INTERNATIONAL LABOUR OFFICE

S T U D I E S AND

REPORTS

Series B (Economic Conditions) No. 29

PROBLEMS OF INDUSTRY
IN THE EAST
with Special Reference to India, French India, Ceylon,
Malaya and the Netherlands Indies
BY

HAROLD BUTLER

GENEVA
1938
Published in the United Kingdom
For the INTERNATIONAL LABOUR OFFICE (LEAGUE OF NATIONS)
By P. S. KING & SON, Ltd.
Orchard House, 14 Great Smith Street, Westminster, London, S.W.I

PRINTED BY ALBERT KUNDIG, GENEVA

PREFACE

The following pages contain some personal impressions of social
and economic conditions gathered during a journey of three months
in Middle Asia during the winter of 1937-1938. These impressions
have been to some extent amplified, corrected and verified by
reference to documentary information obtained en route or already
available in the International Labour Office. They do not claim
to be comprehensive or exhaustive. They make no pretension
to scientific profundity or completeness. Their aim is to call
attention to problems, not to propose solutions for them. Many
points worthy of attention have been omitted, because they did
not come sufficiently under the writer's notice or because to have
followed them up would have led too far afield. The result is not
a treatise, but a descriptive sketch which may serve as a first
introduction to Eastern social conditions for those who have not
had the opportunity of studying them personally.
It is, however, permissible to emphasise the outstanding conviction left by this journey that no international institution can hope
to perform its task adequately unless its higher officials acquire
first-hand information as to conditions in all parts of the world.
The Office is equipped with all the documentary sources—Government publications, books, periodicals, newspapers—from which the
facts and figures can be gathered relating to the labour conditions
in all parts of the globe. But the most complete mastery of the
documentation is utterly insufficient, and may easily give rise to mistaken conclusions, unless it is supplemented by personal experience.
Even a fleeting first-hand view affords a perspective that paper
research can never give. That is the real justification and the real
necessity for official travel. To those who have lived for years in
a country, a visit of a few days or weeks may seem incapable of
teaching much, but, however short, it gives an insight into realities
which cannot be attained by remaining in Geneva.
A fairly long experience has convinced me that the policy of
personal contact and investigation initiated by my predecessor

IV

PREFACE

was indispensable. No country ever resembles one's imaginative
picture of it derived from reading. It is impossible to understand
the mentality of any people or their approach to social problems
or the reasons for that approach, unless one has seen their way
of living and talked with their leading personalities. Only by
using the knowledge and sympathy thus acquired can the Office
fulfil its duty of being a really international institution with a
truly universal outlook.
In a preliminary report presented to the Governing Body of the
International Labour Office in February I gave a complete account
of my itinerary and acknowledged the admirable arrangements
made by the Governments of India, French India, Ceylon, Malaya
and the Netherlands Indies for rendering my journey instructive and
profitable. I also acknowledged the great debt of gratitude incurred to
numerous individuals, and particularly to prominent employers and
trade union leaders, for the readiness with which they supplied information and afforded facilities for studying labour conditions. I do
not propose to repeat these acknowledgments here, beyond saying
that without the lavish co-operation which we received everywhere
it would have been impossible to have obtained even a bird's-eye
view in the time available.
I was fortunate in having travelling companions who helped me
to obtain information which I could not have obtained unaided
•—Mr. P. W. Martin, who accompanied me throughout my journey
and whose economic experience was invaluable, Mr. J. Woudstra,
who has a long official experience of the Netherlands Indies, and
Mr. R. Rao, who has a wide knowledge and understanding of the
problems and aspirations of India. Moreover, in India I had the
able and devoted help of our Delhi office under Dr. P. P. Pillai,
who played a considerable part in drawing up my programme
and in facilitating its execution. To them all I owe a great deal
in the formation and compilation of these impressions. The I.L.O.
has already made some contribution in the East. If this report
helps to make its problems better known and more sympathetically
understood, it will have fulfilled its purpose.
HAROLD BUTLER.
. 10 May 1938.

CONTENTS
Page
PREFACE

m

INTRODUCTION

1

CHAPTER I : India

7

Labour Legislation
Present Conditions of Work
Industrial Relations
Collective Bargaining and Trade Unionism
Wages and Living Standards
Industrial Efficiency
Education and Efficiency
Health and Efficiency
The Standard of Living
CHAPTER I I : French India, Ceylon and Malaya
French India
Ceylon
Estate Workers
Industrial Legislation
Malaya
Labour on Plantations
Labour in Mines
Industrial Legislation

9
11
16
18
20
22
23
26
29

' . . .
•.
'

'

33
38
35
37
39
41
43
45
45

CHAPTER I I I : The Netherlands Indies
Population and Production
Labour Conditions
Estate Workers
Industrial Labour
Plenty and Poverty

49
50
56
56
61
68

CHAPTER IV: Conclusion

65

INTRODUCTION

Within the last few years the rest of the world has gradually
become aware of the growing importance of the East as an economic
area. Until the end of the last century it was regarded as an
extensive market for the manufactured products of the West in
exchange for spices, precious stones, China tea, Indian cottons and
other specialised produce of the Orient. From the 16th century
onwards English, French, Netherlands and Portuguese enterprise
had opened up and developed commercial relations between Europe
and Asia. In the 17th century their trading posts dotted the
coasts of India, Ceylon and Java. In the 18th century commercial
was followed by political penetration. In the 19th century the
same process was extended to the Malay peninsula, Sumatra,
Borneo, New Guinea and Indo-China, and in the form of " Treaty
Ports " to China itself. It was only in the latter part of the
century, however, that the idea of growing foodstuffs and raw
materials on a large scale for the world market took shape and
was applied by European capital and European management.
At the present time India and the Netherlands Indies produce
about one-quarter of the world's supply of cane sugar, over a
quarter of the tobacco and together with Ceylon five-sixths of
the tea. The Netherlands Indies and Ceylon produce well over
one-third of the copra, the Netherlands Indies over one-third of
the palm oil and the Netherlands Indies and British Malaya a full
80 per cent, of the rubber. To these must be added the enormous
expansion of cotton, cotton-seed, jute and linseed in India, of
tin in Malaya and the Netherlands Indies, of petroleum in Sumatra
and in Borneo, both Netherlands and British. It is not too
much to say that in the last century Asia has become the main
source of supply of a number of the world's raw materials. Owing
to its unlimited reservoirs of labour and the fertility of much of
its territory, its future productive capacity is incalculable.
It is, however, subject to one serious limitation—that of the
consuming power of the world. Already the tremendous results

2

INDUSTRY IN THE EAST

achieved by the application of science to tropical culture and the
control of disease, particularly in the Netherlands Indies and
Malaya, have brought about a state of more or less acute potential
overproduction in tea, sugar, tin and rubber. International
systems of Government control have had to be established for all
these commodities. Though both Governments and planters were
strongly opposed to such unorthodox economic experiments, both
were in the end compelled to accept them by the disastrous collapse
of prices during the slump. Most of the planters with whom I
discussed the matter agreed not only that the control schemes
were inevitable and had saved them from worse disaster, but that
once established, they could not be removed without peril to the
stability of their market. Only in the event of a great expansion
in world demand could the restriction machinery be safely scrapped
—a possible but not a proximate contingency. Moreover, to
render control unnecessary, the growth of demand will have to be
large enough to absorb not merely all that could now be produced
by the plantations, but also the greatly increased output which
they expect to achieve in a few years' time. Thanks to the
scientific selection and grafting of rubber trees, up to fourfold the
present yield per acre has become a practical possibility. With
other plantation products, notably tea and sugar, the possible
yield per acre has also been vastly increased by scientific research
and cultivation. That the world should quadruple its consumption
of rubber in the course of a decade is highly improbable, even if
the present prices were halved. The same is true for other products. The outlook for the immediate future is therefore uncertain. The pioneers encountered and overcame enormous difficulties with amazing energy, ingenuity and scientific application.
No one can fail to admire the foresight and system with which
at great expense the planters in Sumatra exerted themselves
to stamp out malaria, hookworm, cholera and other tropical
diseases which undermined the health of their workers; and at the
same time enormously improved the methods of cultivation. Similar
efforts have been made in Malaya; but in both countries the
triumph of science has brought with it a superabundance almost
as hard to meet as the previous shortcomings caused by the
ravages of disease and the lack of scientific method.
The economic significance of Asia is not, however, confined to
its capacity as a purveyor of raw materials. Since the beginning
of the twentieth century Japan has shown that the East is also
capable of competing with the West in the field of industry. By

3

INTRODUCTION

dint of intelligent organisation, great application to the problems
of scientific management and marketing, and the careful training
of a well-educated people in the various skilled occupations, Japan
has become an industrial State of the first magnitude. Since the
beginning of the century, while population has increased some
60 per cent., the output of industrial products is estimated to
have risen to anything from twelve to fifteen times what it was.
Already in 1930 the numbers engaged in industry in Japan
amounted to well over 5 % millions, with another quarter of a
million engaged in mining and well over a million in communications. Agriculture and fishing accounted for slightly less than
half of the total working population of 2 9 % millions, while
4 % millions were engaged in commerce. The index of Japanese
industrial production in 1937 showed a 75 per cent, increase over
the years 1929-1932, so t h a t . i t is reasonable to suppose that the
numbers actually engaged in industry have considerably increased
since the census was taken.
There has not been this same rapid process of industrialisation
in the other countries of the East, but in some, particularly India,
progress has been made. India, like Japan, ranks among the eight
States of chief industrial importance, and as such is allotted a permanent seat on the Governing Body of the International Labour
Office. Both in dimensions and character it is a sub-continent rather
than a country. The 1931 census revealed a population of 352,786,000
persons, twice as large as that of the whole U.S.S.R. and nearly
three times that of the United States. It had increased by 100 millions during the previous fifty years owing to the elimination of
internal war and of famine and to the introduction of modern
hygiene. By 1941 it is expected that India will have a population
of about 400 millions and will be, if it is not already, the most
populous country in the world. Nearly 90 per cent, of its people
live in rural areas 1, and the vital economic problem for India is
whether the production of agriculture can keep pace with the
growth of its teeming millions. In Europe it is usually held that the
land cannot sustain more than 250 persons per square mile. In India
large agricultural districts contain over 600 persons per square mile 2 .
But although India is still overwhelmingly agricultural, it is
nevertheless, judged by any absolute standard, an industrial
country of great importance and still greater potentialities. Though
it is difficult to ascertain the extent of industrial expansion with
1
2

A N S T E Y : The Economic Development
Ibid., p. 40.

of India,

1936, p. 42.

4

INDUSTRY IN THE EAST

complete accuracy, some indication of the increase in manufactures
during the last twenty years may be found in the rise in the export
of articles wholly or mainly manufactured in India from Rs. 506.1
millions in the period 1909-1910 to 1913-1914 to Rs. 895.9 millions
in 1928-1929. The rise in the import of raw materials during this
period from Rs. 100.8 millions to Rs. 255.2 millions x is also significant. Though India was affected by the slump like the rest of the
world and prices have fallen since 1929, there has been no serious
setback in the industrial output. The index of the volume of
industrial production increased from an average of 100 for the
years 1920-1921 and 1921-1922 to 151 for 1930-1931 and 1931-1932 2.
In the absence of reliable statistics, to assess the industrial
population is by no means easy. The Indian Franchise Committee,
which in 1931 carried out special investigations in connection with
the arrangements for bringing the new Constitution into operation,
reckoned the total number of non-agricultural workers to be
twenty-five million. The Committee also came to the conclusion
that a fifth of this number is engaged in industrial establishments
regulated by labour law. It has been estimated on the basis of the
latest population census, held in 1931, that not less than twentysix million persons, including both wage earners and their dependants, obtain their livelihood from industry, trade, transport and
mines, domestic service accounting for another eleven millions3. The
most important of the organised industries, those employing a
hundred thousand persons or more, are tea plantations (864,503),
cotton spinning and weaving mills (436,771), jute mills (279,290),
collieries (173,175), railway workshops (124,981), cotton ginning
and pressing (178,128) and metal and engineering workshops
(103,395)*. But in addition to the organised industries, there is
a very large number of small factories and workshops employing
many millions, which from a social point of view represent a special
problem.
In China industrialisation has not yet attained such proportions ;
but a beginning has been made and, so far as can be judged, the
rate of increase is rapid. Already in 1930 an enquiry made by the
Ministry of Industry and Commerce showed that in 29 of the
principal industrial towns there were 1,975 factories employing
1
India Analysed: Vol. I I : Economic Facts: A series of articles edited by
Freda M. Bedi and B.P.L. Bedi, p. 79.
2

P. J. THOMAS: Population and Production, p. 8.

3

Census of India, 1931, Vol. I, Part II, pp. 206-217.
ANSTEY: The Economic Development of India, 1936, p. 523.

4

INTRODUCTION

5

30 or more wage earners, amounting in all to some 1% million
industrial workers. Nearly 50 per cent, of these were employed
in the textile industry. At present the total of factory workers
lies probably between 1% and 2 millions. Over and above this
there are some 800,000 mine workers. Among the industrial towns
Shanghai comes easily first with over 345,000 workers; Wushi is
credited with some 70,000 ; Tien-tsin and Tsingtao with between
30,000 and 40,000 each; and Hankow with about 10,000. It is
noteworthy that in 1935 the spindleage of Chinese cotton mills
in China was four and a half times what it was in the period
1909-1913, representing an aggregate of approximately 3 million
spindles. Similarly, the net value of imports of machinery into
China more than doubled over the decade 1926-1935. In the present
emergency the Chinese Government is doing its utmost to increase
the industrial power of China, the establishment of heavy industries
being among its principal objects.
But if Japan and India and China can adapt themselves to
modern industry, there is no reason why other Eastern countries
should not follow their example. It is reasonable to suppose that
what the Indian can do can be equally well done by the Javanese,
and that what has already been accomplished in a small fraction
of China can be vastly extended. Though industry is still in its
infancy in Ceylon, Malaya and the Netherlands Indies, it obviously
has a future in all of them. The Goodyear tyre factory in Buitenzorg
and the General Motors plant at Batavia are plain indications of what
is coming. With sufficient education and technical training Oriental
labour can produce most of the articles which the West has been
accustomed to regard as its own monopolies. At present the products of the industrialised East are mainly destined for Oriental
markets, in which Japanese goods have already obtained a predominant position in many branches of trade ; but once home needs
are satisfied, there is nothing but tariffs and quotas to prevent
the export of Eastern manufactures to other continents.
It is therefore of some importance to estimate what have been
the economic and social consequences of Eastern industrialisation;
how far the standards of protection which have been embodied in
the Conventions of the International Labour Organisation have
been and can be applied; what is the relative efficiency of Eastern
as compared with Western labour; what are the factors determining
real and nominal wages; what is the system of industrial relations;
how far trade unionism or other influences are tending to raise
the wage levels and improve the conditions of employment. Save

6

INDUSTRY IN THE EAST

as far as the plantations are concerned, all these questions could
be far more satisfactorily answered if Japan and China could have
been included in the tour upon which this study is based. As the
conflict in the Far East made that impossible, only incidental
reference will be made to those two countries. India furnishes
in itself, however, an immense field for the study of industry
under Eastern conditions, while the plantations in which foodstuffs and raw materials are produced under industrial rather
than agricultural conditions are to be found principally in the
Netherlands Indies, Malaya, Ceylon and Assam. The five territories
which I visited may therefore be considered as presenting fairly
typical conditions of Asiatic industry apart from Japan, which
differs from all of them and from China in the vital respect of
popular education. On this ground Japan is more comparable to
Europe than to the rest of Asia, and in the subsequent chapters
the enormous advantage which she derives as an industrial country
from the foresight of her statesmen in determining to abolish
illiteracy will become abundantly apparent.

CHAPTER 1
INDIA

Industry and industrial conditions in India cannot be compared
with those of any European country. The enormous extent of its
territory, three times the size of France, Germany and Italy put
together, the fact that nine major languages are recognised in
addition to innumerable lesser tongues and dialects, the variations
in climate and custom from one region to another, make it
impossible to judge Indian problems by European standards. Closer
analogies can perhaps be found between India and the United
States. In both countries uniform legislation and administration
are rendered difficult by the wide divergencies that exist between
the various parts of the country. In both, the national organisation
of employers and workers is hampered by the difficulty of communication. The distance from Delhi to Madras or to Bombay is
further than from New York to Chicago, while the direct line from
Calcutta to Karachi, or from Peshawar to Trichinopoly is twice as
far. As in the United States, the growth of trade unionism has been
further hindered by language difficulties. To this must be added
additional complications in the shape of the barriers of religion and
caste, and, above all, the general illiteracy. Less than 10 per cent.
of Indians can read and write, a factor of immense importance in
raising the standard of life. One further resemblance may be
found between the India of to-day and the United States of ten
years ago in the absence of collective bargaining in most industries.
Though trade unions are numerous and most of them duly registered, they are seldom strong or coherent enough to secure effective
recognition, while the employers, who for the most part resent
any interference, and are at best lukewarm in their attitude towards
collective bargaining, are often alleged to hinder the growth of
unionism by active or passive discouragement1.
India differs wholly from Western Europe, however, and still
more from the United States in regard to the standard of living,
1

See, for instance, WITHLHY COMMISSION : Report on Labour in
pp. 323 et seq.

