How the Suez canal helped the colonial Dutch extractive economy

A new and fertilising stream of trade set in with the utilisation of the shortened ocean route, giving prosperity to trade and strengthening the finances of the possessions. — Wright and Breakspear (1909).

The Suez canal in Egypt caught the world’s attention recently. A huge cargo ship got stuck diagonally across the canal, causing a major disruption in the world’s shipping operations. This canal that connects the Mediterranean Sea to the Red Sea is the shortest route from Europe to Asia and about 12 percent of the world’s sea cargoes passed through this canal.

When the canal opened in 1869, it accelerated the colonial extraction of resources from Asia. In particular, the canal boosted the Dutch colonial power to ship resources out of Indonesia to be sold in the Netherlands.

The Suez Canal from Rotterdamsche Lloyd in 1939.

Impetus for Colonial Mercantile

The late 19th century sees the rapid development of “trade” or more appropriately called extraction of resources from Indonesia to the Netherlands and Europe. This rapid economy development was a confluence of several factors. The Dutch colonial government abolished the cultuurstelsel (or enforced culture system) in 1870 and implemented a “liberal” economic system in the Dutch East Indies. This liberal system allowed private companies to conduct business directly in the Indies. New lands provided new agricultural products. The tobacco in Deli had its first export in 1864 and by 1870 had attracted European and American buyers. After years of war, Aceh was subjugated in 1880.

The opening of the Suez canal in 1869 significantly shortened the travel time between Netherlands and Indonesia. Suez canal cut the distance by a third. Without the canal, ships have to go around Africa’s Cape of Good Hope. A journey that took 40 days became 28 days, saving lots of fuel and costs. The introduction of large steamships further made transport cheaper and more efficient.

The canal provided a tremendous impetus to the colonial mercantile. The news of the canal opening excited the Dutch merchants and government. Agricultural and mining products can be shipped more efficiently to Europe which means greater profit.

Some of the valuable products include cinchona, the main ingredient of quinine (remember hydroxychloroquine?). The Dutch started experimenting growing cinchona, originated from South America, in West Java in 1854. Soon it became an industrial-scale production system. Tea, sugar, coffee, rubber, tobacco, cocoa, kapok, and much more are valuable export from Java.

Technology helped speed up the extraction. Telegraph was established in Java in 1856. And in 1859, Batavia was connected to the Netherlands via a telegraph line to Singapore. In 1863, a railway system was established in Java to move agricultural products.

Ships, Trains, and Automobiles

Deli ports and railway

In Deli or North Sumatra, its Sumatra tobacco was highly-priced for cigar wrapper. Deli tobacco brought 4 times the price of tobacco from Java. Initially tobaccos grown from various places in North Sumatra were shipped using small boats via canals and rivers to Labuhan Deli. From Labuhan Deli, all of the collected commodities were shipped to Belawan via Deli River.

Initially tobacco leaves were carried by ox carts. To make the transport more efficient, the Deli tobacco company established a subsidiary company, the Deli Railway Company (Deli Spoorweg Maatschappij or DSM). DSM, a private railway company, was established in 1883 to move agricultural products from all over the east coast. The first line connecting Medan and Labuhan was opened in 1886. By 1890, the railway line connected most of the tobacco plantation areas, east to west and north and south of the Deli region.

Deli railway line in 1893.

The direct line from Medan to Belawan was established in 1888 and Belawan became an important seaport and Labuhan Deli soon reverted to a fishing village. The port was enlarged in 1912 so that the harbour can contain large steamships, to remove the reliant of Singapore as a transit port. About 70% of export from east of Sumatra in 1930s was through Belawan.

As perennial plantation (rubber) became important, the railway network was extended to the southern part of the region: Soengei Bamban to Tebing Tinggi in 1904, Dolok Merangir to Pematang Siantar in 1916, Tanjungbalai in 1927. Another line from Kisaran to Rantau Prapat was completed in 1937. By 1940, the total length of the east Sumatra railway network was about 540 km.


Roads were built mainly for transportation of agricultural products. As the place was still a jungle, planters from the company had to construct their own roads. In 1892, the Dutch government started constructing roads connecting the region. Roads were built north to south parallel to the coast line. In late 1920s, roads were built to the highland in Simalungun, over the Toba plains and the north of Lake Toba. The tea plantation in Pematang Siantar was established at the same time and turned out to be a disappointment as the soil was an acidic Toba tuff, not suitable for tea.

The construction of the road along the east coast of Sumatra extended south along the coast until it hit peatlands in Pulai Pinang in Labuhan Bilik.

KRL sailing from Batavia to Rotterdam via the Suez Canal in 1939.

Shipping lines

When the Suez Canal was opened, the Dutch were excited and immediately called for a public meeting in Amsterdam in August 1869. This park meeting discussed establishing a shipping line from the Netherlands to Batavia via Port Said. The meeting duly concluded that a commission should be formed to establish a regular steamship line. In February 1870, the commission signed a contract with the Dutch government. The Nederland Steamship Company or Stoomvaart Maatschappij Nederland (SMN) will transport all of the Dutch government’s goods, including its monopoly of coffee and sugar from Java. The company was floated with a capital of 3.000,000 Gulden, and its first steamers were ordered from John Elder & Co. of Glasgow.

On May 17, 1871, the maiden journey of Willem III was launched. Two days later, news reached the Netherlands that Willem III was on fire and beached off Portsmouth. Another ship crashed on a rock in the Red Sea.

