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Published online by Cambridge University Press: 18 July 2011
MOST American forecasters in the first half of 1955 were optimistic about the United States economy, but many were gloomy about the prospects for Asia. The head-shaking over Indonesia was particularly grave.1 Such a pessimistic outlook was perhaps a natural reaction to the sanguine attitude that followed the Indonesian achievement of freedom from the Dutch on December 27, 1949. In Indonesia itself, a battle raged in 1955—culminating in the overthrow of the Ali cabinet—between those out of power who blamed the cabinet for inflation, insecurity, and corruption, and those in power who tried to place the onus on previous cabinets, the Dutch, and remnants of colonialism. Indonesian newspapers played up these disputes with perhaps even more vigor than the American press handles party differences within the United States.
Indonesia is a classic example of a recently freed, former colony. Winning sovereignty from the Netherlands ended the first and basically the simpler phase of the revolution. The second phase, more difficult and much more gradual, must evolve new institutions to make the country a truly independent power and ensure economic development with a rising standard of living for her people. She is struggling with the usual boom-and-bust cycle that characterizes araw-material producing country. In the 1930's, she suffered through the sugar depression. Since she gained her freedom, rubber, tin, and copra, comprising over 70 per cent of her exports, have give hera hectic ride on the roller coaster of world prices.
1 See, for example, van der Kroef, Justus M., “Indonesia's Economic Difficulties,” Far Eastern Survey, XXIV, No. 2 (February 1955), pp. 17–23.CrossRefGoogle Scholar
2 Compare the views of Indonesia Raja and Pedoman with Merdeka and the Indonesian Observer.
3 “Indonesian Revolution—Second Phase,” prepared by the students in the Inter-collegiate Seminar on Indonesia, Mount Holyoke College, Department of Economics and Sociology, June 1954.
4 Minister of Economic Affairs Roosseno explained: “This national economy might be interpreted as a situation where the Indonesians did not want any longer to be made the object of something but wanted to become the subject who carried out something.” Berita Ekonomi Indonesia, Nos. 164–65 (April 30, 1955), pp. 20–21.
5 Boeke, J. H., Economics and Economic Policy of Dual Societies as Exemplified by Indonesia, New York, 1953Google Scholar; Furnivall, J. S., Netherlands India: A Study of Plural Economy, Cambridge, Eng., 1944Google Scholar; Higgins, Benjamin, “The ‘Dualistic Theory’ of Un der-developed Areas,” Ekonomi dan Keuangan Indonesia, VIII, No. 2 (February 1955), pp. 58–78.Google Scholar
6 Cf. major headings in Williamson, Harold F. and Buttrick, John A., Economic Development: Principles and Patterns, New York, 1954Google Scholar; and Higgins, Benjamin, “Economic Development of Under-developed Areas: Past and Present,” Ekonomi dan Keuangan Indonesia, VII, No. 12 (December 1954), pp. 778–99.Google Scholar
7 For a good general summary, including material on resources, see Embassy of Indonesia, Information Division, The Republic of Indonesia, Washington, D.C., 1951.Google Scholar
8 The forces of the Kublai Khan were expelled from the Javanese Kingdom of Madjapahit in 1294. Vlekke, B. H. M., Nusantara: A History of the East Indian Archi pelago, Cambridge, Mass., 1943.Google Scholar
9 Recent attempts to grow ramie have been successful enough on a small scale to warrant the importation of an estimated R. 20 millions' worth of processing machinery from Japan. Berita Ekonomi Indonesia, Nos. 164–65 (April 30, 1955), p. 12.
10 The United Nations estimate for 1954 was 81.1 million. Demographic Yearbook, 1954, New York, 1955Google Scholar, Table 1.
11 Ekonomi dan Keuangan Indonesia, VII, No. 7 (July 1954), pp. 428–30.
12 This problem has also been faced by India in her national planning. Cf. Govern ment of India, Planning Commission, The First Five Year Plan: A Summary, New Delhi, 1952, pp. 18, 20, 23.Google Scholar
13 Dr Leimena, , “The Upbuilding of Public Health in Indonesia,” in Ministry of Information, Basic Information on Indonesia, Djakarta, 1953, pp. 112–55.Google Scholar See also articles by DrRoss Jenney, E. and DrKetterer, Warren A. in Public Health Service Reports, LXVIII (1953), pp. 409–15CrossRefGoogle Scholar, 558–62, 707–13, 1056–58.