India,

8

INDUSTRY IN THE EAST

upon which industrial life and wages are based. India is predominantly an agricultural country, and even to-day when in most
industrial centres the population is tending to become more
and more urbanised a large proportion of the industrial workers
still look upon their villages as their real homes. The standards
in the cities are necessarily influenced by conditions in the countryside. Whereas only a few years ago it was said to be difficult to
obtain labour in industry, that complaint is not heard to-day.
On the contrary, during the recent boom in the cotton trade,
Bombay, Cawnpore and Ahmedabad were able to recruit the tens
of thousands of additional workers needed to run a night shift with
no difficulty whatever. At Jamshedpur, remote though it is from
the large centres of population, the steel works turn away hundreds
every day. The number of men wanting to go to sea is so great
that the unions have been urging a system of engagement by rotation on the shipowners of Bombay and Calcutta. In fact, there is
probably no industry in the country that could not recruit all the
unskilled labour it required within a few days or weeks. This is
primarily due to the low wages, the under-employment and the
poor conditions of life in the villages. The standard of cultivation
is for the most part very low. The Central Government through
the Imperial Council of Agricultural Research is making great
efforts to devise and spread more scientific agricultural practices.
It is being energetically seconded by most of the new Provincial
Governments, seven of which are pledged to the Congress Party's
programme of agrarian and social reform. It may well be hoped
that these official efforts will be aided by the propaganda work of
voluntary agencies, without which the knowledge of better farming
methods can hardly be disseminated sufficiently swiftly and
widely among an illiterate population, until recently at any rate
extremely conservative in thought and outlook. But the spread of
agricultural lore is in itself inadequate unless accompanied by simple
education, the beginnings of rural hygiene and the construction
of better houses. As long as the village remains as backward in
these respects as it is at present, it is difficult to see how the wages
and manner of life of the urban worker can be substantially improved. His standard of living is constantly threatened by the
influx of fresh workers from the country, anxious to get a job at
almost any price, prepared to lodge in the most insanitary hovels
and unaccustomed to any form of modern social organisation.
It is against this background that industrial life in India has to
be viewed. In a report of limited dimensions, it is impossible to

INDIA

9

survey it thoroughly or in detail. The ground was moreover
covered admirably by the Royal Commission on Labour in India,
known usually as the Whitley Commission, whose report was
published in 1931. Its findings have not lost their force to-day.
Some of them have already been embodied in useful legislation,
but the fundamental reforms suggested in the recommendations
on education, industrial relations, health, housing and the standard
of life still remain for the most part to be carried out. These things
cannot be done by legislation alone. They depend mainly upon the
desire for betterment among the people themselves and the recognition of its necessity by educated public opinion. Neither of these
conditions existed until recent years, but both are now being
gradually realised. The Whitley Commission " rejoiced at the
evident signs of the awakening of the general conscience, which
greater knowledge and the ferment of thought in India are combining to produce " 1 . To-day as the result of the constitutional
reforms the ferment of new ideas is still more pronounced and
the demand for social reform still more insistent. The nationwide political campaign of recent .years, which served to turn
the attention of the country to economic and social issues, has
produced a perceptible quickening of public opinion. Labour,
health and agriculture are now in the hands of popularly elected
Provincial Governments, which are setting about their task with
great energy and earnestness. Though they have only been in
office a few months, results may already be discerned, such as
the attempts made in some of the provinces to tackle the problem
of rural indebtedness. Many years of unremitting effort and
unselfish social leadership will be required to transform the present
state of affairs, but since the war a great deal has been accomplished
and the outlook for the future is hopeful. With these grounds for
encouragement in mind, a few of the outstanding features of the
industrial situation may be briefly touched upon.
LABOUR

LEGISLATION

Since the war a great deal of labour legislation has been enacted
by the central Legislature and in some of the provinces further
social reforms have been introduced. There was a general consensus
of opinion among Government officials, employers and labour
leaders that the chief impetus for this progressive movement had
1

Report on Labour in India, p. 207.

10

INDUSTRY IN THE EAST

been derived from the Conventions of the International Labour
Organisation. It is true that up to date India has only ratified
fourteen Conventions, but legislation has been passed which has
been directly inspired by others, and in framing its recommendations
the Whitley Commission had the Conventions constantly in mind.
Their report gave a further stimulus to social progress, which has
resulted in the adoption of 18 Central and 13 Provincial Acts in the
last six years, 1932 to 1937 1. As will be seen in the succeeding
section, the regulation of working conditions so far as large factories are concerned is as a consequence fairly advanced—more so
perhaps than in any other Asiatic country. There is still a number
of Conventions which might be adopted with advantage, but owing
to the new Constitution Indian ratifications may involve some delay.
As the Provincial Assemblies are elected by popular franchise and
possess concurrent powers of labour legislation, the tendency to
leave the initiative to the Provinces is already perceptible and
indeed natural. In the long run this may prove advantageous.
If some of the Provinces give a strong lead in building up better
systems of legislation and inspection than exist at present, their
example will exert pressure on the less progressive Provinces, or
may stimulate a demand for legislation bringing the whole of British
India to a higher level in order to prevent unfair inter-provincial
competition. Already leading employers are urging upon the
Government of India the necessity of ensuring uniformity between
the Provinces by setting up some suitable machinery such as the
national industrial council advocated by the Whitley Report. It is
evident that ultimately the general conditions of employment
such as hours of work must be settled upon a federal rather than
on a provincial basis. As the Whitley Commission remarked,
" to divide India into a series of units which could only progress
independently would be a definitely retrogade step 2 ". That
is not, however, the intention of the new Constitution. The initiative
is passing to the Provinces, but this is by no means to be regretted
as it forms a fitting prelude to the introduction of federal arrangements which will preserve a fair balance between central and provincial activities. In this respect, India is likely to undergo the
same experiences as Australia, Canada and the United States,
where the tendency towards federal action has been greatly
accentuated in recent years. '
1
Indian Labour Legislation, 1932-193". Bulletin of Indian Industries and
Labour, No. 61, pp. 53-54.
2
Cf. Report on Labour in India, p. 458.

INDIA

11

The maintenance of uniformity is not only necessary as
between the eleven Provinces, but the demand is becoming
increasingly vocal both from employers and workers for the
establishment of some measure of uniformity between the
Provinces and the Indian States. The latter comprise some twofifths of the territory and more than one-fifth of the population of
India. Hyderabad, the largest, covers an area nearly as large
as that of Great Britain and has a population of over 14 millions.
These States are autonomous in all matters relating to their
internal administration and, unlike British India, have made no
more than a bare beginning in introducing any representative
element in their Government. In some of them labour legislation
has been introduced on the model of the British Indian code, but
on the whole their pace of social advancement would seem to be
markedly slower than that of the autonomous Provinces. As a
result there is a tendency for factories to be established in States
where the standards enforced in British India do not apply 1 .
Complaints have been frequently voiced on this score by employers'
organisations, as the Whitley Report points out. Provision is made
under the new Constitution, however, for these States to have their
own representatives in the Federal Legislature, which will offer
the possibility of setting up uniform standards for the whole of
India. There are, moreover, indications of a growing realisation,
at least in the larger States in which industrialisation has begun,
of the need for regulating labour conditions. These efforts will
doubtless be redoubled in the coming years by the statesmen
responsible for the government of these States, who are keenly
alive to the requirements of the times. Even so, the ratification of
International Labour Conventions is likely to be a slow process.
These formal difficulties may, however, be counterbalanced
by an intensified interest in the work of the Organisation and a more
lively desire to profit by its wide and varied experience. The keen
interest in social questions now becoming manifest in India seems
to justify this expectation.
PRESENT CONDITIONS OF WORK

The conditions prevailing in large-scale industry in India do not
compare unfavourably with those in many European countries.
As industry is of recent growth, factories are as a rule spacious,
1

Cf. Report on Labour in India, pp. 472-473.
2

12

INDUSTRY IN THE EAST

clean, well-lit and well-ventilated. In view of the intense heat of
summer particular attention is paid to air-cooling in the textile
mills, some of which have introduced air-conditioning with considerable benefit to themselves and the workers. Hours of work are
limited by law to 54 per week, and employers testified almost
unanimously that the reduction first to 60 hours under the
Washington Hours Convention and later in 1935 to 54 hours has
resulted in an improvement rather than in a reduction of output.
Many enterprises have already gone further. In all the dockyards,
some of the larger engineering and almost all the railway workshops
as well as in a number of textile mills, a 48-hour week is in operation.
In the Tata Iron and Steel works eight-hour shifts seem to be the
general rule 1 , while in at least one large cotton-mill in Bombay
three shifts of 7 hours have been adopted.
This progressive reduction of hours has tended towards greater
intensity of work. When the ten-hour day was in operation,
employers used to complain that operatives spent a good deal of
time smoking or idling during working hours. The shortening of
nominal hours has not reduced the actual hours of work in the
same proportion. Like the Whitley Commission 2, I did not hear
it suggested that it would be better to lengthen the working day
and lower the standard of concentration. Both employers and
workers seem on the whole to prefer the shorter period of more
intensive work, of which experience has shown the Indian worker
to be perfectly capable.
The safety and health provisions relating to factories are generally
well observed, and the introduction of workmen's compensation.
since 1923 has no doubt helped to improve the standard of safety.
Maternity benefits have been introduced in Bombay, Madras, the
Central Provinces, Delhi and Ajmer and are likely to be extended
in the very near future to Bengal and the United Provinces. The
night work of women and of young persons has been abolished
since 1922 and child labour is not permitted under the age of 12.
Owing to the earlier maturity of Indians, this is regarded as equivalent to 14 in Europe, and it has to be remembered that Hindu
girls are frequently married at that age.
Leaving aside the question of wages, it may be said that the
conditions of employment in large-scale factories, though capable
1
Report on the Conditions affecting the Labourers of the Jainshedpur
Works
of the Tata Iron and Steel Co. Ltd.
October, 1937, p. 34.
2
Report on Labour in India, p . 42. — Cf. A N S T E Y : The Economic
Development of India, 1936, p. 303.

INDIA

13

of further improvement, are in reasonable correspondence with
India's present stage of industrial development. It is important
to realise, however, that the provisions of the Factory Acts and
the limitation of hours of work only apply, as a rule, to powerdriven plants in which twenty or more persons are employed. In
1935, they comprised 8,831 establishments employing over 1%
million persons, 229,726 of whom were women, 33,018 adolescents
between 15 and 17, and 15,457 children over 12 and under 15 1.
There are, however, innumerable small factories and workshops
all over India employing many millions of persons. Their number
is estimated at more than 10,000 in Calcutta alone. In these
places, as I had opportunities of observing, no provisions as to
health, sanitation, lighting, ventilation or safety apply. Child
labour is permitted, and in some industries extensively employed.
Hours are unlimited and are usually long, though there is a great
deal of casual absenteeism and the concentration of effort is much
less than in the large factories.
The immense difficulty of regulating the small factories and
workshops is fully discussed in the Whitley Report (Chapter VII),
and is sufficiently patent to anyone who has seen them. The
imposition of the smallest financial burden upon concerns which
are totally devoid of reserves, the loss of the minute earnings of
children to parents on the lowest scale of poverty, the enforcement
of any regulations upon people whose habits of work are utterly
unorganised and intermittent, are certain to encounter resistance
and evasion. Nevertheless, the Government of India is consulting
the Provinces as to the application of the health, safety and childlabour provisions of the Factory Acts to all establishments employing more than 10 persons. If the provincial response is sufficiently
favourable, there is reason to hope that the Government of India
may be able to ratify the Minimum Age (Industry) Convention
in the near future. The Government of the Central Provinces has
already adopted legislation to regulate the labour of women and
children in non-power workshops employing 50 or more persons
engaged in bidi (cigarette) making, shellac manufacture and leather
tanning 2, and the Government of India has recently suggested
to Provincial Governments the desirability of adopting central
legislation excluding children from workshops in which certain
" objectionable " industries are carried on.
1
Statistics of Factories subject to the Factories Act, 1934, for the Year ending
31 December 1935; pp. 2-3.
2
The Central Provinces Unregulated Factories Act, XXI of 1937.

14

INDUSTRY IN THE EAST

In addition to the small establishments there are other considerable tracts of the industrial field, which are wholly or mainly
unregulated. Of these the most important are the docks, the
building industry and shops. In all these industries no safety
provisions exist, and as might be expected accidents are said to be
numerous, though unrecorded. The application of the Conventions
regarding safety in docks and building (Nos. 32 and 62) is under
consideration and would go far to remedy the present state of
affairs. As regards docks, the Government of India has announced
its intention of ratifying the Convention and the Indian Legislature has passed the necessary legislation in the shape of the
Indian Dock Labourers Act 1934, but the regulations for enforcement are still in preparation 1. Some legal difficulties as to the
enforcing authority under the new Constitution may have to be
overcome, but the early ratification and application of this Convention might be expected. In the case of building, difficulties
no doubt exist, but any measures to secure elementary precautions
would be an improvement, even if the more detailed provisions of
the model code annexed to the Recommendation accompanying
the Convention cannot be immediately applied.
Hours of work in docks, though unregulated, are now generally
9 per day 2, but in building, including Government work under
contract, there are no statutory or general limits. In shops there
are át present no hours or other regulations, but the whole question
is now being taken up in some of the Provinces. The question of
the recruitment of seamen engaged the attention of the Government
and the Legislature when the Convention on facilities for finding
employment for seamen, adopted at Genoa in 1920, came under
consideration. A committee to examine the methods of engagement
and suggest remedies for existing abuses was appointed in 1922.
Although not all the recommendations of this committee were
given effect to, certain improvements were carried out in the ports
of Bombay and Calcutta. The main grievance of the seamen,
however, has been the prevalence of bribery and they allege that
there is no improvement in the situation. The large volume of
unemployment amongst seamen is, as the Whitley Commission
have observed, one of the basic causes of corruption; "so long
as this remains, the temptation to offer a bribe is not likely to be

1
Indian L a b o u r Legislation, 1932-1937.
and Labour, No. 6 1 , 1937, p. 3.
2
Ibid, p . 4.

Bulletins

of Indian

Industries

INDIA

15

diminished, and, quite apart from its connection with bribery,
the reduction of unemployment appears to be essential if labour
in this industry is to be placed on a satisfactory footing " *. One
of the recommendations of the Whitley Commission to abolish
corruption of this kind was that the licences granted under Section 24
of the Indian Merchant Shipping Act to brokers for the recruitment
of seamen should not be renewed. The Central Government has
accepted this recommendation and " a start has been made by
withdrawing licences of shipping brokers at the Port of Calcutta " 2.
Finally, the mining industry is subject to special regulation.
The importance of coal mining may be judged from the fact that
it produces about 21 million tons a year and employs over 160,000
miners, though as most miners do not work throughout the year,
the number of persons more or less dependent upon the industry
is much larger. As the seams are usually thick and the pits shallow,
working conditions are relatively good. Hours are regulated by
the Mines Act, which prescribes a 54-hour week on the surface
and a 9-hour day underground, calculated on a bank-to-bank
basis! The Select Committee of the Legislative Assembly which
reported on the Bill in which the daily limits were first laid'down
reckoned that " the hours actually available for work in any
large mine are likely to be less than eight and only a proportion
of these hours can be spent in actual work " 3. As regards the
employment of juveniles, the law of India is now in advance of
that of most European countries, as no person under 15 may be
employed in or about a mine, and no person under 17 may be
employed underground without a medical certificate. The employment of women underground was extensively practised in the past,
and its prohibition gave rise to acute controversy, as it was argued
that the elimination of women would very seriously curtail the
small earnings of their families. During the last eight years however, the exclusion of women from underground work has been
gradually effected, so that the Government of India is now prepared
to ratify the Convention on the subject 4. Though some hardship
was no doubt caused by the displacement of the women, no one
familiar with the conditions appears to doubt that in the long run
it is a salutary measure which tends to raise the general standard
1
2

Report on Labour in India, p. 177.
Vide p. 12 of the Report showing the action taken by the Central and
Provincial Governments on the recommendations made by the Royal Commission on Labour in India requiring administrative action; 1936.
3
Ibid., p. 31.
4
Since this was written the ratification in question has been received.

16

INDUSTRY IN THE EAST

of civilised living among the mining population. Among the other
steps taken as a result of the recommendations of the Whitley
Commission may be mentioned the abolition of the system whereby
in carpet factories the labour of young children was pledged in
advance to the weaving masters, the curtailment of the possibility
of continuous attachment of the wages of industrial workers as a
cure for indebtedness by reducing their capacity for borrowing,
and the fixing of the maximum limit of a month to wage periods
as well as the regulation of fines and deductions.
INDUSTRIAL RELATIONS

Notwithstanding the extensive reforms which have been carried
out by the Indian Legislatures during the past fifteen years, there
are signs of acute discontent in most industrial centres. Strikes
have been and continue to be frequent, most of them short and
sporadic, but some bitter and prolonged. In fact, the problem of
industrial relations may perhaps be considered to be the chief
problem confronting Indian industry at the present time, and one
upon which further industrial development to some extent depends.
The prevalence of labour conflicts has been marked, taking into
consideration the relatively small number of industrial workers.
Over the last ten years there have been about 150 disputes each
year, involving on the average some quarter of a million workers,
and resulting in a loss of working days ranging from one million
to 32 millions per annum and averaging about six millions1.
The remedy for this state of affairs cannot be found wholly or
mainly in legislation. Without the reforms already carried through
by Government the situation would no doubt have been still more
acute, but a peaceful atmosphere in a factory cannot be made
by law. It is the product of the day-to-day dealings between
management and workers, and it is by these that the flow of
production is mainly determined.
The origin of all the troubles of Indian industry is frequently
ascribed to political agitation or to communist propaganda. No
doubt both have played a part. The advent of the Congress ministries, for example, would appear to have been the occasion of
many strikes for better wages or conditions, which the workers
hoped to secure with the assistance of Government. But these
1
Industrial Disputes in India, 1921-1936. Bulletins
and Labour, Nos. 43 and 62.

of Indian

Industries

INDIA

17

stoppages would hardly have occurred if no ground for economic
dissatisfaction had been felt. Similarly, I found that high police
authorities were inclined to question the influence of " communism ", except where it was able to work upon solid grounds
of discontent. In fact, there seems to be a good deal of support
for the view of the Whitley Commission, who stated that " although workers may have been influenced by persons with nationalist, communist or commercial ends to serve, we believe that there
has rarely been a strike of any importance which has not been
due, entirely or largely, to economic reasons " 1.
The main causes which produce friction and discontent are
cogently and completely set out in Chapter XVIII of the Commission's Report, but their suggestions seem so far to have received
little attention. It may, however, be useful to recapitulate some
of the points which must strike an outside observer most forcibly.
In most establishments there appears to be little attempt on
the part of the management to get into touch with the individual
worker. Even such important operations as engagement or dismissal
are usually delegated to an intermediary known variously as a
"jobber", " mistri " or "sirdar", or automatically approved on
his recommendation. It is notorious that these intermediaries
exploit the workers in multifarious ways and that their influence
is extremely difficult to eradicate. The Chief of Police of a large
industrial city went so far as to assert that 75 per cent, of all labour
trouble in his area was due to the malpractices of these intermediaries.
In European-managed mills it is sometimes claimed that owing to
ignorance of the language and the people the employment of
intermediaries is unavoidable, but a number of European mills
may be found where they have been entirely dispensed with. In
such mills a regular system of personnel management is in operation,
with a well-organised employment office, careful attention to
the allocation of each individual to the work best suited to his
capacity and rigid control over dismissals by the manager himself.
It was claimed that the expenditure of time and money involved
by such a system was amply compensated by the absence of
stoppages and the smoothness of operation which it procured.
This does not seem an extravagant or unlikely claim in view of
similar experiences in Europe and America.
It may further be noted that troubles due to the employment of
intermediaries are by no means confined to European-managed
Report on Labour in India, p. 335.