Reliable sailings were at last established after 1874. The shipping line started with a monthly schedule, and in 1877 was scheduled every three weeks, and in 1879 offered a fortnightly service. In 1882, the shipping line was ready for departure every ten days.

In 1892, the “Nederland” line partnered with another company Koninklijke Rotterdamsche Lloyd (KRL) or Rotterdam Lloyd. They agreed that the ship of each company would sail to the Indies every alternate week. The Dutch Government signed an agreement with the two companies to maintain its mail service.

By the late 19th century (1890s), at least five companies offered the travel from Java to Europe fortnightly.

The Netherland’s company (SMN) sailed from Batavia to Amsterdam via Genoa, calling at Padang, Aden, Suez, and Port Said at a distance of 9100 miles in 28 days, with a first class ticket at US$301.50

The Rotterdam Llyod (KRL) ran between Batavia and Rotterdam via Marseilles with a distance of 9000 miles, calling at Colombo, Pirim, Suez, and Port Said, took 28 days.

The Queensland Royal Mail Line steamers ran between Batavia and London via Colombo, Aden, Suez, Port Said, and Naples, first class costs $201, took 33 days.

The Peninsular and Oriental Royal Mail Line travelled between Batavia and London , via Brindisi, calling at Singapore, Colombo, Aden , Suez, and Port Said .

The Messageries Maritimes boats ran between Batavia and Marseilles, calling at Singapore, Point de Galle , Aden, Suez, and Port Said .

The passenger from Europe to Java may travel by the Rotterdam Lloyd direct fortnightly service from Rotterdam to Batavia. The vessels of this line leave Southampton every other Tuesday at 3 p.m.. and call en route at Lisbon, also, on the passage through the Mediterranean, at Tangier and Marseilles.

The voyage is continued via the Suez Canal, with short stops at Fort Said and Suez, then eastward across the Indian Ocean, with a call at Colombo, to Padang halfway down the south-west coast of Sumatra. A two days’ further run along the remaining length of this littoral, and through the Strait of Sunda at the end, and Batavia is reached. (Wright, 1909)

Advertisement of Rotterdam Lloyd (1927).

For the regional line, the Nederland and Rotterdam Lloyd joined to form Koninklijke Paketvaart Maatschappij (KPM) or Royal Packet Navigation in 1890. KPM brought passengers and cargoes from all ports in the Indonesian archipelago, and transport them to the main ports in Batavia or Singapore.

KPM had a weekly service from Belawan to Singapore or Batavia. The trip to Singapore (26 hours journey) costs 75 Gulden and Batavia (36 hours) at 100 gulden.

Extractive economy

The Suez Canal had accelerated the mining of resources out of Indonesia. Feldwick gave an account on export from the east coast of Sumatra in 1915:

Kerosene, 140,280,021 litres; benzine and gasolene, 84,600,762 litres; liquid fuel, 6,296,20 litres; forest products, 6,006,621 kg; , rubber: Hevea, 9,085,943 kg; Ficus plantation, 441,222 kg; Ficus jungle, 32,213 kg; other sorts, 1,693 kg; Copra, 5,105,240 kg; gambier, 2, 124,979; gutta-percha, 583,421 kg; charcoal, 916,704 kg; Coffee: Liberia, 2,174,106 kg; Robusta, 1,188,552 kg ; Java, 11,047 kg; other sorts, 97,264 kg; black pepper, 1,487,555 kg; Penang nuts, 4,006,294 kg; rattan, 4,517,462 kg: sago flour, 176,586 kg; Deli tobacco leaf, 20,821,722 kg; tea leaves, 638,118 kg ; trassi, 8,717,755 kg; salt or dried fish, 26,092,005 kg; fresh fruit, 47,092 kg.

The Americans were in as well with the Hollandsch Amerikaansche Plantage Maatschappij (later became the United States Rubber Plantation Inc.) in Kisaran. The Belgians had Société Financière des Caoutchoucs (Socfin) with oil palm plantations in Asahan.

And there is virtually no manufacturing industry developed.

Export and Import values from East Coast of Sumatra (from Thee, 1977_

Thanks to Suez, the colonial mercantile, sugar, coffee, pepper and tobacco, petroleum, rubber, copra, tin were mined and exported. The export from Indonesia reached 500 million in 1910 and peaked in 1920s with a value of more than 2000 million Gulden per year.

In the East coast, annual export is 200–300 million Guldens per year, with a trade deficit of 100 million per year. All these profits were drained away from Indonesia to the Netherlands.


Deli Spoorweg Maatschappij

Feldwick, W., 1917. Present Day Impressions of the Far East and Prominent and Progressive Chinese at Home and Abroad: The History, People, Commerce, Industries and Resources of China, Hongkong, Indo-China, Malaya and Netherlands India. Globe encyclopedia Company.

United States Bureau of Foreign Commerce. 1899. Highways of Commerce. The Ocean Lines, Railways, Canals, and Other Trade Routes of Foreign Countries.

Thee Kian Wee. 1977. Plantation Agriculture and Export Gorwth. An economic history of East Sumatra, 1863–1942. LEKNAS-LIPI, Jakarta.

Wright, A. and Breakspear, O.T. eds., 1909. Twentieth Century Impressions of Netherlands India: Its History, People, Commerce, Industries and Resources. Lloyd’s Greater Britain Publishing Company.

Soil Scientist, interest in Colonial history.