The Seeds of Prosperity: Where Did All the Money Come From?
At the peak of his reign in the mid 1920s, Sultan Ibrahim of Johor, Sultan Abu Bakar’s son, was reputed to be the wealthiest man in the world. In addition, the loans that his State of Johor provided to the British bankrolled their global Empire. Where did all the money come from?
One of the perennial themes of Palace of Ghosts is wealth. More specifically, wealth accumulation over time. The most visible sign of this outcome was the flamboyant and ostentatious lifestyle of Sultan Ibrahim of Johor in the 1920s and 1930s. He was a product of his times when the rich lived large and cast caution to the monsoon winds. His outrageous playboy antics provide an entertaining subplot to parts of Palace of Ghosts and get him into all sorts of trouble. However, the wealth of the Sultans of Johor did not, of course, just happen. It started with Abu Bakar, and Chapter 5 of Palace of Ghosts, “A Royal Quest”, tells the story of how it happened.
Economic Development
The economic profile of the economy of Singapore and its hinterlands changed and expanded dramatically during the 19th century; contrary to popular belief, it wasn’t the British who should claim all the credit for this. It is a fact that the British introduced a greater volume of existing and new tradable products to the region, but they only added to the thriving trade going on via regional and pan Asian networks that had existed for centuries. It is debatable whether what became British Singapore could have even survived if the pre-existing regional and pan-Asian trade networks had not transferred themselves to Singapore from their previous epicenter located at the port of Tanjong Pinang on the island of Bintan just 30 kilometers away. What the British brought, in other words, was more of the same: increased volumes to be sure, and, to be fair, a solid level of stability that was welcomed after the preceding decades of chaos. So, at first, the profile of the region’s economy remained essentially the same: trade based.
What made a significant difference later on was the development of new economic sectors based on primary resources and agriculture. This had been going on under the Chinese immigrant communities on the Riau islands to the south, within the Johor-Riau Sultanate, for some time prior to its collapse in around 1780, but it was of mostly limited scale. Similar small-scale agriculture also took place within the Chinese communities in Singapore after the British established their trading post in 1819. Later, some of these plantations were bought up by Europeans seeking both commercial gain and the lifestyle of a country squire. But again, it was on a relatively small scale and the long-term commercial impact was constrained by unsustainable cultivation practices. Given the size of the island, it was not long before the plantations and other agricultural initiatives in Singapore reached a tipping point as the population rapidly expanded and the soil became exhausted. In the mid-1840s, when Singapore’s Chinese planters began to look elsewhere for land, Abu Bakar’s father was quick to welcome them to Johor, an open invitation that continued well into Abu Bakar’s reign.
When Abu Bakar realized the potential of the large tracts of land that he now fully controlled on the Malay Peninsula, the regional economy began to evolve significantly beyond simply an international, regional and local sea-borne trade. It was a turning point in history: the agricultural activity generated by this change laid the economic foundation for the new State of Johor and simultaneously gave Abu Bakar an additional, independent source of income.
It was an epiphany of sorts–Abu Bakar’s father and grandfather had continued their age-old involvement in the local maritime trade as best they could within a British controlled harbour and port, with the added benefit of receiving cash payments from the British in exchange for ceding control. Rumours of their involvement in piracy while simultaneously enjoying the stipend from the British earned them a reputation for duplicity among some circles. Nothing much had changed in their daily lives except for the presence of the British and some extra, much needed, cash. Despite moving from the Singapore River to a larger plot of land nearby at Telok Blangah, they lived comfortably and could rely on the absolute loyalty of their followers. They had a free hand to do whatever they wanted in Johor. Abu Bakar, on the other hand, realised that evolving from a traditional maritime economy and way of life to one that exploited the land he now controlled in Johor had the potential to utterly transform the socioeconomic profile of the region to his and his people’s material benefit.
The extent of Malay rubber plantations in the first decades of the 20th century
It was a critical moment in the social and cultural evolution of the communities which constituted Abu Bakar’s following. Like their leader, they too started to leave behind their roots as sea farers and began to find different ways to benefit and prosper from the new set up. The group of followers living in their kampong at Telok Blangah and elsewhere–mid ranking chiefs, security detail, boat and fleet captains, family members, and all manner of other flunkies and hangers-on–were transformed into various kinds of overseers and administrators who now learned how manage and optimise the revenues generated by the Chinese communities that were increasingly active on the Johor mainland in the second half of the 19th century. They had set up and ran plantations based on a succession of hugely successful, though often short-lived, cash crops: first pepper and gambier, then nutmeg, and then, lastly, what became known as “the money tree”–rubber.