18

INDUSTRY IN THE EAST

enterprises. In Ahmedabad, for instance, where the mills are almost
all Indian-managed, a substantial proportion of the complaints
dealt with by the trade unions relate to alleged wrongful dismissals
at the instance of jobbers. On the other hand, there are Indianowned mills, where excellent arrangements have been made for
the care and welfare of the staff with admirable results from a
business standpoint.
In the past, personal contact with the workers may have been
less necessary, though where established it no doubt paid, as in
one European mill where very little trouble had been experienced
over a period of 40 years. At the present time, however, the Indian
worker has become more assertive, which means that labour
management has become as important an element in the successful
administration of an industrial enterprise as technical, financial or
commercial management. The establishment of the human touch
between employers and workers seems all the more necessary when
the latter are illiterate. They are unaccustomed to the disciplined
rhythm of industrial life, have yet to acquire the aptitude for
handling machinery, and are for the most part unable to grasp
the main principles upon which an industrial undertaking works.
They are thus liable to all sorts of unjustified suspicions and
misunderstandings, and are at the mercy of misleading statements
and promises. At this point as at every other lack of education
is the fundamental weakness of Indian industry. Nowhere is it
more dangerous than in the sphere of industrial relations, where
lack of attention to the human factor may have far-reaching
consequences. In some centres, past neglect seems to have created
a state of tension, which makes the work of the agitator easy and
which will take much trouble and patience to remove. If only
on this ground, employers are beginning to consider the view that
the establishment of settled relations with a well-organised trade
union would be desirable in the interest of steady business, but the
obstacles which have to be overcome on both sides are considerable.
COLLECTIVE BARGAINING AND TRADE

UNIONISM

Here again the lack of education raises a tremendous barrier.
Employers are apt to demand that on the one hand no " outsider "
should have any part in any union with which they deal, while on
the other it is admitted that as yet the rank and file cannot produce
men capable of conducting the administration and the finances of
a properly organised union. This dilemma, from which there is no

INDIA

19

escape, can obviously be used as a pretext for not recognising any
trade union however constituted. In fact, the remark of the
Whitley Commission respecting the railways that some of them
" expect a higher standard of efficiency, responsibility and organisation from the trade unions than can be reasonably expected at
this stage of their development " 1, is probably of wider application.
At present, most of the trade union leaders are more or less educated
men, which implies that they have only very rarely emerged from
the lower ranks of the workers. It is alleged that some of them are
" bosses " rather than leaders, more intent on personal gain or
political advancement than on the welfare of the workers. Whether
this be true or not, there are many who are trying to do sound and
unselfish work and who would probably prove their capacity if their
unions were properly recognised. The great obstacle to Indian
trade unionism is the absence of the guild tradition, for in India,
unlike Europe and the United States, there was not the same gradual
transition from the old to modern methods of industrial production.
There are as yet few well-knit bodies of skilled craftsmen such as
formed the backbone of trade union development in Western
countries. At present, railway workers, seamen and dockers as
well as Government printers and employees have fairly effective
unions, but in the textile industry, in particular, there is little
permanent organisation. Most of the unions are " strike unions ",
expanding rapidly when a dispute arises but dwindling equally
rapidly when it is over. An outstanding exception of a well-organised union is the Labour Textile Association of Ahmedabad, which
has about 30,000 members. Since 1920 it has practised a system
of joint conciliation and arbitration of disputes with the Millowners'
Association, and for the last fifteen years no serious strike has
occurred in the mills recognising the Association. It may be
doubted whether this admirable system would have been initiated
or would have worked so smoothly without the influence of
Mr. M. K. Gandhi, under whose auspices it was founded. But
there is no reason to suppose that what has been done in Ahmedabad
could not be imitated in other places, provided that there was the
spirit of mutual goodwill. The Whitley Commission made a
number of suggestions as to how such an atmosphere could be
created2, but for a matter which depends largely upon personal
leadership and determination to reach a working agreement on
1
2

Report on Labour in India, p. 166.
Ibid, pp. 339-348.

20

INDUSTRY IN THE EAST

both sides, there are no rules. In each industry or city the issue
depends on the personalities of the protagonists, which cannot
be shaped by Government. In the absence of collective bargaining,
however, Government can do much to prevent disputes and to
settle them when they arise. In Bombay, since the Commissioner
of Labour assumed the duties of Chief Conciliator and the appointment of a Labour Officer was made, consequent upon the passing
of the provincial Trade Disputes Conciliation Act in 1934, many
disputes, small and large, have been successfully settled. The
Labour Officer acts as the guardian of the workers' interests,
examining their individual grievances and keeping close contact
with them. He may apply for conciliation proceedings and may
himself appear on behalf of the workers where they have no
representatives of their own-. The appointment of conciliation
officers by Local Governments was recommended by the Whitley
Commission and their utility cannot be doubted. It is now
recognised in India that the old policy of " keeping the ring " and
preserving order is no longer a sufficient method of dealing with
industrial conflicts. Hence the tendency to take conciliatory
action through qualified officers is growing, and there would seem
to be greater inclination on the part of Provincial Governments
than in the past to conduct investigations under the Trade Disputes
Act when strikes actually break out. All these various expedients
help to canalise and settle industrial disputes, but they are likely
to be of periodical occurrence until a strong trade union movement
imbued with a professional spirit has been developed and collective
bargaining established on a solid foundation.
In this connection, attention might be drawn to the value of the
statistical work of the Labour Office at Bombay. Its creation set
a new precedent which other provinces are trying to follow. The
utility to Government of an expert staff, whose duty is to gather
objective information on wages, hours, working practices, the
economic conditions in industry, etc., is immense. Indeed, it is
difficult to see how Government can intervene effectively and
impartially in industrial disputes unless armed with knowledge of
this kind.
WAGES AND LIVING STANDARDS

As might be expected in a country so vast with no trade union
movement capable of negotiating national wage-scales, there is a
very wide variation of wages and earnings in India. Moreover,
it is only in the Province of Bombay that wage data are system-

INDIA

21

atically and scientifically collected. It is therefore impossible to
make any general computations of Indian wages or earnings. Even
in a single city like Bombay or Cawnpore there are no standard
wage-rates in the textile industry. As for " real wages ", they are
equally incalculable, as no reliable cost-of-living statistics have
been published, except by the Bombay Labour Office. The labour
organisations at Bombay and Ahmedabad reckon that Rs. 44 per
month (70 Swiss francs) should be regarded as a reasonable
minimum for the maintenance of a man, his wife and two children
in decent comfort. This estimate postulates a two-room house
(which, judging from prevailing habits, few workers, even those
who could afford it, would be likely to take) in a city where rents
are high, and is probably based on requirements above the average
in other respects. Exceptional local circumstances may no doubt
be pleaded in justification, but a sum of Rs. 44 per month is certainly
far in excess of the average income of an Indian family. Even in
Ahmedabad and Bombay, where wages are higher than in other
textile centres, such earnings can only be attained by skilled
workers. The Whitley Commission found that jute-workers were
earning from Rs. 17% to Rs. 38 per month in 1929, cotton ginners
in Madras Rs. 13 per month, coal cutters Rs. 10 to 15 per month,
while unskilled men were rarely able to earn more than Rs. 15
a month regularly and earnings were sometimes as low as Rs. 10 1.
I was told that in the unorganised trades wages are sometimes
under Rs. 10 a month. It is evident from these figures that the
general standard of living is very low, even in the towns. In the
villages, the level of money incomes is still lower. It is significant
that in Bihar a scale of Rs. 5-10 per month is officially recognised
for the lowest grade of village school-teacher, while in the United
Provinces for Rs. 25 per month it is possible to procure a highschool master with a university degree. In judging Indian wagestandards these figures must be kept in mind. It is true that owing
to the climate the Indian worker needs no heating and little clothing, except for two months in the year in Northern India. Against
this must be set the fact that owing to lack of rain in many parts
of India, food cannot be produced with the same ease and abundance
as in the Netherlands Indies. It is also true that the diet of the
great mass of the people is of necessity very simple and very cheap.
But when every allowance has been made, there is no doubt of
the general poverty among the workers, both agricultural and
1

Cf. Report on Labour

in India,

pp. 199-203.

22

INDUSTRY IN THE EAST

industrial 1 . Of these the most important single cause is probably
the phenomenal growth of the population during the last fifty
years which has absorbed if it has not exceeded the corresponding
increase of national production.
From this statement it should not be supposed that the Government has been idle. Great efforts have been made to extend
cultivation. Since 1895, the area under irrigation has been doubled
and now amounts to 50 million acres—two and a half times as
much as the irrigated area in the United States. But production
remains low in comparison with some of the countries facing a
similar population problem. The annual yield of rice per acre in
India is only 55 per cent, of that in China and less than 40 per
cent, of that in Japan. The production of wheat, cotton and sugar
has been enormously increased during this century and particularly
during the last ten years, but the improvement in agricultural
output has still not kept pace with the vast growth of the
agricultural population 2.
INDUSTRIAL EFFICIENCY

It is beyond the scope of this report to consider the colossal
problem of Indian agriculture, but it is difficult to avoid some
general consideration of the economic condition of the Indian
worker in relation to his efficiency. It is frequently maintained
that his output is small in comparison with that of European
workers. This shortcoming is ascribed by many people in India
to the climate, by others to the natural indisposition of the Indian
to work regularly and unintermittently or to his poor physique
and stamina. All these statements no doubt contain some element
of truth, but none of them can be accepted without reservation,
nor do all of them taken together go to the root of the matter.
In the first place, the inefficiency of the Indian worker as compared with the European is byjio means a fixed quantity. In most
textile mills, for instance, the rule is one loom per weaver as against
four, six or eight in Europe, though the quality of material used
is sometimes inferior to that provided in European factories. Mills
exist in Ahmedabad and Bombay, however, where weavers mind
two, four or even six looms. In such cases, wages are higher and
1
2

Ibid., p. 207.
An Enquiry into Certain Public Health Aspects of VillageLife in India, by
Major-General Sir John MEGAW, Director-General, Indian Medical Service,
pp. 8-9.

INDIA

23

hours shorter, but the managements energetically rejected the
allegation frequently made in some quarters that workers were
indifferent to higher wages or preferred longer hours at a slower
pace. In another mill the management claimed that they were
obtaining 85 per cent, of the average individual output in their
Lancashire mills; but they were paying wages in excess of the
usual Indian rates and only engaged educated workers. In an
Indian-owned mill where similar conditions were given, the
standard of efficiency was said to be much above the average. The
labour coefficient in the Tata Steel Works is estimated to reach
about 75 per cent, of European or American efficiency in some
departments, though the general level is much lower.
It appears therefore that the ratio of comparative inefficiency
is far from being uniform. It may vary from 25 per cent, to 85 per
cent, of the European standard. This suggests that the simple
explanations relating it to climate or physique are too simple to be
adequate. The truth is that efficiency and inefficiency are largely
determined by a combination of the factors of poverty, ill-health
and illiteracy, which are so widespread in India that they seem
often to be regarded as being as indigenous as the climate itself.
These three factors are really inseparable, as ill-health is mainly the
accompaniment of poverty, and illiteracy is largely the cause both
of poverty and ill-health. All these factors are, however, within
the range of human control, and to a large extent within the power
of the individual employer to eliminate. Some employers have actually gone far towards eliminating all three among their workpeople.
In return they have obtained greater efficiency—and in all probability, higher dividends. As an understanding of these three factors
is fundamental to an appreciation not only of the Indian industrial
problem, but of the Asiatic problem as a whole, some attempt may
be made to estimate them briefly.
EDUCATION AND EFFICIENCY

Every observer of Indian industry is agreed that its greatest
handicap is the ignorance of the workers 1. In the words of the
Whitley Report, " in India nearly the whole mass of industrial
labour is illiterate, a state of affairs which is unknown in any other
country of industrial importance. It is impossible to overestimate
1
See, for instance, ANSTEY: The Economic Development o¡ India, 1936,
p. 229; HUBBARD: Eastern Industrialization and Us Effect on the West, p. 285.

24

INDUSTRY IN THE EAST

the consequences of this disability, which are obvious in wages,
in health, in productivity, in organisation and in several other
directions. Modern machine industry depends in a peculiar degree
on education, and the attempt to build it up with an illiterate body
of workers must be difficult and perilous " 1. Although labour is
superabundant and low-paid on Western standards, it is true that
industrial success has been won " in spite of rather than on account
of low-paid labour " 2 . What is really surprising is not the width
of the efficiency gap between Indian and Western industry, but its
comparative narrowness, which is diminishing further every year.
Many Indian textile manufacturers would now agree that thanks to
low wages, up-to-date machinery and constantly improving management they can meet European and American competition in their
own market. They cannot, however, compete on equal terms with
Japanese textiles, a fact which they usually ascribe to the greater
adaptability and dexterity of the Japanese operatives—due mainly
to education. In most Indian factories it is noticeable that the
workers are not the masters but the servants of their machines.
They do not understand them, and as a result of negligent tending
cause more rapid deterioration than in countries where the operatives are mechanically minded. Indeed, it is impossible to imagine
adequately the bewilderment of the Indian worker drawn in from
his village, where life has moved sluggishly along grooves of custom
and tradition for centuries, and hurled into the vortex of factory life
with its insistence on speed, precision and punctuality. It may
not be altogether fanciful to suppose that a part at any rate of the
industrial unrest is the expression of an unconscious revolt against
mechanical civilisation. Mr. Gandhi's insistence on a return to the
old handicrafts has had the effect of emphasising this attitude. His
doctrines have won many adherents in India, and there is no doubt
that some of the cottage industries are making a valuable contribution towards providing employment and a subsidiary source
of income to the villages. In Bihar, for instance, a million people
are employed largely in producing cloth, which is finished by
machine processes at Patna and subsequently marketed by a sales
organisation with branches in London and New York. Such efforts
are laudable and useful. But in a country such as India the march
of modern industry cannot be held back: nor can this development
be regarded as undesirable, provided the social implications and
1

Report on Labour in India,

2

D E P A R T M E N T OF O V E R S E A S T R A D E : Report on Prospects

British

Trade in India,

p . 27.

1919, p. 18.

and Conditions

of

INDIA

25

consequences are adequately met. On the other hand, the
expansion of industry is likely to be conditioned by the spread of
education. Much is already being done by Government to provide
technical education for the higher staff. Unemployment among the
educated classes is acute and endeavours are being made to find
outlets in commercial and industrial occupations. Some employers
have organised regular courses for their employees in order to train
foremen, charge-hands, etc. But without a foundation of general
education among the masses the training of the higher personnel
must be expensive and difficult, while the efficiency of the rank
and file, to whom promotion is often unattainable, must remain
at an unduly low level. Moreover, apart from the question of
operative skill, lack of education is at the bottom of many other
troubles, which afflict both employers and workers in India. The
prevalence of bribery and indebtedness is largely due to the worker's
inability to reason or to calculate sufficiently to protect himself
against exploitation. The complications and antagonisms provoked
by differences of religion and caste are not likely to be diminished
except by the growth of education. The capacity to form coherent
trade unions and to throw up leaders capable of directing them
honestly and wisely can hardly be expected of an illiterate workingclass. Comprehension of the sources of disease and the means of
combating them cannot be inculcated until the people, and
particularly the women, have reached a higher level of instruction.
Finally, the will to attain a higher standard of living is in itself
largely the outcome of education, which alone can dispel the
atmosphere of fatalism and inertia produced by centuries of
confinement to the limits of caste and the isolation of village life.
The importance of the problem of primary education is being
realised in India. Its solution presents a task of formidable dimensions. This may be readily judged from two facts. In 1931, not
more than 8 per cent, of the population were literate, leaving some
260 millions over 5 years of age without the most rudimentary
knowledge of letters l. The second fact is that there were at that
date 645,000 2 towns and villages with a population under 2,000,
each of which would require at least one teacher and in many
cases, owing to caste difficulties, more than one. Many qualified
people consider that this enormous problem can only be solved
by some such mass-movement as was initiated to eradicate illiteracy
1
a

Census of India, 1931, Vol. I, Part I, p. 324.
Ibid, Part II, pp. 12-13.

26

INDUSTRY IN THE EAST

in Russia and Turkey. What seems certain is that money and
enthusiasm expended for this purpose will in time produce a tremendous harvest, always provided that the educational effort
is conceived and executed on sound and sensible lines 1. Already
something is being done to provide elementary education by municipalities, by individual employers and by other voluntary agencies.
It is particularly interesting to find big industrial enterprises such
as the Tata Iron and Steel Company, the Buckingham and
Carnatic Mills, the Delhi Cloth and General Mills and many others
providing free education for the children of their workpeople, partly
in discharge of a civic obligation but partly also with the legitimate
aim of creating a source from which a better type of labour may
be obtained in the future. The planters in Java, Sumatra, Ceylon and
Malaya are following the same principle. In other words, it is becoming recognised by capitalists throughout the East that illiteracy
is the greatest obstacle to efficiency with which they have to contend.
As a cause of backwardness in comparison with Western nations, it
is far more potent than climate, especially when adequate health
services have been established to deal with disease. It may be
said, therefore, that a system of compensations tends to equalise
competitive conditions between East and West. The low wages
of the former are generally offset by low productivity due to want
of technical and general training. Where education is introduced
in the East, it enhances output, but that is usually counterbalanced
by the demand for higher wages and a better standard of life.
Where, however, as in Japan, industry benefits from the advantages
derived from education while maintaining a low wage-level in
terms of international currency, it is clear that it possesses an
exceptional position, as long as these conditions obtain.
HEALTH AND EFFICIENCY

That poor health is the most potent immediate cause of inefficiency in the Indian worker cannot be doubted by anyone who has
seen the slums of the great industrial cities or has given a cursory
glance at the morbidity statistics. The latter reveal the fact that
about 70 per cent, of deaths are caused by cholera, smallpox,
1
On this point the reports on vocational and general education made to the
Government of India by Messrs. A. Abbott and S. H. Wood of the British
Board of Education (Government of India Press, Simla, 1937) and the Report
of the Wardha Education Committee presented to Mr. M. K. Gandhi (The
Harijan, Poona, 11 December 1937) are illuminating.

