Going Bankrupt? Business Failure in Colonial Indonesia, c. 1870-1940

Bankruptcy represents a highly evasive feature of business activity when it comes to interpretation. Statistics convey the ups and downs of business cycles and genuine business failures but also strategies of readjustment. There was a careful registration of declared bankruptcies in late colonial Indonesia but so far the preserved data have not been utilized for purposes of economic historical analysis. This article, based on primary evidence from the colonial period, seeks to fill that gap in the historiography. The article presents an overview of available sources, including a discussion of ambiguities in interpretation. The actual analysis consists of two parts, one concerning the period from the late 1860s up to the first decade of the twentieth century when the basis for laid for a rapid export-led economic expansion. The second part of the analysis embraces the period of expansion, in particular during the 1920s, as well as the downturn during the worldwide economic depression in the 1930s. Particular attention is given to evidence from major commercial centres in Java such as Batavia (Jakarta), Surabaya and Semarang. The statistical record highlights the stability in the bankruptcy pattern up to 1920 followed by sharp oscillations, including dramatic peaks in the early 1920s and early 1930s. Strikingly, sustained losses registered in declared cases of bankruptcy were significantly larger during the 1920s than the 1930s which testifies to a large-scale corporate restructuring through the device of bankruptcy during the former decade. Findings also underscore the conspicuous presence of ethnic Chinese among businessmen filing for bankruptcy but their share declined in the course of time as more European firms went bankrupt.