Malaysian Innovators

Organizational Innovation in the Rubber Plantation Industry in the Form of Agency Houses: Part II

Posted Dato' Dr Anuar
Certificate of Rubber Companies Listed on London Stock Exchange

Background

In the early phase of the rubber industry in early 1900s, investors and speculators floated companies, which owned rubber estates or rubber lands in Malaya, on the London Stock Exchange. Their estates in major states like Selangor and Negri Sembilan had English-sounding names. Some of the English-sounding names included:

  1. Aranlife
  2. Balgownie
  3. Beaumont
  4. Blackwater
  5. Braemer
  6. Broome
  7. Brown Comet
  8. Caledonian
  9. Carey Island
  10. Castlefield
  11. Coalfields
  12. Cullerlie
  13. Colwall
  14. Devon
  15. Didsbury
  16. Easrnor
  17. Ebor
  18. Edinburgh
  19. Effingham
  20. Emerald
  21. Galloway
  22. Glenmarie
  23. Golconda
  24. Golden Hope
  25. Haron
  26. Harfenden
  27. Hawthornden
  28. Haytor
  29. Highland & Lowlands
  30. Holmwood
  31. Inch Kenneth
  32. Kent
  33. Killinghall
  34. Lambourne
  35. Ledbury
  36. Lunderston
  37. Madingley
  38. Merton
  39. Midlands
  40. Monmouth
  41. New Amherst
  42. Newbury
  43. North hammock
  44. Paradise
  45. Pilmoor
  46. Reading
  47. St Andrew’s
  48. Seafield
  49. Seaport
  50. Sedgeley
  51. Shelford
  52. Sione
  53. Strathmore
  54. Strathnairlie
  55. Tremelbye
  56. Vallambrosa
  57. Wardieburn
  58. Waterfall
  59. West Country

 

We remember many of names existed until in the 1970s, while other estates were absorbed by larger companies. With a shipping travel time of about 40 days between London and Singapore in early 1900s, the owners of the rubber estates in London would need local companies or local managers to oversee their rubber estates in Malaya.

Enter the Agency Houses

The early rubber planters used the fund, raised through the flotation of public companies on the London Stock Exchange, to develop their rubber estates. However, the costs involved in opening up new rubber plantation on a scale dictated by demand lay well beyond the means of almost all rubber planters. In addition, the rubber planters had to wait for at least five years before the rubber trees could be tapped for latex.

Mincing Lane in London Where Shares of Rubber Companies Were Traded

Those early rubber planters had to seek capital from other sources, namely the established merchant houses based in Singapore and Penang, which have been operating since 1800s. The established merchant houses had the right contacts on the local and overseas financial market. It also involved experiences of business organizations and management techniques, of which most planters were woefully lacking, and the know-how for shipping and marketing rubber on the London market.

The big merchant houses which started in early 1800s, eventually dominated the rubber industry which came to be known as agency houses. By the end of the second decade of twentieth century, the agency houses had established itself in a dominating position in the rubber plantation industry and later in the oil palm industry.  However, it took a generation to consolidate their position. During this period, the early rubber planters made it to the boardroom of rubber companies which were listed on the London Stock Exchange and the rubber speculators from the City of London itself died off and were replaced by the nominees of the agency houses.

 

The largest Agency House Formerly Known as Harrison and Crosfield

The major agency houses that existed in 1960s included the following:

Agency Houses No. of Companies Number of Estates Planted Areas (acres)
Harrison Crosfield 42 111 231,180
Guthrie 22 39 182,800
Boustead-Buttery 37 58 121,870
REA-Cumberbatch 37 55 97,560
T. Barlow 19 42 102,440
Sime Darby 23 30 73,900
Oriental Estates 14 19 55,140
Plantation Agencies 10 29 48,040
Whittal 22 28 45,210
Harper Gilfillan 16 18 35,560
Ethelburga Agencies 1 9 27,860
J Warren 16 21 26,070
SOCFIN 6 10 62,150
East Asiatic 4 4 21,100
Unitac 7 12 20,260
Other Agencies 5 7 21,040

Source: Zorn Leigh Hunt, Manual of Rubber Planting Companies, 1960, and Strait Times Directory, 1962. Quoted in Fryer (1964)

Guthrie, Another Large Agency House

There were several differences between the pattern of interests of the two largest agency houses, Harrison Crosfield and Guthrie. The first was by far the larger. Guthrie, however, appeared a much more specialized organization: it controlled relatively few companies and fewer estates than smaller rivals. The properties under its management, however, were of very large size, including both the largest rubber and oil palm estate in Malaysia. Guthrie had also a leading position in the cultivation of oil palm.

By the 1980s, the agency houses were bought over by Malaysian interests Several names such as   Sime Darby, East Asiatic and Boustead  are still operating under the new Malaysian owners until today.

As a business historian, we appreciate and value the contribution of individuals who managed these agency houses and created a plantation industry from the jungles of Malaya in the early 1900s.

Our thanks to Mr. Lampard, Mr. T. Barlow, Mr. Boustead Brothers, Sir John Hay, Mr. Money, Sir J. Anderson and others.

Reference:

  1. J. M. Tate. The RGA History of the Plantation Industry in the Peninsular Malaysia. Oxford University Press, Kuala Lumpur, 1996.