INDIA

27

plague, " fevers ", dysentery and diarrhoea 1. Of the " fevers ",
by far the most formidable is malaria, of which the Director of the
Malaria Survey estimated that there were 100 million cases a year
in India 2 , while hookworm (ankylostomiasis) also claims many
millions of victims annually. Until recently it was believed that
these diseases were endemic in tropical countries and constituted
a source of death and debility, which could not be combated
effectually. Modern hygiene has entirely exploded this belief.
The experience of Malaya and the Netherlands Indies has shown
that all these diseases can be greatly reduced, even if they cannot
be entirely stamped out, by the expenditure of sufficient money
and by organisation on the right lines. It has also shown that
their subjugation has an enormous influence in increasing labour
efficiency and reducing labour costs. Surveys have also shown
that tuberculosis has increased rapidly during recent years, and is
now causing a heavy mortality, particularly in the urbanised and
industrialised areas. It is active not only in the overcrowded urban
centres, but also in various groups of the rural population where
there exists a high degree of susceptibility to attack 3 . Diseases
such as these constitute a reliable index of the standard of life of
the population among whom they are prevalent; they spread
rapidly among under-fed and badly-nourished populations, and
the wide occurrence of typical " deficiency " diseases, such as
rickets and night blindnesSj shows that dietetic insufficiency or
unsuitability is one of the causes of the poor physique of the
Indian.
These facts are of course perfectly well known in India. As
one recognised authority has put it, " if the laws of health were
regarded in India to the same extent as in England and the same
proportion of money was spent on public health, the death-rate
in India would be no larger than in England " 4. The Industrial
Commission, which reported twenty years ago, urged the imperative
necessity of improving the health and housing of the industrial
population. " The problem, not only on moral grounds but also
for economic reasons, must be solved without delay, if the existing

1
Annual Report of the Public Health Commissioner with the Government of
India,
1935, Vol. I, diagram facing p. 20.
a
Ibid, 1934, Vol. I, p. 59.
3
Ibid, 1935, Vol. I, p. 2.
4
Lt.-Col. C. L. DUNN : " The Economic Value of the Prevention of Disease ",
Indian Journal of Economics, January 1924.

3

28

INDUSTRY IN THE EAST

and future industries of India are to hold their own against the
ever-growing competition. . . .
No industrial edifice can be
permanent which is built on such unsound foundations as those
afforded by Indian labour under its present conditions " 1. In the
plantations of Assam a good deal has been done to eliminate
disease with the same good results as in Java, Malaya and Sumatra;
but the importance of health as the essential foundation of efficiency
has not been so fully grasped in the industrial areas. It is true
that employers have made some contribution to better housing,
which is the root of the health problem, by erecting lines or tenements in Ahmedabad, Bombay, Calcutta, Cawnpore, Delhi,
Madras and elsewhere, while the Tata Iron and Steel Company have
set up something like a model city at Jamshedpur with a large
hospital, canteens, recreation centres and so on. Admittedly,
the housing erected by employers varies considerably in quality.
By no means all of it is on the standard set by the Buckingham and
Carnatic Mills at Madras, by the British India Corporation at
Cawnpore or by the Delhi Cloth and General Mills at Delhi. It may
be said, however, with a good deal of confidence that the worst
one-room blocks constructed by employers are far superior to the
slums which municipalities tolerate. In every industrial city
back-to-back lines, which are by no means ideal, compare favourably
with the collections of tumbledown corrugated iron sheds or
leaky insanitary mud-huts permitted by some municipalities. It
is argued, no doubt truly enough, that many prejudices have to
be overcome in India (as in most other countries) before hygienic
modes of living can be inculcated. It is also evident that without
better nutrition, a subject to which the Government of India is
now devoting a good deal of attention, hygiene alone is not enough
to check the ravages of tuberculosis and other diseases. But
wherever a real effort has been made to provide better housing or
to spread the knowledge of hygienic living, it has been reflected in
the health, happiness and output of the workers. The connection
between the two is so obvious as to need no emphasis, and yet it is
astonishing to find how seldom any attention is paid to the health
factor when the efficiency of the Indian worker is discussed. Even
those vices so often alleged against him—addiction to drink and
opium or even plain laziness—may be traced back ultimately to
his poor physical condition. Every credit must be given to the
many far-sighted and public-spirited employers who have made
1

Report of Indian

Industrial

Commission

(1916-1918),

1919, p p . 179-180.

INDIA

29

a notable contribution by providing dispensaries, medical attendance, sick benefits, and in some cases private hospitals and maternity treatment. But valuable and necessary as such efforts are, the
health problem is far too vast to be tackled by the employers alone,
nor can they fairly be left with the main responsibility. With
wages as low as they are, the obstacles in the way of establishing
sickness insurance on European lines are considerable, though
nowhere is it more needed than in India. The Whitley Commission
outlined a scheme adapted to Indian conditions. The Province of
Bombay is trying to work out another. It is by experimental
attempts of this kind, by trials, however full of errors, rather than by
inaction that the problem will be solved, and in such attempts
the State is alone qualified and equipped to take the lead. In
the course of their masterly survey of the whole question the
Whitley Commission (Chapters XIV and XV) sum it up concisely
and completely in these words: " Expenditure on public health,
besides yielding an immense return in human happiness, is bound
to produce great economic advantages. There are few directions
offering such great opportunities for profitable investment on the
part of the State.. The economic loss involved in the birth and
rearing of great numbers of children who do not live to make any
return to the community, in the sickness and disease which
debilitate a large proportion of the workers and in early death,
with the consequent reduction of the earning years, is incalculable.
Even a small step in the prevention of these ills would have an
appreciable effect in increasing the wealth of India; a courageous
attack on them might produce a revolution in the standards of life
and prosperity. We feel that the time for inaction and delay is
past and that, particularly in regard to housing, it is imperative
that an immediate beginning should be made. To those who assert
that India cannot afford to spend more on public health, we would
reply that she can no longer afford to do otherwise " 1 .

T H E STANDARD OF LIVING

Along with education and health, the outstanding question
in India, as in the other countries of the East, is how can the
standard of living be raised. In India, .where the population is
increasing at the rate of some thirty or forty millions every decade,
this problem takes on a rather special aspect. For, as experience in
Report on Labour

in India,

p p . 243-244.

30

INDUSTRY IN THE EAST

other countries has shown, only when a people has attained a
certain level of material well-being is adequate consideration
given to control of reproduction. From a double point of view
—to obviate the present misery and to ease the pressure of
population upon resources—a rise in the standard of living is
essential.
Fundamentally there are three main elements that tend to
improve the standard of living: increased production; the exchange
of goods to mutual advantage; and the distribution of income in
such a way as to reach the poorer strata of the population. All three
of these methods may be very briefly considered.
In the main, an improvement in the standard of living must
depend upon increased production.
India differs absolutely
from the highly industrialised nations of the West in the manner
in which this can be brought about. In the United States and other
countries with massive capital equipment, the problem is essentially
one of monetary purchasing power. The means to produce—men,
money, materials and machines—are ready to hand, but from
time to time they cannot be fully utilised because effective demand
is lacking. In India the situation is otherwise. There is no great
accumulation of wealth seeking investment, no massive capital
equipment, no immense capacity to produce ready to spring into
action the moment the necessary effective demand comes into
operation. On the contrary, the capacity to produce, though large
in the aggregate, judged on a per capita basis is meagre in the
extreme.
To some extent this meagre capacity can and will be improved
by increased industrialisation and by the growing efficiency of
industrial labour. But, as already noted at various points in the
foregoing pages, the crux of the situation is agriculture. India
is a land of 700,000 villages, and directly or indirectly the overwhelming mass of the population depends for its livelihood upon
the soil. It is because this livelihood is so scanty that the general
standard of living remains low. Competent authorities estimate
that by means of better methods of cultivation, such as the rotation
of crops, the growing of green manure, the banking of land to
prevent erosion, agricultural output could be improved a full
25 per cent, without any increase in capital expenditure. By other
measures—use of improved seed, fencing, the consolidation of
holdings—a further 25 per.cent, could be added, at very little cost.
From these and other sources there is the possibility of a marked
amelioration in the standard of living of the great mass of agricultur-

INDIA

31

ists. The advantage would not only be to the farmers. Such an
improvement, it would seem, is essential to any further considerable
advance in industry. Until the peasant is able to buy the products of
the factory, there is not much prospect of any great increase
in industrial output finding the necessary market. Furthermore,
so long as the income of the agriculturist remains at its present
low level there is a perpetual drag upon industrial wages. There
is but slight possibility of securing Rs. 44 a month for factory
workers, when in many places the income of a family working on
the land barely amounts to that for a whole year. With an improvement in agricultural efficiency and income the foundation for an
all-round improvement in the standard of living would be laid;
and it is difficult to see how it can be done otherwise.
The second principal means by which living standards may be
raised is by the exchange of goods to mutual advantage. India's
foreign trade is considerable. In gold value it ranks eighth or
ninth among the countries of the world. But the per capita value
is exceedingly small—some 3.4 rupees of imports per head, as
compared with nearly ten times that amount in Japan and more
than fifty times in British Malaya. This, however, does not mean
that India's foreign .trade is unimportant. On the contrary, it
indicates rather that there are large unexploited possibilities of
raising living standards once the output of India and its absorptive
capacity have been increased.
The third means by which the standard of living may be improved
is by making it possible for a larger proportion of the total national
dividend to go to the poorer sections of the population. This opens
a wide field which cannot be explored here. But in one particular
direction there is scope for immediate action. This consists in the
reduction of indebtedness and the provision of cheaper credit to the
agriculturist. Agriculture by its very nature needs credit facilities
to carry the peasant over the crop cycle and to provide the minimum
of farm equipment. For the great mass of the cultivators the
village moneylender is the only recourse. The peasant has little
security to offer and a by no means unusual charge for loans is at
the rate of one anna per month for every rupee lent, which comes
out to interest at 75 per cent, per annum. The attempt made in
recent years to furnish agricultural credit along co-operative lines
has so far done no more than scratch the surface, only some 3 to
5 per cent, of the credit required being provided through this
agency. These two questions of the reduction of indebtedness and
the provision of credit to those on the land are preoccupying most

32

INDUSTRY IN THE EAST

of the Provincial Governments at the present time. Upon their
solution depends very considerably any immediate hope of raising
the standard of living by a more equable distribution of income.
The problem of bringing about the essential improvement in the
standard of living is thus open to attack from a number of angles.
But underlying them all is the need for education in its broadest
sense. It has been said that education should have a threefold
aim: to get a living, to live a life and to mould the world. For the
thousands of years over which its history and literature extend,
India more than any other country perhaps has borne in mind
what many of the Western nations have forgotten: that an essential
aim of education is to enable a man to live a life. It needs now to
emphasise that part of education designed to help a man to get a
living. How rapidly and how completely it can do this will go far
towards determining the part it plays in the third and final aim of
education: to mould the world.

CHAPTER II
FRENCH INDIA, CEYLON AND MALAYA

In this chapter it may be convenient to group together three
colonial territories in spite of the wide divergencies between their
economic, political and ethnological structure. All three, however,
have one important point in common, namely, that almost the
whole of their economic development has been due to European
capital and enterprise. They therefore afford interesting examples
of the effects of modern industrial ideas upon Eastern conditions.
FRENCH INDIA
The French establishments of India comprise five settlements in
different parts of the country with a population estimated in 1935
at 282,000. Of these, by far the most important is the province
of Pondicherry, which comprises about two-thirds of the inhabitants of the colony. The town of Pondicherry, which is the capital,
is agreeably reminiscent of Paris in the 18th century and contains
the principal industrial enterprises of the colony, of which three
cotton mills employing about 10,000 persons are the most important. Until 1936 the regulation of labour in the French establishments of India was limited, in the words of the Minister of the
Colonies, to " elementary measures for the health and safety of the
workers and the protection of women and children. These provisions
have proved themselves inadequate and no longer respond to the
needs created by the development of industry in the colony and
to the legitimate aspirations of its working population. It
appeared accordingly that the evolution of the working class in
these territories entitled it to claim the benefit of the social
reforms carried out in the mother country " 1. Considerable unrest
manifested itself in Pondicherry, which it may be supposed
1
" Report of the Ministry of Colonies to the President of the French
Republic ". Paris, 6 April 1937. Journal officiel des établissements français
dans l'Inde, 15 May 1937.

34

INDUSTRY IN THE EAST

was partly 8 reflection of events in France and partly the
outcome of the industrial and political disturbances which had
troubled British India during the previous years. A number of
strikes occurred, sometimes resulting in serious violence. In the
winter of 1936 the French Government sent Mr. Justin Godart
to investigate the conditions in the colony, and as a result of
his mission a Decree was issued on 15 May 1937,. establishing
a Labour Code for the colony, a Code more elaborate and
more advanced than can be found in any other territory in the
East. Its principal features may be briefly noted. The payment
of wages was carefully regulated. The employment of children
under 14 in factories and workshops and of juveniles under 18
without a medical certificate was prohibited. Hours of work were
limited to 9 per day until 1 January 1938, and to 8 per day thereafter.
This provision has been applied to the textile and building industries, the two principal industries of the colony, by subsequent
regulations of a detailed character. Night work was prohibited
between 9 p.m. and 5 a.m. in factories and workshops without
special permission of the Governor, while women and juveniles
under 18 could not be employed between 6 p.m. and 6 a.m. Weekly
rest was provided, special arrangements were made for maternity
care, while regulations issued by a Decree of 6 August 1937 laid
down comprehensive requirements as to cleanliness, lighting,
ventilation and fencing in industrial establishments. Finally,
recognition was granted to registered trade unions and a system
of conciliation and arbitration on the model of the French law
instituted. Where conciliation fails, two arbiters are required to be
appointed by the parties concerned, or if they fail to agree, a third
arbiter must be nominated, whose findings are signed by both
parties.
This Code had only been in force for a few months at the time
when the writer visited Pondicherry in December 1937, but it
was evident that it had contributed substantially to reduce the
tension which had previously existed. Nevertheless, a serious strike,
mainly due to a question of dismissals, was still proceeding, which
illustrates the point already made above that labour legislation is not
by itself sufficient to prevent industrial unrest. In French India the
same difficulties exist as in British India in regard to the relations
between employers and workers. Trade unionism is still inexperienced
and employers view it with considerable reserve. Moreover, the same
need exists for careful control on the part of the employer of matters
such as engagement and discharge, if the abuses resulting from the

FRENCH

35

INDIA

activities of native foremen are to be avoided. It would be too much
to expect that such an advanced Code as that now operative in
Pondicherry could be introduced and applied in its totality without
difficulties arising. It attempts for the first time to apply strict
provisions in establishments where little regulation had previously
existed. It is not surprising therefore that problems have been
encountered and that time should be necessary to allay the unrest
which previously existed 1 . A bold experiment is, however, being
made in French India as in Indo-China, the results of which deserve
to be followed with sympathy and attention. It may be anticipated
that when the initial difficulties and misunderstandings have been
removed, it will be found that great improvement has taken place in
the working conditions prevalent in the colony, resulting in greater
contentment among the workpeople and better relations between
them and their employers.
It is, however, impossible to judge the results of French colonial
administration or the great efforts which have recently been made
to improve the conditions of the people in all the French colonial
territories by reference to the establishments in India. Unfortunately through lack of time the writer was prevented from accepting
an invitation from the French Government to visit Indo-China.
This extensive territory, three times the size of the United Kingdom,
with a population of over 22 millions, is of especial interest and
importance at the present time by reason of the recent application
of a labour code, applying to native workers as well as to Europeans.
The Office has, however, just published a comprehensive report on
social conditions in t h a t colony 2 which furnishes many interesting
points of comparison with the Netherlands Indies and Malaya and
without which no attempt to draw a picture of the results of
European economic enterprise in the East can be regarded as
complete.
CEYLON
Throughout its history Ceylon has been famous for its natural
beauty and its precious stones, b u t its economic importance is
mainly due to the scientific cultivation of tea, coconut-palms and
rubber during the last hundred years. These products, which are
1
See speech by Mr. Crocicchia, the Governor, at the opening of the General
Council, 20 November 1937. Journal officiel des établissements français dans
VJnde, 27 November 1937
a

INTERNATIONAL LABOUR OFFICE: Problèmes

de travail

en

Indochine.

Studies and Reports, Series B, No. 26. Geneva, 1937. An English version
of the study will be available in the autumn of this year.

36

INDUSTRY IN THE EAST

for the most part grown under plantation conditions, are the
principal source of wealth of the island, though rice is extensively
raised for home consumption and various other crqps such as
cocoa, cinnamon, citronella and tobacco are produced in smaller
quantities. The total population of the island, which is about equal
in area to Belgium and the Netherlands together, is under 6 millions
(5,312,548 in 1931).
Until recently the Ceylonese confined their activities almost
exclusively to agriculture, preferring to live on their smallholdings
or on " share-cropping " rather than to work on the plantations
or in the towns. Hence the estates were mainly dependent on
immigrant labour from Southern India, which offers an inexhaustible
recruiting ground owing to its abundant population. The higher
wages and higher living standard in Ceylon offer an inducement to
Indians to immigrate, of which they have readily availed themselves x. The extent to which Indian labour is employed is known
exactly for the plantations but can only be estimated for other
occupations. At the end of 1936, 659,000 Indian workers and their
dependants w-ere located on the estates, while about 200,000 were
outside the estates. Out of 82,000 persons employed by Government departments, municipal bodies and in industrial or commercial
occupations covered by a special survey, 24,000 were found to be
Indians. As long as the Ceylonese were able to get a living
on the land and the economy of the island was expanding, no
great objection was raised to Indian immigration. As the joint
result of the growth of the population and the effects of the
depression, however, large numbers of Ceylonese are no longer
able to earn their livelihood on the land and unemployment has
made itself felt. As the export of tea and rubber is now restricted
under international agreement, no further considerable development of estates may be anticipated in the near future. It follows
that the surplus agricultural population can only be provided for
either by opening new areas for agriculture by irrigation and other
methods or by finding employment on the estates or in the towns.
In the absence of statistics it is impossible to make any estimate
of the number of persons who can be properly regarded as unemployed,2 but there is no doubt that unemployment is sufficiently
1
Mr. Ormsby Gore reckoned that in 1927 real wages on the estates were
100 per cent, higher in Ceylon than the wages of rural labourers in Southern

India.

The Rt. Hon. W. G. A. ORMSBY GORE, M.P.: Report on

Malaya,

Ceylon and Java, 1928, p. 79.
2
Unemployment in Ceylon. Report of an Informal Committee to the Minister
of Labour. 1937.

