I. Government and Legal System in the Straits Settlements

For many years after the establishment of Penang there was no regular form of government, no proper legal system, and no known body of law was administered.Footnote ¹⁷ Captain Light and his immediate successors appeared to have administered justice according to the dictates of their consciences.Footnote ¹⁸ In 1792, he also allowed the native inhabitants to be tried and governed under their own laws by a headman and eventually this was extended to all classes of inhabitants in Penang.Footnote ¹⁹ This continued despite the appointment of an English barrister, Mr John Dickens, as Judge and Magistrate of Penang in August 1801.

This ambiguous state of affairs changed in 1807 when the Crown granted the first Charter of Justice and by it established a Court of Judicature in Penang. The Charter provided that the court consisted of the Governor, three Councillors, and the Recorder of Prince of Wales Island. There was no separation of powers between the executive and the judiciary, and only one professional judge in the court. Nevertheless, the Executive members were often content to allow him to sit alone.Footnote ²⁰ The court was to have the jurisdiction and powers of the Superior Courts in England so far as circumstances would admit. On ecclesiastical matters the court’s jurisdiction was to be exercised so long as the religions, manners, and customs of the inhabitants would admit. There was no Court of Appeal and any appeal had to be to the King in Council.Footnote ²¹

The perceived position in Singapore in her early years after 1819 was similar to that in the early years of Penang. In Malacca, however, Dutch law and Malay custom (which the Dutch had left in force)Footnote ²² appeared to have constituted the lex loci.Footnote ²³ When Malacca and Singapore were eventually annexed to Penang in 1826 to form the Straits Settlements, the second Charter of Justice was granted. It created the united “Court of Judicature of Prince of Wales’ Island, Singapore and Malacca” and essentially contained similar provisions to those in the first Charter. From that point, it was clear that English law applied throughout the Straits Settlements.Footnote ²⁴

This did not preclude the English judges from occasionally giving effect to the customs of the other inhabitants where this did not undermine English law. In an 1883 case the following is recorded by Justice Ford in the Judge’s book in Penang:Footnote ²⁵

Although the law applicable to all the territories in the Straits Settlements was clearly set out from 1826, the judicial structure continued for several decades to be inadequate. There was only one Recorder and this adversely affected the judicial work in Malacca and Singapore leading to disaffection. There was only one professional judge, the Recorder, who had to oversee three territories. The Recorder went on circuit periodically to Singapore and Malacca but when he was not present the judicial work in these two territories was undertaken by the Resident Councillors there. There was disaffection over some of their decisions and their judicial work in turn affected their other duties.Footnote ²⁷ Eventually the press and the European merchants agitated for a separate judge for Singapore to be appointed. This led to the third Charter of Justice which was granted on 12 August 1855 and provided for a professional judge in Singapore who also had jurisdiction over Malacca. However, the Executive were still judges and it was only after the transfer of the Straits Settlements from India to the colonial office in 1867 that the Governor ceased to be a judge of the court.Footnote ²⁸ In 1868 the Resident Councillors also ceased to be judges,Footnote ²⁹ finally bringing about the separation of power that the early Recorders had advocated.

As regards the colonial administration in the Straits Settlements, the status of the three territories was downgraded from a Presidency to a Residency in 1830 and this affected the civil service. Positions were drastically reduced and the few officials who remained in their posts suffered big salary cuts.Footnote ³⁰ Morale within the civil service understandably suffered. This skeleton civil service remained largely unchanged until the end of Indian rule even though between 1830 and 1867 Singapore’s population quadrupled and her trade increased more than threefold. The downsizing of the Straits civil service coupled with population and economic growth meant that the Straits government was inadequately resourced to govern the territories effectively and could only exercise relatively simple functions. In this the government was hampered by its limited capacity to increase revenue. The British mercantile class’ opposition to anything that might diminish Singapore’s status as a free port was extreme. Not only were there no duties imposed on the import or export of goods, the British merchants were against any fees normally charged at ports, e.g. pilotage, wharfage, and anchorage duties.Footnote ³¹ The merchants also paid no personal or corporate income taxes, or until 1863 any stamp duty. Indeed the establishment of the Straits Settlements may have exacerbated the financial problems because Singapore’s free port status was extended to the other two territories and the loss of revenue made it even more difficult for the colonial government to balance its budget.Footnote ³² The pressures of inadequate revenue, a fast growing population, and increased economic activity were important factors that led the British authorities to abdicate any real attempt to govern the Chinese community. For example, it was remarkable that until the Chinese Protectorate was established in 1877, there was practically no British official who had any knowledge of the Chinese language,Footnote ³³ and it would appear that from an early period the court found great difficulty in obtaining suitable Chinese interpreters.Footnote ³⁴ The police force was also small and ineffective.Footnote ³⁵ This was the context that allowed the early Chinese community in the Straits Settlements the autonomy to order its affairs.

