BI building founded on nation's wealth

BI building founded on nation's wealth

By Ida Indawati Khouw

The Bank Indonesia building in Kota, West Jakarta, was where
the Indonesian banking system began. The following article, the
54th in the series on old and protected buildings in Jakarta,
provides a glimpse of its history.

JAKARTA (JP): The wife of a high-ranking official at the Royal
Netherlands Embassy was discussing a grand old building in the
old town of Kota in West Jakarta.

"I saw a very beautiful building just across from Kota railway
station. I wonder what the building is," she said during dinner
at an embassy officials' house.

She was referring to the white Bank Indonesia building, which
is not only architecturally beautiful but was also the silent
witness to the birth of the local banking system 172 years ago.

Located on Jl. Pintu Besar Utara, the building was the office
of De Javasche Bank (the Java Bank), the first bank in the Dutch
East Indies. It later became Indonesia's central bank, Bank
Indonesia.

The Dutch lady was particularly impressed with the style of
the two-story Renaissance-esque building, with its beautiful
ornaments and intricate carvings.

The Renaissance style is apparent in the horizontal grooves
along its walls, among other things. "The horizontal grooves give
the impression of 'piles of rocks' that are found in almost all
Renaissance-style buildings," says Yulianto Sumalyo in Arsitektur
Kolonial Belanda di Indonesia (Dutch Colonial Architecture in
Indonesia).

Yulianto says that unlike other buildings in Kota which
resemble "a group of islands surrounded by streets" (they have no
front yards), the Javasche Bank has a large open space in front
of it.

The firm behind the building was Ed. Cuypers & Hulswit
Batavia, a famous architecture house in the city at the time.

The building is actually older than the bank itself. It was
formerly the property of Binnen Hospital (meaning Inner Hospital,
because it was located inside the old walled city of Batavia).

But other sources show that the bank rented the building from
private company Firma Mac Quoid Davidson and Co. for 500 guilders
per month.

"Only two years after its construction did the bank buy the
building for 50,000 gilders on an installment basis," said R.
Hardjo Santoso, 70, a retired Bank Indonesia staffer who is now a
member of the team in charge of founding a museum dedicated to
the bank.

Javasche Bank was built on Jan. 24, 1828, on the orders of
Dutch King Willem I.

Deficit

Dawam Rahardjo in his book Bank Indonesia dalam Kilasan
Sejarah Bangsa (Bank Indonesia in the Brief History of the
Nation) says that merchants in the Dutch East Indies founded the
bank in the absence of a banking institution.

To import goods from Western Europe, especially the
Netherlands, businesspeople needed to engage in export activities
but if there was a trade balance deficit, the loss had to be
covered by gold or silver.

"The buying of gold and silver resulted in the disappearance
of the precious metals from the market. To solve the problem, the
Dutch East Indies government had to import gold and silver from
the Netherlands," Dawam says.

The East Indies administration suffered a deficit in export-
import activity because the influx of Europeans required a
soaring amount of imported goods.

"The deficit had to be covered by off-shore loans ... To cope
with this, exports should have been boosted because the export
value per capita in Java was still low. For export, Java relied
only on coffee, rice and tobacco; but the international coffee
price was declining at that time," says Dawam.

It was during these hard times that Javasche Bank was founded
by Governor General Leonard Pierre Joseph Burgraaf Du Bus de
Ghisignies, following the model of De Nederlandsche Bank in the
Netherlands.

The Dutch government covered 50 percent of the bank's 1
million guilders paid-in capital, while the rest was covered by
the Nederlandsche Handel-Mij (NHM), a large trading company which
had banking characteristics.

The bank was opened for the public on April 8, 1828, and was
advertised in the Bataviasche Courant newspaper. Its first
director was C. de Haan, previously head of Semarang District
Court in Central Java. Its secretary was C.J. Smulders, former
clerk of Surabaya District Court in East Java.

Hardjo said that the bank was named Javasche Bank because the
institution operated in Java. "That's why problems appeared when
the bank wanted to open branches outside Java. It was later
decided that Javasche Bank was 'just a name' and had nothing to
do with its area of operations," he added.

Monetary conditions were unique. They were several "strange"
currencies in circulation like those mentioned in the Gedenkboek
van De Javasche Bank 1828-1928 (Commemoration Book of the
Javasche Bank 1828-1928), namely De Gouden Doublon, De Gouden
Ducaat, De Gecartelde Ducaton, De Piaster of Spaansche Mat and De
Sica Ropij.

Only after 1912 was the Dutch Guilder introduced as the
administration's sole currency system.

Hardjo said, however, that during World War II, the value of
the Dutch guilder and the Dutch East Indies' guilder was
different. "One Dutch guilder was equal to three Dutch East
Indies guilders," he said.

The banknote was introduced here on March 11, 1828, when the
Dutch authority released a decree on banknotes under the
condition that the amount was not more than 1,120,000 guilders.

"The banknote was ordered from Enschede en Zoon in Haarlem
(The Netherlands)," Dawam says.

Javasche Bank kept growing. In the late 19th century it had
seven branches in Semarang and Solo (Central Java), Yogyakarta,
Surabaya (East Java), Padang (West Sumatra), Makassar (South
Sulawesi) and Cirebon (West Java).

Almost all of the bank's buildings had similar architectural
styles because they were built by the same firm of architects.

Other foreign and local banks were also founded during this
period.

During the Japanese occupation between 1942 and 1945, almost
all the banks in the East Indies were liquidated after their
assets were seized the new ruler. The only survivors were
Yokohama Specie Bank, Taiwan Bank and Mitsui Bank.

On March 14, 1946, Javasche Bank resumed operations under the
authority of the Dutch government.

On May 28, 1951, the bank was nationalized by the Indonesian
government. Former finance minister Sjafruddin Prawiranegara
become the director. Two months later, the Indonesian government
bought 97 percent, or Rp 8.95 million worth, of the bank's shares
at the Netherlands stock exchange.

It became Bank Indonesia on July 1, 1953.