CEYLON

37

felt to have become a social problem of some acuteness and would
in all probability be considerably aggravated by another depression.
This is evidenced by the fact that the demand for the restriction
of immigration has become very vocal. The Ceylon Labour Party
and other bodies have been urging this measure upon the Government with the. result that an enquiry was recently instituted,
and the organisation of a complete census of the unemployed.
is now proceeding.
It would be beyond the scope of this report to go into the details
and difficulties of the immigration question. It has become additionally controversial owing to the passage of an Act by the Ceylon
State Council excluding Indians from the village franchise, even
when born in the island, an action which moved the Government of
India to prohibit all emigration to Ceylon. The point of general
interest lies in the fact that Ceylon is moving along the same path
as India and Java, though its population problem is still very far
from having reached the same degree of acuteness. Nevertheless,
the first signs are beginning to appear which indicate that the
existing standard of living cannot be maintained much longer on the
old basis. That the existing standard is itself low is demonstrated
by the admirable survey made by Mr. M. M. Wedderburn, the present Chief Secretary, in 1934 in connection with the proposal
to introduce statutory poor relief x, and by the interesting reports
issued by the Ministry of Labour, Industry and Commerce on the
economic conditions of the country districts. Mr. Wedderburn's
conclusions are no doubt applicable to other parts of Asia besides
Ceylon. In his own words " investigation shows. . . that in the
rural areas in Ceylon there is widespread poverty; that the way to
combat this evil is to increase general prosperity by every possible
means and at the same time to endeavour, with the assistance of the
Health and Education Departments, to raise the standard of life
among the village poor "2.
ESTATE WORKERS

As in Malaya, elaborate arrangements have been made between
the Governments of India and Ceylon under the Indian Emigration
Act, 1922, to safeguard the welfare of the Indian workers on the
estates. Recruiting is organised and controlled by the Ceylon
1
Report on the Proposal to introduce Statutory Provision for Poor Relief in
Ceylon. Ceylon Government Press. 1934.
a
Ibid., p. 79.

38

INDUSTRY IN THE EAST

Emigration Commissioner, who is a Government officer and who is
also head of the Ceylon Labour Commission, an unofficial body
maintained by the Ceylon Planters'Association. His headquarters
are at Trichinopoly and he has a number of assistants likewise
stationed in Southern India, including three medical officers. In
Ceylon the Government of India maintains an agent, whose duty
is to supervise the conditions of employment and to investigate
complaints from the Indian workers. Penal sanctions and longterm contracts do not exist in Ceylon. A worker is free to leave
an estate at any time on giving one month's notice. Until 1924
advances were made to workers, but these have since that date
been abolished as liable to give rise to abuses. Every estate
worker is entitled to 6 days' work in the week paid at the rate of
wages fixed under the Indian Labour Ordinance, No*. 27 of 1927.
During the depression when production had to be drastically
curtailed, this requirement gave rise to considerable difficulty, as
employers were not always able to provide the requisite amount
of work and wages, while being reluctant to discharge men where
it could be avoided. In the view of the Indian Agent, " it must
be said to the credit of the Superintendents that they . . . tried
to do their best for their labourers in a difficult situation " x .
With the return of normal conditions the strict enforcement of the
Ordinance has been resumed. The legal minimum rates at the
beginning of 1936 were from 41-49 cents per day (about 12-14
rupees per month in Indian currency) for men and from 33-39 cents
for women according to the district. The working day is 9 hours,
including a period not exceeding 1 hour for the midday meal 2 .
In respect of housing and sanitation, however, many estates
are apparently still defective. In 1936, 21,844 out of the 70,181
rooms inspected in the lines were pronounced as below Government
standards by the Medical Inspectors, while the sanitary accommodation was declared inadequate in 207 estates out of a total of
459 3. Malaria, hookworm and dysentery are still fairly common.
In 1934 and 1935 a malaria epidemic swept through the island
causing 2,209 deaths on the estates, and even in 1936, a more
normal year, there were 114,013 cases on the estates, of which
419 proved fatal. The number of cases treated for hookworm was

1
Annual Report of the Agent of the Government of India in Ceylon,
Government of India Press, New Delhi, 1937, p p . 5-6.
2
Administration
Report of the Controller of Labour for 1936, p. 25.
3
Annual Report of the Agent of the Government of India in Ceylon,
G o v e r n m e n t of India Press, New Delhi, 1937, p . 13.

1936,
1936.

CEYLON

39

311,856, but treatment was as a rule prophylactic rather than
curative. That steady improvement is being made in the health
of the estate workers may be judged, however, from the fact t h a t
whereas from 1924-1928 the death rate on estates was higher than
the rate for the island as a whole, from 1929 onwards it has been
consistently lower x. The Government maintains 70 hospitals and
107 dispensaries in districts where Indian labourers are employed,
while the estates maintain 85 hospitals and 733 dispensaries 2. As
regards education, there were 653 registered schools on the estates
attended by 39,647 children out of 72,858 children of school age, a
proportion of 54.42 per cent 3.

INDUSTRIAL LEGISLATION

In Ceylon as in Malaya and the Netherlands Indies the labour
problem has until recently been mainly a plantation problem.
The vast majority of employed persons is to be found on the
estates, and industry has not acquired any great importance.
Nevertheless, about 347,000 persons are engaged in industrial
occupations, including Government and municipal services. A
great deal of attention is being devoted to industrial conditions,
and a considerable volume of information is available with regard
to them. In pursuance of Article 35 of the Constitution of the International Labour Organisation, legislation concerning the following
Conventions has been adopted in Ceylon : Night Work (Women) ;
Minimum Age (Industry); Night Work (Young Persons); Minimum
Age (Sea); Unemployment Indemnity (Shipwreck); Workmen's
Compensation (Agriculture); Minimum Age (Trimmers and Stokers); Medical Examination of Young Persons (Sea); Workmen's
Compensation (Occupational Diseases); Equality of Treatment
(Accident Compensation); Minimum Wage-Fixing Machinery;
Forced Labour.
In consequence, women and female young persons under 18 may
not be employed at night, while no child under 14 years may be
employed in any industrial undertaking or on ships 4. Although
school attendance is compulsory between the ages of 6 and 14,
sufficient schools are not everywhere available, which makes
enforcement difficult.
The Committee on Factory Legislation
1
2
3
4

Administration Report of the Controller of Labour for 1936, p. 22.
Ibid., p. 25.
Jbid., p. 26.
Ordinance No. 6 of 1923.

40

INDUSTRY IN THE EAST

reported t h a t many children were still illegally employed and
recommended the extension of the inspection system z. Compensation is payable in respect of accidents, of specified occupational
diseases, and of anthrax incurred by any workman employed on
the estates, in industrial undertakings or on board ship under the
Workmen's Compensation Ordinance of 1934, which is modelled
on the Indian Act. This measure is now becoming generally
understood and the number of applications is accordingly increasing.
The whole field of factory legislation was carefully reviewed in
1935 by the Committee referred to above, which made a number
of far-reaching recommendations for the improvement of the
protection of workers against accidents, disease, fire and structural
defects. Their most important proposals related to hours of work,
which are at present entirely unregulated except on Government
work and on the estates. The Committee considered that if the
spinning and weaving mills, where a 10-hour day was in operation,
could not be successfully operated on shorter hours, it was " an
indication t h a t such a business is unfavourably situated in Ceylon
and should be removed elsewhere ". The Committee recommended
a 9-hour day and a 50-hour week with overtime payment at the
rate of 25 per cent, above the normal rate 2. The Committee further
proposed the restoration of the post of Chief Inspector of Factories
and Mines with two or more assistants 3. Since this report was
presented, it has been under careful consideration by the Minister
of Labour and his staff with a view to the framing of a Factory
Bill. A first draft has already been discussed by the Executive
Committee on Labour of the State Council, and an amended draft
will come before the Council for adoption during the present year.
It provides for an 8-hour day, a weekly rest-day, further restrictions
on the employment of women, juveniles and children and for the
ensurance of safety both as regards structural requirements and
the fencing of machinery. If this Bill is adopted, it will do much
to establish good working conditions in Ceylonese industry. In
the preparation of this as of other measures adopted, the standards
set by the Conventions have exerted considerable influence, as
prescribing the method and setting the goal, even in matters where
it is not immediately attainable.

1
Report of the Committee
Protection Ordinance"
(No.
Press, Colombo, p p . 7-8.
a
Ibid., p p . 9-11.
3
Ibid., p. 5.

appointed to revise the " Mines and
Machinery
2 of 1896).
May 1935. Ceylon Government

MALAYA

41

Steps have also been taken for the registration of trade unions
and the settlement of industrial disputes. Under the Ordinance
of 1935 twenty-eight trade unions are now registered and the
machinery set up by the Trade Disputes Ordinance of 1931 has
been useful in preventing or settling industrial conflicts.
From this very summary account of the past and present activities of the Government of Ceylon in the social field it will be seen
that a considerable effort has been made to deal with the labour
problem on enlightened lines. There is no doubt that the new
Constitution introduced seven years ago has had the effect of
concentrating attention upon the social and economic problems
of the island. Democratic institutions have once again proved
their value in this connection. Moreover, a progressive spirit is
very evident among Ministers and officials, which gives good
promise for their success in meeting the economic and social
problems with which the island is now attempting to deal.
MALAYA
Malaya is the geographical term applied to a peculiar collection
of political units, comprising the British Colony of the Straits
Settlements with its capital at Singapore, the four Federated Malay
States of Perak, Selangor, Negri Sembilan and Pahang administered by their respective Sultans with the aid of a Federal Council
and an Executive under the British Chief Secretary, and six Nonfederated States whose Sultans have their own State Councils and
a British Adviser. The variety of the constitutional relationships
between these eleven units and the Governor on the one hand and
between each other on the other hand naturally tends to complicate
administration and to render uniformity of legislation difficult to
maintain. It may, however, be said that broadly speaking the
principal provisions regarding labour are applicable throughout
the Malay Peninsula.
Until the end of the last century Malaya was of little economic
iriiportance. Its tin had been mined in a small way by the Chinese
for centuries, but in 1870 the annual production amounted only to
about 2,000 tons. Sugar cane, coffee, coconuts and other crops
were planted without any notable success. It was only with the
advent of the motor-car t h a t a tremendous demand was created
for tin, for which the peninsula had always'been famous, and for
rubber, for which it proved peculiarly adapted. From the beginning
of the century onwards the mining of tin and the cultivation of

42

INDUSTRY IN THE EAST

rubber have progressed with astonishing rapidity, so that to-day
nearly half the tin and half the rubber of the world are produced in
Malaya. By 1926 the exports of the country were valued at
£147,000,000 and imports at £117,000,000, a total external trade
greater than that of all the other British colonies put together 1.
The slump produced a disastrous effect upon the prices of both
commodities, the production of which is now restricted under
international control schemes; but recovery has largely restored
the prosperity of the country.
That prosperity was not built up upon the labour of the Malays,
who are able to earn all they need without undue exertion as small
farmers and fishermen, but who do not take kindly to mining or
plantation work. The planters and the mine-owners, many of
whom are Chinese, had therefore to seek labour abroad, and proceeded to import thousands of Tamils from Southern India mostly
for the rubber estates, of Chinese from Southern China mostly
for the tin-mines, and some Javanese. The conditions under
which this foreign labour was recruited and employed will be
mentioned later; but these imported workers soon began to multiply and now actually outnumber the natives of the country.
In 1935 it was estimated that there were 2,105,000 Malays,
1,772,000 Chinese, 638,000 Indians and 21,000 Europeans out of
a total population of 4,611,000 2. Of the immigrants, the Chinese
are by far the most active element. Mr. Ormsby Gore, the present
British Secretary of State for the Colonies, went so far as to say
that " it is to the individual enterprise, industry and thrift of the
Chinese merchant and petty trader, the Chinese craftsman, the
Chinese coolie and above all the small Chinese contractor with his
" Kongsi '-' or guild that the great wealth and development of
British Malaya are mainly due 3 ". It follows that with so small a
population in' a country almost the same size as England and so
richly endowed by nature, the standard of living is relatively high.
Having an adequate revenue at its disposal, the Government has
been able to develop health and education to a point attained
perhaps nowhere in the East, except in Japan. Free education is
provided in the vernacular for all Malays, both boys and girls, while
generous financial aid is given to the vernacular Chinese and Tamil
schools, of which there are about 1,200 in the country. The great
1
The R t . Hon. W . G. A. ORMSBY G O R E , M.P. : Report on Malaya,
and Java, 1928, p . 2 1 .
2
Malayan Year Book, 1936, p. 37.
3
Report on Malaya, Ceylon and Java, 1928, p. 1 1 .

Ceylon

MALAYA

43

majority of children are thus taught to read and write, and a cheap
system of higher education enables them to pursue literary and
scientific studies up to University standards. Thanks to the
expenditure of large sums by the public authorities and the
planters, the tropical diseases have been reduced to relatively
small proportions. The considerable success of the anti-malarial
campaign and the elimination of hookworm as a prevalent disease
has largely changed the outlook for future generations. The
combined progress of popular hygiene and popular education should
enable the people of all races in Malaya to compare favourably with
any other country in the East as regards intelligence and physique
—a matter of no small importance for the future development of
the country.
LABOUR ON PLANTATIONS

Almost since the rubber development began, the control of
the importation of labour has been efficiently organised. More
than thirty years ago the Department of Labour was constituted to ensure the observance of proper standards of employment
on the estates, where the bulk of the labour has always been
drawn from South India. In 1907 the Indian Immigration Fund
was set up by statute under the management of a Committee
presided over by the Controller of Labour and comprising representatives of the medical service, the planters and the Indians. This
body, which is maintained by a compulsory levy on the planters,
is responsible for the recruitment and transportation of Indian
labour, which is subjected to various conditions and restrictions
by the Indian Emigration Act of 1922. In addition, the Government
of India maintains an agent in Malaya, whose duty it is to ensure
that the agreements between the two countries as to recruitment,
wages and conditions of work are duly observed. The whole question
of recruitment is very carefully regulated to prevent exploitation by
the kanganis (workers licensed to recruit new workers). It is, however, significant that a growing proportion of the estate workers
come from India spontaneously without any recruiting pressure, in
some cases paying their own travelling expenses. This is the result of
the free labour policy pursued over the last thirty years. The contract system for unskilled Indian labourers was abolished in Y9Ì0.
Penal sanctions were finally abolished in 1921 and 1923. The only
exception was in respect of workmen recruited in Java under the
Netherlands Indian Labourers' Protection Ordinance of 1908, which
allowed contracts of 900 days' duration prescribing the rate of
4.J

44

INDUSTRY IN THE EAST

wages and conditions and specifying the penalties, including imprisonment, to which the worker was liable in case of desertion
or refusal to work. The continued need for penal sanctions does not,
however, seem to have been felt in Malaya, for as far back as 1925
no Javanese were employed under this Act in the Straits Settlements x and only 819 in the Federated Malay States 2. This Ordinance was repealed in the various Malayan territories in 1932 and
subsequent years.
But although the labourer is under no contractual bond, his
welfare is constantly supervised by the Labour Department on the
one hand and by the Government of India on the other. The latter
has, in fact, insisted upon conditions being guaranteed to Indian
workers on Malayan plantations which are not applied to the
plantations of Assam. Of these perhaps the most important is the
fixing of a minimum wage in certain key areas for estate workers.
In April 1937 the rate fixed was 50 cents for men and 40 cents for
women. These wages compare very favourably with agricultural
wages in the Presidency of Madras, from which the Tamils are
drawn. Mr. Srinivasa Sastri, who conducted an official enquiry
on behalf of the Government of India into the conditions of Indian
labour in Malaya, found that as in the Netherlands Indies the
housing of the workers is in transition, no new " lines " of the old
type being now built but cottage accommodation being provided.
He also found the medical arrangements satisfactory on the larger
estates, though deficient on some of the smaller ones, and urged
that the teachers and the premises for the schools provided on
the plantations should be improved 3.
Mr. Sastri's report, made after a thorough investigation, may
be taken as showing that the conditions under which the Indian
works on the estate have been brought to a satisfactory level.
In the matter of health, housing, education and wages, his position
has steadily improved over the last thirty years. A further step
in the same direction is the spread of co-operative societies under the
impulse of Government. There are now 253 societies with a capital
of 4,200,000 Straits dollars 4. The effect of thrift on the self-respect
and social status of the workers is remarkable. The savings organisations, such as now exist on many plantations and in many of the
big businesses in Singapore, afford them protection against the
1
3

Colonial Reports Annual, Straits Settlements, Report 1925.
FEDERATED MALAY STATES: Annual

Report of the Labour

Department

for 1925.
3
Report on the Conditions of Indian Labour in Malaya, pp. 7-10.
4
Governor's Address to the Legislative Council. 1937.

MALAYA

45

moneylender, who is the bugbear of Indian existence, and the
burden of debt under which the workers previously suffered has
been greatly reduced. The Wage Earners' Administration Order
has further contributed to discourage moneylending at exorbitant
rates.
LABOUR IN MINES

In the tin mines, where the workers are for the most part Chinese,
supervision is probably less effective than on the estates where
conditions are mainly determined by the agreement with the
Government of India. It is true that the payment of wages,
housing and health are subjected to Government inspection, but
the contractor system with all its abuses is still almost universal
and deeply rooted. The Government of the Federated Malay States
is seeking to provide an alternative by its technical school, in which
Asiatics can obtain training in mining and can thus qualify themselves for posts of supervision in the mines. In contrast to the
plantations, no wage-fixing machinery exists for the tin mines.
Much of the work is paid by results, a system which is favoured
by the Chinese, who regard higher earnings as the reward for
extra skill or effort as preferable to a fixed remuneration. At the
same time, the lack of some method for adjusting wages is becoming
felt. Serious strikes occurred at the end of 1936, because the drastic
wage-cuts effected during the slump had not been restored, although
the price of tin had risen very considerably. The Government
succeeded in negotiating an agreement which provided for an
increase of wages, but it is evident that some regular system of
wage settlement is desirable if further troubles are to be avoided
in the future. The Governor has emphasised " the great advantage
that may be derived from negotiating with organised bodies of
employees " and has announced the preparation of legislation to
facilitate it 1 . In addition, an Advisory Committee on Chinese
Labour has been set up for the whole of Malaya with functions
similar to those of the Indian Immigration Committee in respect
of wage-fixing but without statutory powers.
INDUSTRIAL LEGISLATION

Until recent years there was little industrial activity in Malaya
apart from the plantations, the tin-mines and the transport undertakings (railways, docks, tramways, etc.). Factories are now
1

Address to the Federal Council, 3 November 1937, p. 7.

