, the amount yielded by this tax showed a growth of seventy-five per cent.
It is not necessary to detail the various steps by which the Dutch have carried out this policy of abandonment. It is sufficient to note the general result.
To-day all industries, with the exception of coffee, opium, and salt, are free. In the production of the two latter, opium and salt, the Colonial Government maintains a complete monopoly; in the case of coffee they compete with the planters. The extent of the shares respectively taken by the Government and private enterprise in the trade of the island is exhibited by the following returns for 1889:—