Abstract

"Financial Insights about East Sumatran Plantations in Early 1900s Rubber Bubble"

Valeria Giacomin, Bocconi University (valeria.giacomin@unibocconi.it), Matteo Calabrese, Luxembourg University (matteo.calabrese@unibocconi.it)

In the early 20th century, East Sumatra became a hub for plantation companies focusing on rubber plantations. Buoyed by the success of the cultivation of Hevea rubber variety domesticated from Brazil in neighboring Malaya, and the surging global demand for this commodity, several new estate ventures secured capital from European investors through listing in stock exchanges in London and Amsterdam. While there is extensive research on the rubber industry and its financing in Southeast Asia, there is no systematic study focusing on the companies introducing rubber in East Sumatra and their financial performance vis à vis the industry in the midst of the first rubber boom between 1905 and 1911. Our research aims to fill this gap by reconstructing the corporate landscape of estate companies operating rubber plantations in this region during the first decade of the 20th century. It explores their financial performance in relation to the speculative bubble that emerged since the mid-1900s. Our central research question is whether these companies prioritized long-term investment over speculative gains, in the framework of an academic debate that spurred in the 1970s. We employ a mixed methods approach, combining quantitative analysis of acreage, capitalization, and rubber prices with a qualitative examination of the directors and agents involved in the listing of these companies. The analysis is based on a comprehensive database compiled with data from the London Stock Exchange and Amsterdam Stock Exchange available at Guildhall Library in London, the International Institute of Social History in Amsterdam and the Graduate Institute in Geneva, in triangulation with data from the Investors Monthly Manual of the London Stock Exchange digitized by the Yale School of Management. We also use historical records from the Singapore & Straits Directory and the regional newspaper the Straits Times; business and corporate records held at London Metropolitan Archives; and publicly available material from British and Dutch national archives.