Stories from Deli

MODERN PLANTATION CROPS OF THE EAST COAST OF SUMATRA

Thus far we have mentioned only those products of Sumatra which have been produced by the Sumatrans themselves, and imported into the United States for many years. These exports were hardly a hint of what the soil could produce under Western methods. Even the greatest yields of coffee and pepper hardly foreshadowed the huge plantations that were to produce the multi-million dollar crops of rubber, palm oil, sisal, agave and tobacco. Nor did the riches of tin give any hint that someday the greatest oil fields between the Persian Gulf and California lay beneath the swamps of Sumatra. The sleeping chrysalis of Sumatra was to be transformed by two events which occurred during our own Civil War. Both were to be of the greatest significance for American interests in Sumatra, as well as the history of the island itself.

The first was the granting of the first tobacco concession on the East Coast of Sumatra, and the second was the importation of the first American kerosene into the Dutch East Indies. Of kerosene and oil, more in a later chapter, but here we must relate the amazing story of the modern plantation industry and its relation to the United States. The first modern concession was obtained by a 26 year old Dutchman, Jacobus Nienhuys, on July 7, 1863, on the Deli River near the present city of Medan, then an insignificant and unknown region of Sumatra.65 He planted tobacco that year, and in the next was able to export some tobacco to Rotterdam, though not of good quality. In 1865 Nienhuys grew and exported the first of the famous Deli leaf, still regarded as the finest tobacco for cigar wrappers. This was shipped in increasing quantities to the great tobacco emporia of Holland, and in 1873 the first Deli leaf reached the United States.

The first shipment was not a success because it was more expensive than U.S. leaf. Nothing more than sample lots were sent to the United States until March r88r when the first major shipment entered the country. Then American cigar makers became the largest customers for Deli leaf. From 1883 until recently the United States has imported at least two million dollars worth each year. This consistent demand was the foundation of the prosperity of the Deli plantations of Sumatra, which admittedly enriched Holland more than it did the natives of Sumatra. Americans showed great interest in obtaining seed of the fabulous tobacco of Deli. It is not certain when the first American visited the Deli plantations, but one of the first was Herman A. Fischer of New York, who went to Deli in late I885 and returned in early I886. In the same month as Fischer’s departure, a Philadelphian, I. Gardinet died at Panteh Perak. 68 The occupations of these Americans is not known but it is possible that they were tobacco buyers, since this was five years before the era of American oil drillers or missionaries, and during an era when there was virtually no American shipping in the area. These were isolated visits in the “nadir” of American interest in Sumatra.

Imports rose despite increased tariffs that were admittedly discriminatory against Sumatran tobacco in favor of Havanna and Connecticut produce. Disputes over Dutch evasion of the tariff reached the
Supreme Court of the United States (Patk v. Robertson, November 24, I890; I37 U.S. 225), and attempts to raise the tariff even higher led to bitter debates on the last day of Congress in I886. Conspicuous among the high tariff advocates was future President William McKinley of Ohio, who finally had his way in I890 with a two dollar tariff. By I889/90 the United States was importing a near-record of 9,735,000 pounds of Deli leaf (worth over nine million dollars) to beat the McKinley tariff increase from 75 cents to $ 2 per pound. This quantity was exceeded only in I920 when we took 9,823,000 pounds (worth a record $ I7,6I6,066), when the United States consumption of large cigars reached its peak. 1889 and 1920 were peak years, but in a normal year in the 1890’s we imported about four million pounds of Sumatra leaf, worth about a dollar a pound.

In the following decade we took about six million pounds yearly, at the same cost. There were
shortages during the first World War, and fluctuations in the early 1920’s, but in the boom years of the late 1920’s we were again regularly taking about six million pounds a year, worth about fourteen
million dollars yearly. The Depression gave a severe blow to cigar smoking and American imports of Deli leaf dropped to about three million pounds a year, at a dollar a pound.