Similarly the Chinese stayed aloof from the formal legal system. The first reported civil case involving a Chinese plaintiff found in the most comprehensive collection of the early cases of the Straits SettlementsFootnote ³⁶ took place in 1836 in Penang.Footnote ³⁷ Between this and the end of Indian administration of the Straits Settlements in 1867 there were only another six reported civil cases involving Chinese plaintiffs. While these reported cases do not signify that there were no other civil cases filed by Chinese plaintiffs, it is an indication that the Chinese did not generally seek to resolve their disputes through the formal court system.Footnote ³⁸ It would appear that in Qing China, while there was a preference for civil disputes to be resolved through the informal justice system,Footnote ³⁹ Chinese villagers were not averse to using the formal legal system.Footnote ⁴⁰ If this is correct, it suggests that the relative aloofness towards the Straits legal system was not due so much to cultural factors but to issues of familiarity and language.Footnote ⁴¹

II. The Kapitan System and Political Control

The word “Kapitan” is likely to have been inspired by the Dutch word “Kapitein” and is used interchangeably with Captain in English to denote a chief or headman in a community, particularly a Kapitan officially vested with certain executive, administrative, and, in some cases, judicial powers over his own people, and invariably acting as the channel between the government and the community.Footnote ⁴²

Prior to the establishment of the Court of Judicature in Penang in 1807 the Chinese, Malays, and Tamils had their own Kapitans. These were prominent natives appointed by the colonial authorities to assist it in maintaining law and order amongst their own countrymen.Footnote ⁴³ At the beginning of the British occupation of Penang there was a thriving Chinese community in the Malay state of Kedah which supplied the early leaders of the Chinese in Penang. The first Kapitan of Penang, Koh Lay Huan, had rebelled against the Manchu government in China and fled first to Thailand and then Kedah with three junks of followers and many chests of books. He came to Penang soon after Captain Light’s arrival and settled there with his followers probably forming the first Chinese community there.Footnote ⁴⁴

In Malacca, the British occupied the territory intermittently following the seizure of the Netherlands by French forces in 1795. Dutch laws and customs were followed, and the Dutch appointed Kapitans continued to settle lawsuits and disputes as before. Even after Malacca formally came under the British in 1825 following the Anglo-Dutch Treaty of 1824 the status quo of the Kapitans was maintained, at least nominally.Footnote ⁴⁵ The Kapitan system was also adopted in Singapore.Footnote ⁴⁶

The establishment of the Recorder’s Court in Penang in 1807 did away with indirect rule through Kapitans and the second Charter of Justice similarly did away with the system in Singapore and Malacca in 1826.Footnote ⁴⁷ While it existed there were distinct advantages to the British. Without sufficient revenue, and coupled with the traditional aloofness of the Chinese from the machinery of government,Footnote ⁴⁸ which contributed to the difficulty of bringing the immigrant Chinese population within the political system,Footnote ⁴⁹ the Kapitan system provided a workable substitute.Footnote ⁵⁰

While the Kapitan system could not formally exist in the face of the first two Charters of Justice as judicial authority had been vested specifically with the courts that were established, the need for a substitute for direct control continued.Footnote ⁵¹ The British were in no better position to administer the Chinese post-1807 in Penang or post-1826 throughout the Settlements as they were prior to such dates. As such the Chinese continued to be left largely to govern themselves.Footnote ⁵² Whatever the official position, some prominent Chinese were recognized as unofficial Kapitans.Footnote ⁵³