14 Indonesian Observer, March 16, 1955, p. 2.
15 Ministry of Information, op.cit., pp. 157–72.Google Scholar
16 For a brief summary of UN Technical Assistance, see Reid, John S., “How Shared Skills Help Indonesia,” Indonesian Affairs, III, No. 6/7 (June-July 1953), pp. 22–27.Google Scholar
17 M.I.T., Center for International Studies, Indonesia Project C/55–5, Cambridge, Mass., 1955, p. 1. See also Higgins, Benjamin, “Development Financing” International Conciliation, No. 502 (March 1955), pp. 275–314.Google Scholar
18 Vandenbosch, Amry, The Dutch East Indies: Its Government, Problems and Politics, 3rd ed., Berkeley, Calif., 1942.Google Scholar
19 “The Petroleum Industry,” in Embassy of Indonesia, Report on Indonesia, VI, No. 4 (December 1954), pp. 12–16.Google Scholar
20 Legislation to encourage foreign investment and to spell out the specific terms surrounding it was presented to Parliament in 1954, but no action had been taken by the summer of 1955.
21 Indonesian Observer, April 13, 1955, p. 2.
22 Djojohadikusumo, Sumitro, “Our Way Out,” Indonesian Review, 1, No. 3 (April-June 1951), pp. 179–89Google Scholar; “The Government’s Program on Industries,” Ekonomi dan Keuangan Indonesia, VII, No. II (November 1954), pp. 702–36.
23 Indonesian Observer, March 17, 1955, p. 1.
24 Dr. Djuanda calculated that by 1960 Indonesia would need 7,500 engineers, including those engaged in teaching and research. In 1955, there were only 204 members of the Association of Indonesian Engineers, including agricultural engineers, foresters, and geologists. See American-Indonesian Chamber of Commerce, Information Bulletin, No. 419 (March 29, 1955), p. 8.Google Scholar
25 The Report of the Bank of Indonesia (formerly the Java Bank), which is published annually, includes theimportant statistics for economic study and the report of the president of the bank, Dr. Sjafruddin Prawiranegara. Another excellent annual review with statistics is National Planning Bureau, “Indonesia's Economic Development, 1953,” Ekonomi dan Keuangan Indonesia, VII, No. 7 (July 1954), pp. 394–455.Google Scholar
26 Higgins, Benjamin, Economic Stabilization and Development in Indonesia, Secretariat Paper No. 8, International Secretariat, Institute of Pacific Relations, New York, 1954.Google Scholar
27 For example, see the editorial “Economic Reconstruction,” June 22, 1955, p. 2. First reports indicate that the new Harahap cabinet wim Dr. Sumitro as Minister of Finance is giving high priority to immediate economic problems and to long-term planning for economic development.
28 Indonesia needs good transportation and communications for political reasons also, in order to weld a unified nation.
29 Indonesian Observer, March 16, 1955, p. 2.
30 Report on Indonesia, VI, No. 6 (February-March 1955), p. 6.
31 Daniel Neumark, S., “The National Income of Indonesia,” Ekonomi dan Keuangan Indonesia, VII, No. 6 (June 1954), pp. 345–91Google Scholar; C. Bakker, “Some Remarks About Dr. Neumark's Estimation of the National Income of Indonesia in 1951 and 1952,” ibid., VII, No. 9 (September 1955), pp. 597–602. See also ibid, VIII, No. 3 (March 1955), pp. 191–94.