46

INDUSTRY IN THE EAST

to be found in Singapore engaged in pineapple-canning, oil-pressing,
engineering, sawmilling, the production of gum, sago, etc. The
tin-smelting plant is the largest in the world. Finally, the naval
and air establishments have now created a large avenue of employment under industrial conditions.
Though a fair number of Indians are employed, the bulk of the
industrial labour is furnished by the Chinese, who are admirable
skilled workmen both in wood and in metal. Wages are, of course,
considerably higher than on the plantations, running from 80 cents
to $1.20 per day for men. Factories and workshops are regulated
by a series of Labour Ordinances from 1923 to 1935, which have
enabled a number of International Labour Conventions to be put
into effect.
Reports from the British Government indicate that, in pursuance
of Article 35 of. the Constitution of the International Labour
Organisation, legislation concerning the following Conventions has
been adopted in Malaya: Night Work (Women); Minimum Age
(Industry); Night Work (Young Persons); Minimum Age (Sea);
Unemployment Indemnity (Shipwreck) ; Workmen's Compensation
(Agriculture); Minimum Age (Trimmers and Stokers); Medical
Examination of Young Persons (Sea); Workmen's Compensation
•(Occupational Diseases); Equality of Treatment (Accident Compensation); Minimum Wage-Fixing Machinery; Forced Labour.
Hours are limited to 9 per day, any excess being paid at double
the normal hourly rate. No person is bound to work on more than
six days in the week, but there is no statutory weekly day of rest.
The fixing of such a day encounters opposition owing to the existence
of four major religions in the Colony and to the preference, particularly among the Chinese, for irregular working periods rather
than a rigid week. Though mines, plantations and factories, except
Government establishments, usually work seven days a week, the
average worker often does not average more than five days' work
per week, if account is taken of the numerous religious feasts and
holidays. Such opinion as exists in favour of a regular weekly
rest-day is probably to be found among the employers rather than
the workers. Women and children under 18 may not be employed
at night. Children under 16 may not be employed in places where
power-driven machinery is used and no child under 12 may be
employed anywhere outside an estate. With Chinese workers
particulars of wages, whether by time or by piece, must be affixed
and any dispute may be referred to the Controller of Labour,
whose decision is final. The truck system is prohibited and priority

MALAYA

47

for wages is secured in case of bankruptcy. Inspection is carried
out in order to ensure sanitary and healthy conditions, but less
attention seems to have been paid to safety. In most of the factories which I visited machinery and belts were unfenced, safety
posters were entirely absent and little or no facilities for dealing
with accidents existed. On the other hand, the Workmen's Compensation Ordinance of 1932 has on the testimony of several big
employers whom I saw produced excellent results without any
marked tendency to malingering. The administration is largely
in the hands of Commissioners to whom workers can and do apply
directly for advice or for the settlement of their claims without
going through the formalities of a court of law. In case of bankruptcy, claims for compensation are given legal priority over other
debts. This Ordinance has certainly tended to improve safety
standards and to protect workers against accident without imposing
any serious burden on industry.
A good deal has, in fact, been done to ensure reasonable conditions of employment in industrial establishments. Mr. Sastri
suggested, however, that the interests of urban workers »" do not
receive from the Labour Department the same care and attention
as those of estate labourers " 1. Owing to the much smaller
importance of industry as compared with rubber-growing and
mining there is probably substance in this suggestion. Moreover,
the division of inspection into Chinese and Indian departments,
though justified on linguistic and other grounds, is apt to cause
complications in the administration when Chinese and Indians are
employed in the same factories. The existing Labour Code has,
however, succeeded in preventing serious abuses and is now under
revision with a view to the promulgation of a Factory Ordinance,
which will promote a higher standard of health and safety in
factories.
Unemployment is hardly felt at the present time 2 . As the country
is in full development, the demand for labour tends to exceed the
supply. This is particularly true of skilled labour owing to the
increased demands of the naval and military establishments. The
Government is endeavouring to meet the demand by organising
apprenticeship and expanding the facilities for technical education,
of which full advantage will certainly be taken by the population.
1
Report to the Government of India on the Conditions of Indian Labour
in 2Malaya, p. 18.
Since this was written, however, the reduction in the rubber and tin
quotas has led to unemployment amongst plantation and mine workers.

48

INDUSTRY IN THE EAST

The time has not been forgotten, however, when large numbers
of Indians and Chinese were repatriated to India and China owing
to the tremendous shrinkage of tin and rubber production during
the depression. Unfortunately, the world is far from having
reached a state of economic balance, and Malaya is primarily
dependent on two products, whose market is mainly determined by
the demand for motor-cars, particularly in the United States.
The international restriction schemes have succeeded in creating
greater security both for the planters and their workpeople.
Nevertheless, the International Rubber Committee has been
obliged to cut down the export of rubber from 90 per cent, to 60 per
cent, of the basic quota in the last few months, while the price of
tin declined from £311 per ton in March 1937 to £175 per ton in the
last quarter of the year, which led to a reduction of the quota from
110 to 70 per cent. These fluctuations naturally make the problem
of regular employment extremely difficult, and as the vast majority
of workers are foreigners, they have little chance of gaining a livelihood except in the industries for which they were engaged. For
this reason the conviction is growing that some form of settlement
must be organised, particularly for the younger generation who
have spent all their lives in Malaya and would be completely
dépaysés if they had to go to India or China. As in Sumatra,
where somewhat similar conditions exist, it may be found that the
solution lies in a combination of subsistence farming (which needs
far less time and labour than in colder and less humid climates) and
plantation work, the ratio between the two varying with the state
of the rubber market. Generally speaking, however, it may be
said that Malaya is in a fortunate position. Owing to its natural
riches, which are no doubt destined to further development, and
owing to the outlay of considerable sums on health, education,
housing and communications, the country can afford to its inhabitants a standard of living, using the term in its broadest sense,
substantially higher than in most Eastern countries. Indeed,
Malaya like Sumatra is an admirable example of what can be done
to raise the level of civilisation in the East, when scientific methods
can be applied on a sufficiently large scale to a country possessing
a rainy climate, a fertile soil and mineral resources, and containing
a population well within its capacity to provide not only with a
bare subsistence but with the facilities for physical and cultural
development.

CHAPTER III
THE NETHERLANDS INDIES

The Netherlands Indies is one of the richest as well as one of the
most beautiful areas in the world. Being endowed by nature with
abundant rainfall and a soil which is largely volcanic, Java and
Sumatra are islands of extraordinary fertility. To these natural
advantages for agricultural production are added considerable
mineral resources—oil in Sumatra and Borneo, tin in Banka and
Billiton, coalin Sumatra and Borneo, and gold and silver in Sumatra,
Borneo and Celebes. Under Netherlands administration these
immense stores of raw material have been exploited not only in a
highly scientific but also in a liberal spirit. Until the recent slump
made some restrictions inevitable, foreign capital was encouraged
and no hindrance was placed on exports or imports to or from any
country in the world. Ten years ago Mr. Ormsby Gore, now
Secretary of State for Colonies in Great Britain, stated that Java
" certainly affords the most remarkable example in the world
to-day of the application of science to the development of the
tropics " x.
Although since that date Netherlands science has constantly
advanced and Netherlands administration has certainly not deteriorated Java, and its sister islands have nevertheless suffered
intensely from the depression, perhaps as much as any part of the
world. Although prosperity is now returning, the texture of their
economic life has been considerably modified and the general
standards of the country have been lowered 2. How is it that a
country of unmatched fertility and exceptional resources developed
and administered on a high level of efficiency and enterprise should
nevertheless be exposed to such striking reversals of fortune ?
1
The Rt. Hon. W. G. A. ORMBSY GORE, M. P.: Report on Malaya, Ceylon
and Java, 1928, p. 110.
2
Public expenditure, for instance, was 515 million guilders in 1929 and
317 millions in 1936.

50

INDUSTRY IN THE EAST

To answer this question fully would require a volume which would
go to the roots of the social and economic troubles from which the
world as a whole is now. suffering, but it may nevertheless be
worth while to sketch the outlines of a suggested reply.
POPULATION AND PRODUCTION

In order to obtain the elements of the problem, it is necessary
to give a few figures. The total area of the Netherlands Indies is
1,904,000 square kilometres, five times the size of Japan. The total
population in 1930 was 60.7 million people, of whom 59 million
were natives, 1.2 million Chinese and 240,000 Europeans. Its
distribution was, however, extremely uneven. Whereas Java and
Madura with an area about one-fourth that of France contained
41.7 million people, an average density of 315.6 per square kilometre, the population for the remainder of the islands did not on
the average exceed 10.7 per square kilometre. The greater part
of this population is illiterate (94 per cent, natives, 71 per cent.
Chinese) and all but a small fraction (8.5 per cent, in Java and 5.2 in
the Outer Provinces) live under rural conditions. Agriculture, either
native or on the estates, is the predominant occupation. In Java
the census of 1930 showed nearly 8 million engaged in the former
and 960,000 in the latter, while 1.6 million were employed in industry, a term which comprehends not merely organised industry,
of which there is little, but native factories and workshops engaged
in the manufacture of native clothing, cigarettes, etc., under more
or less primitive conditions. It will be seen from the above figures
that the pressure of the population on the land is already very
intense in Java. This problem is greatly exercising the administration of the Netherlands Indies, which is taking energetic
measures to solve it. A good deal has been done to increase the area
under cultivation by irrigation and other methods and to educate
the native in the better use of the soil. It is not thought, however,
that the situation can be met by these means. It is calculated
that only about 300,000 hectares of new arable land remain in
Java—enough to carry the increase of the population for three
years. On the other hand, immense tracts of undeveloped land exist
in the Outer Provinces. Anyone who has flown for hours over the
virgin jungle of Sumatra becomes quickly aware of the vast extent
of territory available. It should not be imagined, though, that
this land is merely waiting for suitable tenants. Converting the
tropical jungle into land appropriate for agriculture is long, arduous

THE NETHERLANDS INDIES

51

and costly. During the next three years the sum of three and
a half million guilders will be spent for preparatory work alone,
more particularly the exploration of suitable land. Until that has
been done colonisation is impossible. In Southern Sumatra the
Government is already actively engaged upon this herculean
task and is carrying on a comprehensive scheme of subsidised
settlement. During the last seven years, some 65,000 Javanese
have been established under excellent conditions on land recovered
from the jungle, and it is calculated that if 150,000 persons mostly
consisting of young families could be transferred to Sumatra every
year, the annual increase of the Javanese population could
be neutralised. The Government is not satisfied with the present
rate of settlement and is seeking to accelerate it despite the
heavy cost.
In addition to the emigration of farmer-settlers from Java,
the island is also obtaining some relief from the departure of workers
to the Outer Provinces either on their own initiative or under
contract. The latter are mainly employed on the plantations on
the East Coast of Sumatra, where a proportion of them tend to
remain when their contracts have expired. In this area about
200,000 Javanese were found to be living outside the estates in 1930
and the number is probably larger to-day. On the other hand, these
settlers and their children constitute a supply of free labour for the
plantations, which they are already beginning to use. If the
planters can obtain suitable workers on the spot, they will no
longer require to import labour from Java at considerable expense.
But it is evident that the more the estates can do without workers
from Java, the less will they contribute to solving the island's
demographic problem, which hitherto they have certainly done
something to alleviate.
The other method by which the Government is trying to cope
with the population problem is industrialisation. The progress of
industry, to which reference will be made later, is less systematic
and less rapid, but its importance and possibilities are being
increasingly recognised as a means of relieving the pressure of
population, which as in India is accentuated every year by the
improvement of sanitation, the repression of tropical diseases and
the reduction of infantile mortality. In the absence of an energetic
Government policy for meeting the problem, the progressive
lowering of the standard of life in Java would be inevitable despite
the immense natural productiveness of the soil. Though no
accurate statistics are available, it is freely stated that already a

52

INDUSTRY IN THE EAST

decline has taken place during the last generation. However this
may be, the difference between Central and Western Java on the
one hand and the East Coast of Sumatra on the other is patent to
the most casual observer. In the former the countryside is an
unending village surrounded by its laboriously tilled little fields
and groves, save where the plantations intervene, whereas in the
latter villages are scattered and open spaces frequent. Java, in
fact, is almost suburban in appearance, Sumatra entirely rural.
On the other hand, the natives in Sumatra clearly enjoy a higher
standard of living. Goods are rarely carried in tiny quantities with
great effort for an exiguous reward on human shoulders as in Java,
but are transported by bicycles, pony-carts and even motor-cars.
The general appearance of houses and children and parents suggests
a state of life above the harsh struggle for mere existence so
characteristic of India and even of Java. The Netherlands Indies
possess the necessary room for expansion and are using it to solve
the population problem, of which the application of Western
science to Oriental life has been the principal cause.
It is something of a paradox that the application of this same
science to agriculture has created as many problems as it has solved.
The danger for the future is not a shortage of any of the products
which the East Indies produce so lavishly, but a glut brought about
by the combination of the ingenuities of modern science with an
already bountiful nature. Of this truth the case of rubber is the
most striking, of which the Netherlands Indies supplied 36 per
cent, of the world's exports in 1936. Until the slump the Government of the Netherlands Indies set their face against any attempt
to depart from the old economic canons and to restrict production
by international agreement. When the price of rubber fell from
10 §• d. in 1928 to 1 — d. in 1932, there was, however, no alternative
but international limitation of exports to save the industry in
Sumatra as in Malaya from complete ruin. Something like stability
has now been attained, at any rate for the time being, but only at
the cost of drastic variations in the export quota. Between October
1937 and January 1938 it was successively cut down from 90 per
cent, to 70 per cent, for the first quarter of the year and 60 per cent.
for the second quarter, as the result of the decline in business and
particularly of motor-car manufacture in the United States. And
yet through the latest discoveries in the shape of scientific budgrafting and tree selection, a well-run plantation in Sumatra and
Malaya, if freed of all restrictions as to replanting, could quadruple
its present output in the next 10 or 15 years. Unless undreamt-of

53

THE NETHERLANDS INDIES

uses of rubber are discovered it is difficult to see how the adaptation
of supply to demand will be effected otherwise than by continued
restrictions.
But rubber is only one of many crops which have been successfully cultivated in the Netherlands Indies, as may be seen from the
subjoined table. With the exception of sugar, the export of all
these products was well maintained in relation to the world's
totals.
SHARE OF THE NETHERLANDS INDIES IN THE WEIGHT OF 'THE WORLD
EXPORT OF CERTAIN CROPS
1925

1929

x

1932

1936«

Per cent.

Cinchona*
Kapok
Pepper
Rubber
Copra and copra equivalents
Agava
Tea
Sugar s
•.
Palm oil, kernels
i Coffee
The Expori Crops of the Netherlands

Bureau of Statistics, Batavia), p. 23.
a Provisional figures.
9 Share in world production.

92
79
72
36
28
15
13
10
1
5

94
73
69
30
29
22
17
11
5
6

91
81
76
30
35
27
19
10
11
8

90
77
92
36
27
22
18
2
17
6

indies in 1936 (Bulletin No. 149 of the Central

Owing to the disastrous fall in prices, however, their value contracted from 1,078,000,000 guilders in 1929 to 362,000,000 guilders
in 1936. These figures are eloquent enough of the instability of
agricultural prices, which was the most serious phenomenon of the
depression. As a consequence of this decline in the value of exports,
coupled with the cheapening of Japanese products resulting from
the depreciation of the yen, extraordinary changes took place in
the value of imports into the Netherlands Indies and the percentage
drawn from the different countries.
The following table shows to what considerable extent goods
from Japan replaced those coming from the great manufacturing
countries of the West. This movement was especially noticeable
for textiles. Whereas the percentage of textile imports from
Japan was 30.8 in 1928 as against 52.7 from Great Britain and
the Netherlands, it had risen to 83.1 as against 10.1 in 1934.

54

INDUSTRY IN THE EAST

VALUE

AND

PERCENTAGE

OF IMPORTS
INDIES

INTO

THE

NETHERLANDS

1

(000,000's omitted)
1928

1932

1934

1933

Guil- Per Guil- Per Guil- Per
ders cent. ders cent. ders cent.
EUROPE:

Netherlands
Great Britain
Germany
ASIA:

Japan
Singapore
and Penang
AMERICA
AUSTRALIA
AFRICA

[
\

1935

Guil- Per Guil- Per
ders cent. ders cent.

50.5
20.0
12.2
10.7

145 39.3
58 15.8
36
9.6
28
7.7

113 35.4
39 12.4
31
9.7
24
7.6

102 35.1
37 13.0
29
9.9
21
7.3

97 35.4
35 72.«
24
8.6
21
7.8

350 35.7
94
9.5

183 49.6
78 21.3

175 55.0
99 31.0

13.1

54 14.5

39 12.3

157 53.6
93 31.9
37 12.6

144 52.5
83 30.3
34 12.5

26

6.9

17

5.5

19

6.7

22'

7.9

496
197
120
105

128

101 10.2
26

2.7

12

3.3

10

3.2

10

3.3

8

3.1

5

0.5

2

0.6

2

0.7

2

0.8

2

0.7

i Adapted from: Dr. Cecile ROTHE: "The Economic Situation of the Netherlands
Indies from 1928-1935 ". The Asiatic Review, January 1937.

Statistics might be cited showing a similar if less marked development in Malaya and Ceylon.
These figures could no doubt be interpreted as affording a striking
illustration of the menace of Japanese competition to European
industry. Yet such an inference would only be partially true.
Owing to the tremendous shrinkage in the value of the exports
of the Netherlands Indies, it was impossible for the colony to
purchase anything like the same quantity of goods, whether from
Europe or elsewhere, as in times of prosperity. In any event, therefore, whether Japanese industry had existed or not, there would
have been a drastic reduction in the imports from Europe. But
as Japanese articles were cheaper, they inevitably took the place
of more expensive European goods. Whatever disadvantages may
have resulted for the European manufacturers and the European
workmen whom they employed, there is no doubt that the ability
to purchase Japanese goods at prices within the reach of their
reduced buying power was a great boon to the native population.
It was thus enabled to maintain its standard of living to an extent
which would not have been possible had it been dependent on
European sources for its textiles, bicycles, tyres, umbrellas and
other articles. For this reason the influx of Japanese goods was

THE NETHERLANDS INDIES

55

at first approved by the authorities, but in 1933 the Crisis Import
Ordinance was brought into force regulating about 40 per cent, of
the total imports of the islands. Its announced purpose was to
aid manufacturers in the home country to maintain their position
against Japanese competition, to serve as a bargaining weapon for
securing reciprocal trade agreements and to protect and encourage
the development of domestic industries.
The last of these objects may perhaps be regarded as the most
important. Before the depression industry had only been very
slightly developed, but the combined effects of the tremendous
loss of exports caused by the slump and the need for finding
employment for a rapidly growing population induced the Government to take active steps to promote industrialisation. Its main
effort was to stimulate small industrial undertakings for supplying
the local market with such articles as glass, earthenware, bicycles,
toys, rubber articles, etc. At the same time, however, the establishment of large-scale enterprises has by no means been discouraged.
Great firms like Unilever, General Motors, the Goodyear Rubber Co.,
the National Carbon Co., have started plants in Java, and there
is no reason to suppose that other similar enterprises will not take
root in the near future, as the capacity of Javanese labour to adapt
itself to industrial conditions becomes increasingly evident. A
special effort is, however, being made to develop the textile industry
for which there is a very considerable market in the Islands. In
1934, the native industries already produced woven and, batik
goods to the value of 18 million guilders. In the following year
about 12,000 textile workers were employed in Java, while 6,000
handlooms and 700 power looms were in operation. The Java
Textile Company has now been established and is expected to
employ eventually about 10,000 workers x. In the same way, the
tobacco and chemical industries are also being developed, and in
time it may be expected that Java, like so many other parts of
the world, will tend to become increasingly self-sufficient for its
primary needs. Though as yet still on a modest scale, industrialisation has become established in the Netherlands Indies as in
Japan, India and China. It represents one of the methods of dealing
with the population problem and of increasing the standard of
living of the native population. Its future expansion is therefore
not only inevitable but desirable. Though it entails serious
1
Geertrui M. van EEGHEN: " The Beginnings of Industrialization in
Netherlands India". Far Eastern Survey. American Council: Institute of
Pacific Relations. 9 June 1937, p. 131.