The sea peoples whom the Malay chiefs had relied upon for wealth, lost their power and were either absorbed into the emerging new structures or simply drifted off into the vastness of the Malay Archipelago. By the time the future Sultan Ibrahim of Johor was showing the world what it meant to be truly wealthy in the 1930s, he and his predecessors already had the best part of a century’s worth of steady wealth accumulation under their belts. There was more to this process, however, than just the diversification of the economy into new sectors in which the sultans happened to have sovereign control of that most precious means of production, land. Similarly, it cannot be solely attributed to their control, via various contractual structures, over an ever-expanding labor force as immigration from China and, later, India ballooned. It also concerned the emerging new business environment, and for this the British could claim some credit, for it was they who provided the stability and commercial framework within which the regional economy could flourish.
The “Medici Effect”
Various modern-day authors (in particular Professor Richard L. Florida) have stressed the importance of where you choose to live and, in addition, the dominant personality traits of the other people who also opt to live there as being a major factor in your material success. From time immemorial, people have congregated around the region at the tip of the Malay Peninsula to make money. Then, as now, a common character trait among the population was a burning desire to succeed and make money. Today’s inspirational ideals of Singaporeans’ desire to succeed and impress others by their success are characterised, perhaps light heartedly, as the “5 C’s of Singapore”–cash, car, credit card, condominium and country club membership. Simply put, Singapore, Johor and Riau attracted people with a “can do” attitude, a hunger for success, who didn’t shy away from risk or hard work. The Singapore government of today rightly claims credit for maintaining and promoting these same things, but it is far from being their invention. In fact, it has been centuries in the making.
The Johor-Riau Sultanate, and its final manifestation and ultimate malfunction in the second half of the 18th century, already had as its economic foundation a powerful center where it could concentrate the means of production: labor, capital, entrepreneurship, and, as well as the coastal land on which the port of Riau stood, the sea. It was the center of an extensive maritime network, not only for the transport of people and products, but also lines of communication that connected Southeast Asia, and reached as far afield as Africa, India, China and Japan.
The Dutch had eyed it nervously and with jealously, not only because of the wealth it generated but also because of the power that came with it. All manner of goods and products passed through this port, and not just the so-called native trade in resources and agriculture: forest products and cash crops. Siam (now Thailand) was the strongest power among the Southeast countries and traded with neighbouring countries in goods such as rice, teak wood, gemstones and many other raw materials. Vietnam also exported rice as well as coal and indigo. The Philippines, Borneo and Cambodia were also important export markets. European traders were active in the region long before their governments established permanent bases. This trade was at first dominated by the indigenous people and other Asians, however, as the empires of the Portuguese, Dutch, French and British grew in power and influence, their private citizens, operating outside of their government’s monopolistic trading companies, also became involved in what became known as the country trade, feeding into the regional ports of Singapore and the Straits Settlements, among many others throughout Southeast Asia. The British focused on exporting commodities such as tin, rubber, spices and timber from the region, and importing opium and textiles. Also passing through the region were agricultural products from Dutch-controlled regions, such as Java, bringing in coffee, tea, tobacco and sugar.
This was the entrepôt the early 19th century Singapore inherited and sustained. It exemplified the classic “Medici effect” (a term borrowed from the title of Frans Johansson’s 2004 book), the same phenomenon which gave birth to the European Renaissance centuries earlier: when capital, trade, and different cultures intersected, the result is explosive. Where money flowed, innovation soon followed. When the Johor-Riau Sultanate collapsed and the port of Riau at Tanjong Pinang was abandoned, it was Singapore which took up its mantle, transplanting many of the people connected to the trading networks to the Singapore River just a few kilometres to the north. There, the whole process started up again, but not from scratch: several centuries of trading experience and knowledge was not lost as a result of the upheavals. Abu Bakar and then his son Ibrahim found themselves at the center of booming economy. They were most powerful among the all the local peoples and clans. They found themselves in partnership with the architects of a new commercial framework and the guarantors of the necessary stability. After, of course, Singapore’s and the region’s fortuitous natural geolocation, this was the contextual basis of its success.