However, beyond the unofficial Kapitans the British also co-opted the Straits Chinese and other Chinese community leaders, including secret society headmen.Footnote ⁵⁴ The main reason for this was that the reliance on a highly select group of Chinese leaders was not politically or socially optimal because of the heterogeneous nature of the Chinese community in the Straits Settlements, particularly in Singapore and Penang. When the Kapitan system was in place, the colonial authorities tended to appoint the leader of the major dialect group to the position of Kapitan.Footnote ⁵⁵ The Kapitan was only the accepted leader of his own dialect community but was nevertheless appointed to maintain law and order throughout the Chinese community. This understandably left the other Chinese groups feeling insecure as they could not be sure of the Kapitan’s support in times of need.Footnote ⁵⁶ Such a shortcoming would have continued if the British government continued to rely only on unofficial Kapitans as go-betweens with the Chinese community.

Accordingly, the British needed other avenues to engage the diverse Chinese population. The most natural way to do so was through the institutions that the Chinese organized themselves around. These were based along speech or kinship ties, or through membership of secret societies, and they therefore became the organizations through which the British for much of the nineteenth century attempted to engage and manage the Chinese community. We will therefore explore these communitarian organizations in a later part of this article. It will be useful though to first discuss the mechanics of immigration into the Straits as this formed the basis on which the communitarian based systems flourished.

III. Straits Settlements Immigration

Migration from China to the Straits Settlements largely comprised of two patterns, namely the kinship based system and the credit ticket system.Footnote ⁵⁷

For much of China’s history, the main pursuit of its people has been agricultural. When there was relative peace the population would increase, but this would inevitably cause a decrease in per capita land cultivation, made worse sometimes by increased tax burdens as a result of powerful landowners using their influence or wealth to withdraw large tracts of land from the tax system. This would make it difficult to earn a livelihoodFootnote ⁵⁸ and could lead to banditry and in the worst cases, uprisings. Periods of disorder would ensue whereby the population would be significantly reduced until a new balance was achieved, sometimes accompanied by the rise of a new ruler.Footnote ⁵⁹ Such a period of disorder was to be found in nineteenth century China during the waning of the Qing Dynasty. The peasant class faced increasing hardship and many jobless peasants became a source of unrest in society. There were also many natural calamities in the 1840s and 1850s, and major rebellions broke out in the second half of the nineteenth century the most serious of which was the Taiping Revolution that lasted from 1850 to 1864, raging over sixteen provinces and destroying more than 600 cities.Footnote ⁶⁰ There was therefore pressure throughout much of this century to emigrate overseas, including to the Straits Settlements.

For those immigrants who managed after a period of time in the Straits to accumulate sufficient capital to start a business, they would eventually require assistants if the business grew. In a difficult environment where most Chinese were seeking to earn enough to return to China as quickly as possible,Footnote ⁶¹ honesty and loyalty were not readily given and the immigrant therefore found it difficult to find trustworthy staff.Footnote ⁶² He would therefore turn to his home village in China to recruit staff from among his kinsmen (or sometimes from the same dialect group). His relatives worked as assistants or apprentices and after a few years some of them would start their own businesses after having learnt the necessary skills as well as saving some capital of their own. They in turn would go back to China to recruit their relatives if they needed labour.Footnote ⁶³ The family orientation of Chinese business is the result of the Chinese system of social relations. According to Confucianism, in a person’s network of relations family members are the closest and therefore the most trustworthy.Footnote ⁶⁴

The apprentices would work long hours with low pay, and much of their work involved petty and mundane matters. The relationship with the business owner could sometimes be oppressive. There was no fixed period of apprenticeship, and promotion to a proper position within the business depended very much on the apprentice’s performance and his relationship with the owner, with kinship ties being more important than mere dialect ties.Footnote ⁶⁵ It is likely that hardly any of these arrangements were placed on a formal contractual basis,Footnote ⁶⁶ and even if they were such arrangements would not be specifically enforceable and would at best give rise to an award of damages.Footnote ⁶⁷ Nevertheless it would appear that they were in the main adhered to by the apprentices because such arrangements were highly beneficial to them. In the absence of modern tertiary education, learning business or a craft was only practical through the apprentice system and such opportunities were highly sought after.Footnote ⁶⁸ In addition, given that the legal institutions at the time were weak, trust was an important commodity in businessFootnote ⁶⁹ and one did not engender this for the future if one reneged on an apprenticeship arrangement. Many apprentices who worked for a relative also had the opportunity to rise within the family owned firm.