56

INDUSTRY IN THE EAST

disadvantages for European manufacturers who have been accustomed to supply the Netherlands Indies in the past, its
ultimate economic advantage both to the colony itself and to the
rest of the world can hardly be doubted.
LABOUR CONDITIONS

Having roughly sketched the economic structure of the Islands,
some impressions may be given of the labour conditions under which
they are being developed. Broadly speaking, the working population may be divided into three categories: firstly, the agriculturists working in the villages either on their own holdings or for
other cultivators, who form the vast majority of the population;
secondly, workers employed on the estates; and thirdly, workers
employed in industrial occupations. Agricultural conditions as
6uch fall outside the scope of this report. It may, however, be
remarked in passing that great efforts are being made by the
Government, with a considerable degree of success, to raise the
output of the native cultivator by teaching him scientific methods.
Care has also been taken to prevent the permanent alienation
of land from the natives, a policy which has undoubtedly been of
great benefit to them and to the island generally. But interesting
and important as the study of the agrarian problem undoubtedly is,
attention must here be confined to the workers employed on the
estates and in industrial occupations.
It is characteristic of the Netherlands Indies, as it is of Ceylon
and Malaya, that labour regulation was first introduced to prevent
the exploitation of the workers on the estates in the Outer Provinces.
Until very recently official attention has been limited to them, with
the somewhat paradoxical result that at the present time the
conditions of employment on the estates are carefully regulated
and controlled by Government authority, whereas there is little
legislation for the protection of workers employed in building,
docks, factories and workshops. Indeed, it may be said that apart
from the fact that he is working under contract and is not therefore
free to leave his employment, the estate worker in the Outer
Provinces enjoys considerably better conditions in respect of health,
housing, hours of work and security of wage payment than is
usually the case for the industrial worker.
ESTATE WORKERS

Labour regulation may be said to have begun in the Outer
Provinces in the year 1880, while in 1904 the Labour Inspectorate

THE NETHERLANDS INDIES

57

was created to prevent abuses which had come to light on some
of the estates on the East Coast of Sumatra. Practically the whole
of the labour employed in Sumatra was recruited in Java or China
under contract for three years, at the end of which time the workers
were entitled to be repatriated at the employer's expense. As the
cost of recruitment and transport was considerable, the Government
allowed these immigrant workers to be engaged under contracts
which provided for penal sanctions, that is to say, they were liable
to arrest and punishment in case of breaking their contract or
leaving their work. As a counterpart, however, they were protected
by a series of provisions prescribing their conditions of living
and employment and enforced by the Labour Inspection Service.
This system continues at the present time, but in recent years
it has undergone considerable modification. By an Ordinance of
25 February 1931, provision was made for the progressive
substitution of labourers under free contract for labourers under
penal sanction, while a further Ordinance of 10 October 1936 is
designed to bring about the almost complete disappearance of the
penal system not later than 1946. As a matter of fact, the number of
labourers employed under penal contract has already been reduced
to small dimensions. In 1935 only 16,636 labourers, or 6.4 per cent.,
were so employed out of a total of 259, 290. On all the estates which
I visited penal sanctions had completely disappeared, and managers
were unanimous in stating that good rather than bad results had
followed their abolition. While some maintained that criminal
penalties were still necessary to keep workers to their contracts
when engaged in the rough work of clearing the jungle, others who
had had experience of clearance work considered that it could be
done at least as well by free labour. The necessity of the penal
sanction system may therefore be regarded as being disproved, and
it is in any case doomed to disappearance. It has been found in the
Netherlands Indies as in Ceylon and Malaya that estate work can
be performed as well, if not better, by free labour, provided that
erasonable conditions of employment and remuneration are provided. In other words, the ordinary economic incentives operate
in Asia as in the rest of the world with the result that the plantations
are now endeavouring to make their service sufficiently attractive
to secure all the labour they need. In this they appear to have been
successful, at a cost which has not proved by any means uneconomic.
The principal conditions of employment, namely, health,
housing, hours of work and remuneration, are all regulated by
Ordinance in the case of workers under penal sanction and to a

58

INDUSTRY IN THE EAST

lesser extent in the case of free workers. Of these perhaps the most
important of all is health. Until 50 years ago the population of the
Netherlands Indies, as of all other tropical regions in Asia, was
exposed to the ravages of the endemic diseases—dysentery,
malaria, hookworm and smallpox. When hundreds of workers and
their families were housed at close quarters in coolie lines on estates,
the morbidity from these diseases became extremely high. It was
therefore natural that from the institution of labour regulation
in the Outer Provinces considerable attention should have been
paid to the health of the workers. In the case of those employed
under penal sanctions, the employer was and is still obliged to
provide free medical treatment and nursing, including the necessary
medicaments and dressings, in a suitable hospital for the worker
and his family. While the worker is in hospital, not only he but
his family are entitled to food free of charge. Though the free
worker is not entitled to all of these benefits, he nevertheless enjoys
them in practice, as the system which operated during the penal
sanction period has now been continued on most estates, even
though no workers are now employed except under free contract.
Although such legal provisions exist, it would be a mistake
to suppose, however, that official pressure was the only, or even
the most powerful, agent in bringing about the immense improvement in the-hygienic conditions that have been effected during the
last 40 years. In the last decade of the 19th century employers had
generally come to realise that apart from any humanitarian
considerations a solution of the health problem was essential
if the estates were to be profitable. At that time the death rate
among labourers on the estates of the East Coast of Sumatra was as
high as 74 per thousand per annum, but by the systematic efforts
which have been made by the Health Organisation established by
the planters' associations, tropical diseases have been either completely stamped out or reduced to insignificant proportions, with
the result that the death rate of estate workers is now less than
8 per thousand. No one can fail to admire the thoroughness with
which the medical services on the estates are organised and administered on the East Coast of Sumatra, nor can their economic
Avalué be doubted for a moment. It is calculated that although
their health services cost the planters' associations about 1,357,000
guilders per annum per 100,000 workers, they have nevertheless
reduced their labour costs by about 670,000 guilders per annum per
100,000 workers. That a worker should produce more when he is
well than when he is sick is, of course, a self-evident proposition,

THE NETHERLANDS INDIES

59

but it is one which employers often fail to recognise even in Europe.
In tropical countries efficient production was out of the question
until hygienic conditions had been established. This could only
be done by the expenditure of money, first on research and secondly
on the prophylactic measures which research had discovered to be
effective. The amazing progress made in tropical medicine during
the last two generations has been put to admirable use on the
estates in the Netherlands Indies and is kept up to date on the
East Coast of Sumatra by the pathological laboratory which is
maintained by the two planters' associations at Medan at a cost of
about 100,000 guilders annually. As a result, the working population which was previously ravaged by disease is now probably as
healthy as many working populations in Europe. This result
does immense credit to the foresight of the planters and to
the efforts of the Government of the colony to protect the
workers.
It is a somewhat curious anomaly that health conditions should
be better in the Outer Provinces than in Java. In the latter the
employers are not subjected to the legal requirements which have
been applied for the protection of the health of the immigrant worker
in the Outer Provinces. This is partly explained by the fact that
on many of the plantations operations are seasonal and are performed by the local villagers. An obligation to provide medical
assistance would therefore involve the provision of medical care for
a large part of the local population. As a result, although workers
resident on estates usually enjoy free medical treatment and
hospital care, the general standard of hygiene on the estates is
probably not so high in Java as in the Outer Provinces.
Closely allied to the question of health is the question of housing.
Here too, the Government intervened to ensure the provision of
suitable housing accommodation for penal sanction workers and their
families. After five years they used to be entitled for any further
period of employment to the use of a self-contained dwelling
consisting of a separate or semi-detached cottage. It is significant,
however, that although this provision has never been applied to
free workers, employers are now substituting single or semi-detached
cottages for the old coolie lines on most estates. It is reckoned that
about 25 per cent, of the estate workers are now housed in cottages.
In 1936 there were 12,164 one-family cottages, 15,339 for two
families and 814 for three or four families. This policy has been
generally adopted, because it is realised that the provision of good
housing conditions induces workers to remain on the estates and
5

60

INDUSTRY IN THE EAST

contributes to improve their health, efficiency and contentment.
In Java and Madura, however, the employer is under no obligation
to provide housing, though he frequently does so in order to keep
a nucleus of good workers.
Hours of work, rest days and remuneration are also regulated
by Ordinance in the case of the penal sanction worker. The
length of the working day on the estates is 9 hours, and overtime
rates are fixed by law at least 50 per cent, higher than ordinary
rates. The manner in which wages are to be paid is stipulated in
the contract the execution of which is strictly supervised by the
inspectorate. Wages are required to be sufficient " to provide
adequately for the normal necessaries of life ", and the cost of
living is periodically established by the Inspection Service after
careful enquiry into prices. At the present time, wages amount
to 30 cents per day for men and 25 cents for women. In the case
of free labourers the rates are 32 cents for men and 27 cents for
women during their first contracts, while on re-engagement they
become entitled to an extra 3 cents per day. It may be said
therefore that in the case of penal sanction workers conditions of
employment and remuneration are carefully controlled and supervised. As has already been said, their conditions tend to set the
standard for workers under free contract. Legally, however, the
latter are not afforded the same degree of protection. In some
cases experience has shown such protection to be desirable and the
revision of the Free Workers' Ordinance of 1911 is now under
consideration with a view to affording them the same standards as
those enjoyed by workers under penal sanctions. At present,
however, it may be remarked that the free workers on the estates
in Java are less favourably situated than those in the Outer
Provinces. The depression forced them down to very low levels, so
that on various estates in Central and East Java weeding was paid
at the rate of 4 to 6 cents a day, plucking from 5 to 8 cents and
sorting from 6 to 9 cents. On estates dependent on resident labour,
on the other hand, wages were from 50 to 90 per cent, higher. At
the request of the Government, wage-returns were made by the
estates from October 1936, but the reports of the labour inspectors
during the subsequent months showed little improvement in the
rates of remuneration on most estates. Accordingly in September
1937 the Government circularised the planting community and
suggested that wages should be improved, not merely to compensate
for the increased cost of living but also to reflect the better situation
which had resulted from the economic revival. Recently, the

THE NETHERLANDS INDIES

61

Minister for the Colonies stated in the States-General that up to
November 1937 a general increase in wages had taken place,
amounting to as much as 25 per cent, for factory labour on the sugar
estates; but as adequate figures of the cost of living are not available,
the real importance of these increases cannot be estimated. At
present the Government has no statutory power to determine
minimum wage rates in Java nor is the necessary machinery available. Although the Java Labour Inspection Service, which was only
instituted in 1930, exercises some supervision over the conditions of
employment on estates as well as in industrial occupations, the
number of inspectors is small and their work consists of suggestion
rather than enforcement.
INDUSTRIAL LABOUR

As has already been pointed out, labour regulation in industrial
occupations is still in a very early stage. The Government of the
Netherlands Indies gave effect to the Conventions relating to the
employment of children and the employment of women at night
by an Ordinance of 17 December 1925, subject to certain reservations. Children under the age of 12 may not be employed in
factories in which power-driven machinery is used, in workshops
habitually employing more than ten persons, in construction work,
on railways and tramways, and in the loading, unloading and
transport of goods at docks, railway stations and warehouses,
with the exception of transport by hand. Children under 12 are
further prohibited from being employed between the hours of 8 p.m.
and 5 a.m. or from lifting weights in excess of their physical capacity.
Women may not be employed between the hours of 10 p.m. and
5 a.m. in the undertakings mentioned above, but an important
exception is still legally permitted in the case of sugar factories
during the sugar season, in fibre and cassava factories, in oil and
palm oil factories and in the salt works in Madura. Employment
of a specified number of women during the night may also be
permitted by the Chief of the Labour Office under specified conditions in tea factories, coffee establishments, tobacco undertakings,
rice husking mills, kapok cleaning establishments, firework factories and batik works. The tendency has been, however, to dispense
more and more with these exceptions and exemptions in practice,
so that they may now be regarded as obsolescent. The Government
of the Netherlands Indies has also applied the Conventions relating
to the age of admission to employment at sea, the employment of

62

INDUSTRY IN THE EAST

young persons as trimmers or stokers, and the medical examination
of young persons at sea. Employment in the tin mines at Banka
and Billiton, where Chinese workers are mostly used, is also carefully
regulated by Ordinances of 1927 and 1932, while some regulations
have been issued for mines in general.
Apart from these provisions, however, there is no regulation of
industrial employment. Hours of work are not limited by law and
compensation for accidents, though it has been under discussion
for some years, is at present unprovided. From the absence of
legislation it should not be concluded, however, that conditions in
the larger factories under European management are generally
defective. In the works of the oil companies, the General Motors and
Goodrich companies, and so on, the plants are operated under
modern conditions, hours are not excessive and the general conditions of health and cleanliness are good. The same may generally
be said of the factories on the estates, while some of the medium
factories under Chinese management which the writer visited,
though not up to the highest standard, were not open to serious
criticism. On the other hand, in medium and small factories very
long hours are apparently worked on occasions and the same is
true, as in India, of the native workshops. The latter constitute
a perplexing problem as everywhere in the East. It is very difficult
to enforce standards of health and cleanliness, to say nothing of
wages and hours, without imposing burdens which the fragile
capital structure of such enterprises would not enable them to
bear. It is evident that improvement can only be very slowly
effected, but the whole problem is under the anxious consideration
of the Labour Office in Batavia and it may perhaps be expected
that some elementary regulations as regards conditions of health,
housing, the payment of wages and the employment of children
will shortly be introduced. It must, however, be emphasised that
in Java as in India the pressure of a large and increasing population
on the resources of the country renders the wages problem extremely
difficult. In many small undertakings, sucli as nut-shelling establishments, batik shops, copra-drying houses, etc., eight hours
work was sometimes not remunerated at more than 1 % or 2 Y¿ cents
in 1935 and 1936. According to the report of the Labour Inspection
Service, earnings were so low as to give rise to malnutrition and
other evils. At the same time, the standard of earnings in the
countryside is such that all the labour required can be obtained
at very low rates, even in the native workshops where conditions
are frequently very unattractive to a European eye. In such

THE NETHERLANDS INDIES

63

circumstances, the establishment of a minimum wage of general
application becomes extremely difficult because its enforcement
would inevitably present an almost insoluble problem.
Finally, reference should be made to the Safety Service which
has been in existence since 1852 and which has done admirable
work in securing the prevention of accidents in factories. It deals
not only with the inspection of boilers and steam-engines, but also
with the enforcement of the Safety Regulations of 1910 applying
to electrical installations, sugar refineries, and factories of various
kinds involving dangerous processes. In every factory which the
writer visited not only was machinery well guarded but safety
posters in the native languages were conspicuously displayed.
PLENTY AND POVERTY

The very summary picture thus drawn of the social and economic
situation in the Netherlands Indies furnishes the material for a
partial reply to the fundamental question raised at the outset:
how is it that an area as rich as this should nevertheless have a
standard of living which, judged by Western criteria, is low ?
Certain obvious factors at once suggest themselves. One is that
until recently disease was rampant. Hale and enterprising human
beings are the first requirement if a high standard of living is
gradually to be built up, but only in the present generation has a
healthy working force become available. Another is that although
the area as a whole is not overcrowded, the population is exceedingly
.dense in Java where pressure upon the land is perhaps more severe
than anywhere else in the world. Here again, action is being taken ;
but the full reward in the shape of higher living standards is only
beginning to be reaped in a few areas in the Outer Provinces.
A third reason consists in the relatively small amount of industrialisation so far achieved. This, there are grounds to expect, will proceed
with increasing rapidity; but here, as in India, the high percentage
of illiteracy is likely to prove a severe handicap, particularly in
competition with a literate nation such as Japan.
These are all, as it were, domestic matters lying more or less
within the competence of the area itself to correct. As already
seen, the necessary action is to a considerable extent being planned
and executed. But a further major cause of economic instability
and social deprivation lies outside the power of any single country
to remedy. So long as plantation products—rubber, sugar, tobacco,
tea, coffee, palm oil, cinchona, kapok, copra, pepper, sisal—find

64

INDUSTRY IN THE EAST

ready buyers among the other countries of the world, there is
prosperity in the Netherlands Indies. When they fail to find buyers
or have to be disposed of at prices which mean no more than
a starvation living to those working on the estates, the colony,
though it may be counted rich in resources, is in fact poor. The
drop in prices of plantation products during the period 1929-1932
was nothing less than catastrophic. The quarter of a million tons
of rubber exported annually from the Netherlands Indies fetched
lOd. a pound in 1929 and less than 2d. in 1932. The 70,000 tons of tea
sold at 0.75 guilders the half kilo in 1929 fetched only 0.28 guilders
in 1932. Similarly throughout the whole list : the return on plantation products was reduced on the average to something like one-third
or one-quarter of what it had been.
Fluctuations of these dimensions render orderly economic and
social progress practically impossible. To meet them there are
now the elaborate restriction schemes by which output can be
diminished and the adoption of improved methods slowed down.
That these represent the lesser of two evils cannot be doubted;
but the fact remains that poverty will never be banished by reducing
production and impeding increased efficiency. What is true of the
Netherlands Indies is no less applicable to Malaya and Ceylon.
The fundamental difficulty consists in the intermittent failure
of effective demand for goods in general in the great industrial
countries. This falling off in the volume of buying is felt with
special severity by the producers of raw materials. They suffer not
only from the actual diminution in demand for finished goods but
also from the fact that, in time of depression, manufacturers draw
upon their stocks in hand and for a while practically cease buying
from the primary producer. It is these enormous swings from high
to low in the economies of the great industrial countries that
impoverish the plantations and with them all the countryside
around. Prosperity in countries such as the Netherlands Indies,
Malaya and Ceylon depends not only upon rich resources and efficient
operation but also upon access to a steady market; and a steady
market depends in the main upon the success achieved in the world
as a whole in preventing the disastrous downward movement of
business cycles. Until this has been done, at least in a larger
measure than has so far been achieved, the ability to produce
abundantly is liable to prove a dubious blessing.