Partnership with the British
It was not all plain sailing. As the 19th century progressed a lot of what the British did, their approach to shoring up the new trading entrepôt, was baffling and beyond the cultural context of the Malays. The British brought new forms of organization, capital and new trade connections, but it seemed to be working. From the Malay perspective, at least superficially, the partnership with the British was the latest in one of many efforts to reorganise their old sultanate based on, hopefully, some semblance of a traditional pattern. The partnership with the British was certainly symbiotic: the British were as much beneficiaries of the sultans’ standing among the local communities, and of the personal qualities of Sultan Abu Bakar specifically, as he was of their presence. Simply put, he was a visionary and a genius.
Dr P. J. Thum, Singapore’s most popular historian, writes of “Living with Myths in Singapore”. Some of these myths concern the questions posed in Palace of Ghosts about where the money came from that led to the success of the Settlement, generally, and to the wealth of the sultans, specifically. People often talk about loss and dispossession as if the whole episode of history was a zero-sum game. In fact, there were beneficiaries from all communities, at least for those who were fortunate enough to be directly involved in the growth of trade and commerce. Carl A. Trocki, one of Southeast Asia’s leading historians, opines that “In most accounts the role of indigenous peoples in the growth and prosperity of Singapore is understated. The Temenggongs were vital to the successful expansion of British power and the colonial economy in the Malay world”. Abu Bakar, his people and his descendants, benefited handsomely as they successfully made the transition from “sea lords to land lords”.
Another myth that Dr. Thum alludes too was that 1819 was the beginning: the point in time from which the first dollar was banked, and all wealth flowed from that point thereafter. This, as we have seen, is indeed a myth. The British were tapping into an existing trading and commercial ecosystem. But Abu Bakar, his predecessors and descendants, also tapped into a massive global commercial organization which they exploited to further their own interests and those of the new State of Johor, which they did with spectacular results. The British and the Sultans of Johor were ultimately totally dependent on each other for their mutual survival and success in Southeast Asia.
The Vision and Mission of Abu Bakar
Temenggong Abu Bakar had a laser focus on becoming Sultan, and to do that he needed, first and foremost, money and prestige. No one would listen to him unless he had these two things in hand. Every important step he made was orchestrated to advance his goal to make himself the head of a reinvented Sultanate. His thought processes were perhaps comforted by the notion that the realm of the old Sultanate, including the island of Singapore, rightfully belonged to him and his ancestors, in spite of what the 1819 treaties said. It was after all their traditional domain. It might seem like he and the British were going in opposite directions, but in fact their coexistence complemented each other’s efforts. The Sultan’s web of influence that enabled him to capture a large slice of the wealth generated initially in Singapore, and later as he built up his own new state in Johor, could not have happened without the benefits that flowed from deep integration and partnership with the British and through them the wider regional and international trading economies. The British in Singapore, in turn, became reliant on Abu Bakar for their own success.
Their relationship was underwritten by massive wealth generation and this was the stepping stone that Abu Bakar needed to get him into the drawing rooms, parlours and saloons of European aristocracy, and ultimately to the inner sanctum of British royalty. The process of wealth accumulation was not to end with Abu Bakar: there was much more to come. However, it was he who laid the foundations not just of the wealth itself but also of the mindset required to convert what he had, both in terms of his own character traits as well as the physical assets he controlled.
The Golden Fertiliser
In summary, the answer to the question about the Sultan of Johor’s wealth, where did all the money come from?, is from several sources. First, the natural fortuitous geolocation of the region the sultans found themselves living in– it was the right place at the right time; second, the inheritance of the trading networks that had been built up over the preceding centuries that had most recently operated within the Johor-Riau Sultanate; this second factor coincided with a third, which was the establishment of a British trading post and the ensuing period of stability that followed; fourth, the diversification of the economy that occurred under the auspices of the Temenggongs, later Sultans of Johor, in their sovereign State of Johor; fifth, the dynamism that occurred as a result of a confluence of commerce, money, cultural diversity and accompanying ideas; and finally, a partnership between the Sultans of Johor and the British to which both parties contributed and both derived economic benefit. There are of course other factors, notably the enterprise and hard work of the Chinese communities, but these six factors are the foundational explanations of where the money came from.
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