32 Considerable expansion of her trade with Japan seems quite possible once the reparations and payments problems have been solved. See, for example, the statement by Minister of Foreign Affairs Sunario, Indonesian Observer, June 8, 1955, p. 1.Google Scholar
33 Recently Goodyear denied a rumor that it planned to sell the company's estates and announced that it would go ahead with a replanting program. American-Indo-nesian Chamber of Commerce, Information Bulletin, No. 397 (November 10, 1954), pp. 14–15.Google Scholar
34 Djojohadikusumo, Sumitro, “Instability of Trade and Economic Development,” Ekonomi dan Keuangan Indonesia, VI, No. 12 (December 1953), pp. 732–38.Google Scholar See also United Nations, Commodity Trade and Economic Development, E/2519, New York, 1953.Google Scholar
35 Embassy of Indonesia, Educational and Cultural Division, The Cultural Life of Indonesia, Religion, the Arts, Education, Washington, D.C., 1951Google Scholar; Covarrubias, Miguel, Island of Bali, New York, 1937Google Scholar; Galbraith, Francis J., Preliminary Observations for a Study of Javanese Culture, Washington, D.C., Foreign Service Institute, 1949.Google Scholar
36 Kahin, George McT., Nationalism and Revolution in Indonesia, Ithaca, N.Y., 1952, p. 660.Google Scholar
37 Mimeographed data from the Indonesian Embassy, Washington, D.C., 1955.
38 Indiagram, No. 723 (June 20, 1955), pp. 2–3.
39 Palmier, Leslie H., “Aspects of Indonesia's Social Structure,” Pacific Affairs, XXVIII, No. 2 (June 1955), pp. 117–31CrossRefGoogle Scholar; see also W. F. Wertheim, “Changes in Indonesia’s Social Stratification,” in ibid., XXVIII, No. 1 (March 1955), pp. 41–52.
40 A new system of sugar growing, tried by a few mills, has given the individual farmer a stake in the productive process that is more in keeping with the new spirit of independence and development. Ruopp, Phillips, ed., Approaches to Community Development, The Hague, 1953, pp. 188–206.Google Scholar
41 Hatta, Mohammad, “Indonesia's Foreign Policy,” Foreign Affairs, XXXI, No. 3 (April 1953), pp. 441–52.CrossRefGoogle Scholar
42 Finkelstein, Lawrence S., “Indonesia's Record in the United Nations,” International Conciliation, No. 475 (November 1951), pp. 513–46.Google Scholar
43 The Indonesian Observer suggested in an editorial that the time had come when Indonesia should no longer fear U.S. aid, and should try to get amounts more comparable to those being received by India, a staunchly independent country. June 2, 1955, p. 2.
44 Times of Indonesia, May 26, 1955, p. 1.
45 Palmier, , op.cit., p. 126.Google Scholar
46 Cf. Bone, Robert C. Jr, “The Future of Indonesian Political Parties,” Far Eastern Survey, XXIII, No.2 (February 1954), pp. 17–23.CrossRefGoogle Scholar
47 Kahin, op.cit.; Wolf, Charles JrThe Indonesian Story: The Birth, Growth, and Structure of the Indonesian Republic, New York, 1948.Google Scholar
48 The officers of this Republic were tried and sentenced to prison in 1955. Indonesian Observer, June 8, 1955, p. 3.
49 Marguerite Harmon Bro puts it first on her list of problems in Indonesia: Land of Challenge, New York, 1954, p. 87.
50 New York Times, December 1, 1954, pp. 1, 13; see also ibid., December 3 and 12, 1954.
51 Provincial governors are appointed by Djakarta and are responsible to Djakarta. Each ministry has branch officials at the provincial and regency levels, but authority rests in Djakarta.
52 Indonesian Observer, March 15, 1955, p. 2.
53 Paauw, Douglas S., “The Role of Local Finance in Indonesian Economic Development,” Ekonomi dan Keuangan Indonesia, VIII, No. I (January 1955), pp. 2–24Google Scholar; see also ibid., VIII, No. 9 (September 1954), pp. 564–86.
54 In an editorial comment, the Indonesian Observer pointed to the unfortunate record of the Kuomintang revolution in China, which was eventually corroded by corruption. June 10, 1955, p. 2.
55 Ibid., p. 1.
56 Eugene Staley stresses the interrelation of economic and political factors in The Future of Underdeveloped Countries: Political Implications of Economic Development, New York, 1954.
57 For a somewhat similar view on under-developed areas, see Buchanan, Norman S. and Ellis, Howard S., Approaches to Economic Development, New York, 1955, p. 116.Google Scholar