CHAPTER IV
CONCLUSION

It would be tempting to draw some general conclusions from
the foregoing summary descriptions of labour conditions in the
five territories visited. The immense importance, both to themselves and to the rest of the world, of the industrial expansion of
the last fifty years is beginning to be apparent to everybody. Not
only has the East become one of the principal sources of the world's
raw materials, but it is now rapidly acquiring the manufacturing
skills. In Ceylon, Malaya and Sumatra, large numbers of workers,
instead of snatching a precarious existence from the soil by primitive
and outworn agricultural methods, are now engaged upon plantations which, directly and indirectly, have done much to raise
the standards of health and of subsistence. In India the factory
worker, though his wages, like those of the estate workers, are
still very low by European standards, has likewise risen a step
higher in the scale of living than if he had remained tied to his
village. Even the traditional native methods of cultivation are
slowly beginning to give way to the teachings of modern science.
As a consequence, a great change is stirring Eastern society to
its depths. The consciousness of misery has been created by the
growing realisation that it is not the inescapable lot of the poor
and that chances of a better life now exist. The immemorial
passivity and fatalism of the Orient are beginning to yield to the
desire for higher standards and the determination to acquire them.
The rise of a trade union movement in China, India and Japan,
the social programmes of the Congress Party in India, of the Social
Mass Party in Japan, of the Kuomintang in China and of the
Labour Party in Ceylon all bear eloquent witness to the changing
outlook of Asia. This tremendous metamorphosis is still in its
early stages. The transformation which it foreshadows will probably
require generations for its accomplishment; but of its immeasurable

66

INDUSTRY IN THE EAST

significance to the rest of the world there can be no question. It is
perhaps the most revolutionary movement of our revolutionary age.
Unhappily, a visit to China, the most populous, and to Japan,
the most advanced industrial and commercial country of the East,
was prevented by the present conflict. Without some acquaintance
with these two countries, no adequate picture of Oriental economic
and social development can be drawn. If they are omitted, any
conclusions must necessarily be of a partial and provisional character,
more especially as the five territories visited have owed a great
part of their economic expansion to European influences. Nevertheless, there are some tendencies which are evidently prevalent in
all Asiatic countries in a greater or lesser degree and of which the
five territories in question furnish abundant and not untypical
illustrations.
It is clear that the introduction of industrialisation is breeding
the same problems in the East as in the West, but against an
Eastern background their order of importance appears in a different
light. The Western mind is mainly preoccupied with questions of
wage rates, working hours, unemployment, social insurance,
protection against industrial accidents and disease, the safeguarding
of women and children against exploitation, the organisation of
factory inspection, relations between employers and workers, to
which have been added in comparatively recent years the questions
of housing, nutrition and vocational training. All these problems
have already made their appearance over the Eastern horizon.
As has been pointed out in the previous chapters of this report,
factory inspection has been initiated, the need for ensuring health
and safety in factories is being realised, the limitation of working
hours is being introduced, compensation for accidents and industrial
disease is spreading, the employment of women and children is
being regulated. In Japan health insurance has been established
on a national scale. In India it is attracting increasing attention.
There is plenty of evidence that the existence of all these problems,
which come to the surface as soon as industry takes root, is being
appreciated and that they are being attacked. That the International Labour Organisation is making a substantial contribution
to their solution is beyond doubt. The foregoing references to the
application of Conventions denote the attention paid to them in
all the countries mentioned, while in China and Japan similar
progress is being made. Moreover, apart from the actual ratification
of Conventions, the incipient labour codes of every Asiatic country
bear plain traces of the inspiration derived from Geneva. Wherever

CONCLUSION

67

I went, I found Government offices well supplied with the literature
of the International Labour Office, and Ministers and officials
responsible for labour matters anxious to preserve and develop
their contact with it.
Nevertheless, although there is a general endeavour to work
towards international standards in regard to conditions of employment and a growing measure of success is being achieved, it would
be misleading to suggest that these problems, important as they
are, dominate the social consciousness of the East. They necessarily
yield priority to the fundamental and interlocking problems of
population, poverty, illiteracy and disease. The last three existed
in Europe during the early stages of the industrial revolution. It
is only within recent times that medical science applied by public
health administration has eliminated some and repressed other
chronic diseases. In the East the same process has begun, but as
in the West its success depends to a large extent on the diffusion
of education. Similarly, poverty in the West is being progressively
conquered by greater production enabling a higher standard of
living ; but this again could not have been achieved without popular
education. If illiteracy had remained as prevalent in England and
France as it was in the days of Balzac or Dickens, the construction
and manipulation of the intricate machines upon which so much
of their present wealth depends would never have been possible.
In the East the spread of education is in its infancy, except in
Japan, which has drawn enormous benefit in respect of health and
efficiency from her early adoption of compulsory schooling. But
in addition to these three great enemies of progress—disease,
ignorance and hopeless poverty—the East is confronted by a
fourth problem in the shape of an overabundant population such
as no European country has to face. Already the populations of
China, India, Japan and Java are in excess of their available
resources, if measured by any Western standard of life. The
further increase which is bound to occur over the next twenty
years can only be met by intensive measures to increase the yield
of the land, to colonise unsettled areas, to exploit undeveloped
resources and to enhance industrial production. In Japan, for
instance, it is estimated that work and wages will have to be found
for 400,000 additional workers every year between 1940 and 1950
and for 450,000 additional workers every year between 1950 and
1960. There is no room for these nine or ten million extra people
and their dependants on the land. Already in 1930 every hectare
of tilled ground in Japan supported 11 persons, as compared with

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INDUSTRY IN THE EAST

8.7 in the Netherlands and 3.0 in Italy 1. The position in China,
in India and in Java is similar. In the absence of complete statistics
the exact population of China is uncertain, but that it is vast and
that it cannot derive a sufficient living from the resources of the
country as at present developed is hardly doubtful. The same is
true of India, and it is noteworthy that even where huge tracts
of territory have been opened up for cultivation by large-scale
irrigation as in the Punjab, the relief to the pressure is countered
in a decade or two by the tremendous fertility of the agricultural
population. In Java there is reason to believe that the pressure
upon the soil is the greatest in the world.
In these circumstances, it is inevitable that industrial wages
should be low. The remuneration of the industrial worker is on
a higher level than that of the agricultural worker almost everywhere in the world. The East is no exception to the rule. But
though there is generally this margin between industrial and agricultural wages, it cannot be stretched beyond a certain point,
particularly in countries where there is always a vast surplus of
rural labour ready to press into the factories for any wage which
will enable it to live. That is the characteristic Eastern problem,
which, as matters stand, makes low-wage competition with the
West inevitable. It is futile to suppose that minimum wages
comparable to those ruling in Western Europe and North America
could be set by law and enforced by the State. Evasion would be
widespread and in some countries at least the extra money would
probably find its way into the pocket of some foreman or intermediary instead of into t h a t of the worker. Even if these difficulties
could be overcome, there is the still more fundamental consideration
that the agricultural workers would be totally unable to buy the
relatively high-priced goods so produced. In other words, industrial
wages and with them the living standards of industrial workers
cannot anywhere exceed rural levels by more than a certain ratio;
and the rural levels are depressed by population increase to a point
where they afford only the barest subsistence.
What has been said so far may be usefully summed up at this
stage. The East is emerging from the economic lethargy of past
centuries. It is becoming industrialised and is rapidly increasing
in efficiency. It is subject to a tremendous pressure of population
upon resources. Its prevailing living standards are, and are liable
1
Cf. Ryoichi ISHII: Population Pressure and Economic Life in
London, 1937, pp. 74-76.

Japan,

CONCLUSION

69

to remain, relatively low by reason of the meagre per capita output
of the agricultural population. This combination of circumstances
contains dangerous possibilities. These have already been felt to
some extent in the field of international trade. The East is manufacturing at prices attuned to agricultural incomes and in so doing
appears as a menace to the great manufacturing countries of the
West. The outstanding social and economic problem of the Orient,
seen in its world setting, is how this difficulty can be resolved.
In the first place it may be well to point out that the so-called
" menace " of Eastern competition is not so formidable nor so
generally disastrous in its effects as is sometimes represented. The
poor peasant of Asia—and even of Europe—naturally "prefers the
cheap products of Eastern industry because they are within the
range of his purse. Their quality may not be so good but he can
afford to buy them; whereas the more expensive products of Europe
and America remain beyond his reach. In these circumstances
some displacement of Western manufactures by those of China,
India and Japan has necessarily taken place. But large numbers
of people, and they among the poorest in the world, have greatly
benefited from this possibility of buying some of the basic necessaries of civilised life. Nor has this been entirely to the detriment
of Western producers. The cheap products of the East are opening
up new markets in the native populations. Cheap textiles, toys,
bicycles, musical instruments, shoes and household goods generally
are finding a new range of buyers. At the same time, this increased
trade is improving the demand for raw materials, and helping
to raise the standard of living of raw material producers generally.
It needs to be remembered, also, that Eastern competition is not
normally so fierce as the experience of the last few years would
appear to indicate. The cheapness of Japanese exports, which
made all attempt at equal competition impossible to the countries
of the West, was due in large part to the extreme depreciation of
the yen. During the great depression most manufacturing countries
reduced the gold value of their currencies by some 40 per cent, or
less. The yen was reduced by 66 per cent., thereby conferring a
competitive advantage upon Japanese exports which had nothing
intrinsically to do with their Eastern origin. Nevertheless, while
it is true that Eastern competition, in that it opens new markets,
is not so detrimental to Western interests as is sometimes imagined,
and in any case has appeared during recent years in an abnormal
form, there is a genuine difficulty involved. By reason of the
excessive difference between the living standards of the East and

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INDUSTRY IN THE EAST

the West, coupled with the fact that, as Japan has shown, Eastern
efficiency and enterprise can reach high levels, a situation of a type
which has not heretofore arisen on any considerable scale has now
to be worked out.
The closing of the economic gap between East and West is
indeed one of the greatest problems of the present time. The process
has already begun, but it can hardly be carried forward peacefully
without some effort at international adjustment. As yet the West,
aware only of the domestic difficulties caused by the influx of
Eastern products into its markets and for the most part ignorant
of or indifferent to the urgent dangers arising from the overpopulation and- poverty of the Orient, is seeking to defend itself by
quotas, tariffs and similar means. On the other side, the East,
becoming daily more conscious of its own pressing economic and
social troubles, is seeking to find outlets for its industry everywhere
with little regard to the disturbance caused to the social equilibrium
of Western countries. These methods of economic warfare are
likely to defeat their own ends. Only through mutual co-operation
and better understanding can a modus vivendi tolerable to all
parties be gradually worked out and applied.
Clearly the only effective remedy is to raise living standards in
the East. This may be expected not only to relieve the situation
so far as international competition is concerned, but also to contribute to the solution of the problem of excessive population increase.
There are only two known curbs for a growth in numbers in excess
of the means of subsistence : one is that of " nature "—starvation,
disease, infanticide and exterminatory wars; the other is urbanisation and higher living standards. Experience in the West has
shown clearly that, consequent upon industrialisation, the rate of
population increase slows down. . In Japanese cities similar factors
would appear to be already at work 1.
In order to raise living standards the first requirement is to
improve efficiency both in agriculture and in industry. This calls,
among other things, for a direct attack upon illiteracy and disease.
Once a beginning has been made here, experience has shown that
productive efficiency progresses rapidly. But to increase output
is only one of the elements in the problem. As already emphasised
in the body of the Report, abundant production does not bring
with it the assurance of prosperity. There must also be the possibility of selling the goods produced. It is here that the principal
1

Op. cit., pp. 74-76.

CONCLUSION

71

difficulty arises. Industry in the East cannot depend solely upon
the increased markets coming from the improved efficiency of its
agriculture. For as rapidly as agricultural output expands, new
mouths arrive to consume it; and the margin for the purchase of
manufactured goods remains small. If standards of living are to be
raised, markets for industrial products must be found abroad. For
this reason, international trade is of especial importance in the
social and economic development of Asia. So far, relatively little
progress has been made. At present, the total value of international
trade carried on by the 1,000 million inhabitants of the East is
not appreciably greater than that of the United Kingdom, with
less than 50 millions. Development in this field has become vitally
necessary. Whether it is a question of finding markets for plantation products, of promoting industrialisation so as to provide
work for those whom the land can no longer support, of attracting
new capital, or of obtaining raw materials for industries already
developed, commerce with other countries is essential to the East.
There is, moreover, the further requirement to which reference
has repeatedly been made: if goods are to find a ready market
the downward swings of business cycles in the great industrial
countries of the world must be as far as possible eliminated. This
is necessary for two principal reasons. In the first place, because
otherwise the depression is passed on in an accentuated form to
the producers of raw materials, resulting in the impoverishment of
the plantations, of the mines and of all the country around dependent upon them. In the second place, and still more important,
because in a world subject to intermittent deficiencies of demand,
international trade and international investment cannot develop
freely. In time of depression every nation of necessity seeks to
protect its own producers, and the whole system of international
trade is broken up in a vain attempt on the part of each separate
country to deflect the disaster from its own shores.
The promotion of international trade and the prevention of
industrial depression can do more than anything else to help the
countries of the East to higher standards of living. In this evolution
the West also stands to gain in the long. tun. It is true that there
will be difficult and painful adjustments to be made. It is true
also that Western countries will no longer benefit as in the past
from such exceedingly favourable terms of trade, where manufac
tured goods were exchanged against relatively large quantities of raw
materials produced by the cheap labour of the East. But losses
such as these can be much more than compensated'by the immense

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INDUSTRY IN THE EAST

advantage to be had if Western industry tackles the principal task
before it at the present time: the elimination, if only partial, of
industrial depressions. Furthermore, once there is a balance in the
East between manufacture and agriculture, it is reasonable to
expect that what has regularly occurred in the past when countries
became industrialised will occur again here. The total amount of
international trade available to each country will not be less but
greater than before, by reason of the fact that a people with high
standards buys more than a people whose standards are perforce
low.
These, it would seem, are the central problems of the East in
its progress towards higher levels of living, and these some of the
means by which the difficulties likely to be encountered may be
turned or overcome. Even so brief an analysis as that attempted
here indicates how closely the countries of the world are linked
together. The explosive force of population increase in Eastern
countries is a danger not merely to the East but to the whole world.
Conversely, the improvement of conditions of life in the Orient
depends to a great extent upon an enlightened trading policy on
the part of Western nations, and upon the success with which these
nations are able to cope with business cycles.
When it comes to dealing with problems which, though highly
important, are less general and fundamental than those just
considered, the same interrelationship and interdependence is
evident. It is impossible here to enter into these questions, but
bare mention may be made of some two or three typical examples.
One of the most discussed questions at the present time is the adaptation of the output of the plantations and mines to the effective
demand for their produce. The violent fluctuations in the price
of tea, tin, rubber and other products have produced two farreaching consequences, one economic, the other social. On the
economic side free competition has perforce been abandoned in
order to secure some relative stability of prices by means of the
international regulation of exports. Even so, wide and rapid
variations in production are still taking place, with the result that
estates tend now to be managed on factory lines—that is to say,
changes in demand are met by increasing or reducing output rather
than by adjusting prices. This procedure involves the same social
consequences as in industry, where decline in production is reflected
by unemployment. In the past, estate labourers were usually
engaged on long contracts, which were little affected by the state
of the market. In the future the problem of unemployment and

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73

under-employment among plantation workers is likely to arise.
What is true of plantations and mines in Malaya, Sumatra and
Ceylon is applicable in a rather different way to factories in India.
Formerly, unemployment was rendered less disastrous by the fact
that the industrial worker could always fall back upon the village.
In future, this is likely to become progressively less possible. In
short, the countries of the East in the process of industrialisation
are bound to meet many of the problems already encountered in
the West and can learn much from the experience there gained ;
while at the same time the peculiar conditions of the East are
likely to demand special adaptations.
Another question which repeatedly arises is the relation between
foreign capital and the standard of living in colonial territories.
Lack of capital and of capital equipment is one of the causes of
Eastern poverty, and one of the greatest obstacles to industrial
development. The accumulation of capital by the savings of the
masses is only just beginning through the development of cooperative societies and provident funds. Even among the wealthy
classes, investment in industrial or commercial enterprise is as yet
comparatively rare, except in China and Japan. Gold and precious
stones are still for the most part regarded as more secure and
desirable forms of wealth than bonds or shares. Hence the introduction of foreign capital has been of immense service. Without
it a major part of the new wealth now derived from mines, factories
and plantations would never have been brought into existence,
and the consequent improvement of the standard of living would
not have taken place. On the other hand, a large proportion of
the profits of foreign enterprise seems to have gone abroad, though
the information available is usually not sufficient to enable any
definite conclusions to be drawn.
Again, the question of Asiatic migration as a means of relieving
the pressure of population has received little attention. The emigration of Indians to Ceylon, Malaya, East Africa and elsewhere
has no doubt been of some assistance in this direction. The Chinese
have spread all over the Pacific area. Japan has made repeated
efforts to stimulate emigration, but even where no obstacle has
been raised by foreign countries, the numbers leaving the country
have not appreciably counteracted the increase in the population.
All these and other problems are not merely of Asiatic interest.
More and more they affect the trend of world economics and world
politics. They cannot therefore be regarded as devoid of international importance. For that reason an Asiatic Conference on

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INDUSTRY IN THE EAST

the model of that held two years ago in Santiago might be expected
to yield valuable results not only from the standpoint of examining
the specifically Eastern aspects of problems of industry and labour,
but also of enabling the rest of the world to gain a better understanding of the social and economic conditions of the Orient. That,
after all, is one of the principal tasks of the International Labour
Organisation. A high percentage of international differences and
conflicts, whether economic or political, springs from fears and
suspicions bred largely of ignorance. Even a little knowledge is
less dangerous than none at all. Though the journey to which this
Report relates was too brief and too restricted to afford any comprehensive experience, it may be hoped to have dispelled some
of the travellers' ignorance and to have given them an elementary
insight into the social and economic realities of the countries
visited. It will not, however, have served its real purpose unless
it is the forerunner of more systematic efforts to create a better
understanding of the Oriental problem within the International
Labour Organisation. This can be done in various ways, but
none is so effective as personal contact and ocular demonstration.
It is to be hoped, therefore, that even if a conference on Eastern
soil is for the moment impracticable, the Governing Body and the
Office will take steps to ensure closer relations with the countries
of Asia than have existed hitherto.