One of the best results of Sumatran dependence on the American market was the improvement of labor conditions on the plantations. Because of the difficulty of obtaining labor outside of Java, the Dutch government had permitted “penal sanctions” for violation of labor contracts. Although the contracts also protected the Javanese laborer from abandonment miles from home, the major effect was to compel him to work for one employer, since he could not quit. In 1929 the champion of Indian independence, Sen. John J. Blaine (R. – Wis.), discovered the penal clause while studying tobacco production in Sumatra. He offered an amendment to the Smoot-Hawley Tariff Act
clause prohibiting the importation of any article produced by convict labor, to prohibit also products of “forced labor or/and indentured labor under penal sanction.”

This would have excluded essential items like rubber (though not that produced by American estates, which used free labor), so the terms were changed to cover only goods also produced in the United States, which meant tobacco only. Deli planters sent two delegations to the United States to effect changes, and secured only this last concession. So, before the act took effect (on January 1, 1932) the tobacco companies “voluntarily” declared that they would not use the penal sanction, and sign no new contracts which includes such a penalty. Under this American pressure, the Dutch government passed in 1931 a new act requiring the older companies to cut contract laborers to fifty percent by 1936. Further measures were passed in 1936 and 1939, so that by January I, 1942 the penal sanction for breach of contract was entirely abolished.

Most Deli leaf has been shipped to the United States via the tobacco market at Amsterdam, and smaller quantities through Rotterdam. In the earliest years several shipments were made directly from Sumatra to the United States, including a direct shipment of 547 bales to San Francisco in 1882.76 It was not until the world-wide shipping shortage of World War I that large quantities of Deli leaf came directly to the United States. After the war, the Netherlands resumed its place as entrepot, but direct shipments continued until 1922. The Second World War had the same effect as the first, and in 1939 imports from the Netherlands were replaced by direct shipments. In 1940 the war in Europe caused the transfer of Dutch tobacco sales to Sumatra itself, and American buyers like those of Bayuk and General Cigar Co. went halfway round the world to buy the famous leaf on the Kwala
Mentjirim Estate of the Deli Mij. (February 2,1940).

With the invasion of Holland the market was transferred to New York, where the first sale of Sumatra tobacco was made on November 16, 1940. The new Foreign Trade Zone on Staten Island became the world’s tobacco market, its opening on May 2, 1941 being attended by Mayor LaGuardia himself. Large quantities of Deli leaf were stored in American warehouses and released from bond throughout the war, so that United States customs show at least 2.3 million dollars’ worth of
tobacco imported from the East Indies during each war year, comprising our largest Indonesian import item for the four years 1942 to 1945.

Shipments of Deli leaf resumed after the war, but they have never reached a million pounds, though this scarcity has brought about the post-war record of $ 4,545,103 in imports during I951. Since that peak American imports of Deli tobacco have fallen off steadily until they were a mere 19,756 pounds, worth $ 131,466 in 1959, only 6 percent of our imports by value. This was the lowest quantity since we first started importing it in bulk in I881. Despite the revival of cigar smoking in the United States Sumatra leaf is having a hard time regaining its prewar position. Cuban, Philippine and American leaf imports have been more competitive while Deli costs are rising, induced by the higher wages paid since the war, by labor and transport difficulties, and squatters on some of the best lands, and periodic insecurity.

We may be witnessing the end of the pioneer plantation industry of the East Coast of Sumatra, for Dutch capital is moving out of the area to places like the United States. A prime example is the
American Sumatra Tobacco Company which was incorporated in the United States on February 12, I9IO by the four largest Sumatra tobacco firms. Its holdings in the United States have expanded from tobacco land in the Connecticut Valley to plantations for leaf tobacco in Georgia and Florida, and from that into growing peaches in Georgia, searching for oil in Florida, and manufacturing stamp vending machines.

The pioneer plantations of tobacco on the rich soils of the East Coast of Sumatra were followed about I908 by new European plantations of rubber, sisal, palm oil and tea. Although Americans directly engaged only in rubber planting, the prosperity of the other plantations depended heavily on American imports. By 1923 the United States was the greatest single importer of European plantation produce, taking 48 percent of the exports of the East Coast, amounting to over twenty million dollars. In I925 we took 45.5 million dollars worth of goods from the East Coast directly, and another twenty million indirectly.

James W. Gould. Americans in Sumatra. 1961