While the kinship system was socially and economically beneficial and an essentially private arrangement between the parties that was within the Confucian norms of mutual responsibility,Footnote ⁷⁰ this could not be said for many aspects of the credit ticket system. Singapore’s trade with China was one of her most important branches of trade in the nineteenth century. This comprised trade in commodities, but there were also transactions in human beings and these were perhaps the most valuable cargoes the Chinese junks brought to Singapore.Footnote ⁷¹ This trade was given further impetus with the development of tin mining in the Malay States.Footnote ⁷² The credit ticket system developed out of the need for immigration on a larger scale and Singapore was a key conduit for the trade in human cargoes for Southeast Asia.Footnote ⁷³ It has been said that initially the system did not result in widespread abuse but changed after the progressive abolition of the slave trade in Europe from the 1830s and the opening of China after the signing of the Treaty of Nanking in 1842. These factors combined to make the trade larger and more international, and led to the treatment of immigrants becoming more inhumane.Footnote ⁷⁴ Blythe gives the following description of how this system operated in the transportation of Chinese immigrants to Penang and Singapore:Footnote ⁷⁵

The colonial government benefited indirectly from the coolie trade. In the absence of more conventional means of raising revenue, it relied greatly on “sin” taxes. Opium was the most important source of revenue as the government sold licenses to operate opium dens. These licenses accounted for between 30 and 60 percent of the locally collected revenue of Singapore and the other territories of the Straits Settlements in every single year for the entire century after 1819, and generally averaged between forty and fifty percent of total annual revenues.Footnote ⁷⁸ The impact of these taxes fell disproportionately on the Chinese who used opium most heavily. The revenue obtained by the government was too valuable to abolish these opium farms despite some calls to do so,Footnote ⁷⁹ and it is suggested here that this also meant there was initially little incentive to curb the abuses in Chinese immigration given that the Chinese were major consumers of the drug. Furthermore, consumption over time had deleterious effects on the physical and mental condition of the users. Liberal immigration would have been necessary to ensure the replenishment of the labour pool.Footnote ⁸⁰

It has been asserted that only when the British feared that the lack of control would deter Chinese immigration thereby hurting its interests that it decided to do something.Footnote ⁸¹ In the 1870s some leading Chinese also began to call for the government to superintend coolie immigration and prevent the kidnapping of new arrivals (also known as “sinkhehs” – literally “new person”), which was then being done on a highly organized basis by the secret societies.Footnote ⁸² Thus regardless of whether the colonial government was motivated by self-interest or not, it became more difficult for it to ignore the issue.Footnote ⁸³ The outcome was the Chinese Immigrants Ordinance 1877 (CIO 1877), which inter alia established the Chinese ProtectorateFootnote ⁸⁴ to keep a watchful eye on the coolie trade and its adjunct, the import of young girls for prostitution.Footnote ⁸⁵ It had branch offices in Penang and Malacca.

Another possible self-interested colonial reason for eventually regulating the coolie trade was the change in British policy towards the Malay States. After 1870 the British decided to annex the Malay States. It has been argued that intervention brought about political protection and unlocked the developmental potential of the Malay Peninsula. Intervention also increased the political linkage between Singapore and the Peninsula given that Singapore was the political centre of British power. For Singapore to fulfil this role for the Peninsula there needed to be some measure of stability in the Chinese population which constituted almost three-quarters of the total inhabitants. The Chinese Protectorate was accordingly created to limit the criminal activities of the secret societies by regulating prostitution and ending the kidnapping of coolies.Footnote ⁸⁶

Pursuant to the CIO 1877 and the Crimping Ordinance 1877, which provided for the licensing of recruiting agents, every immigrant ship was boarded by an officer from the Protectorate and hand bills were distributed amongst the passengers to assure them that the government would protect them against any oppression. Those whose passage had been paid were released at once, while others were taken to licensed depots.Footnote ⁸⁷ Further protection was provided them by requiring that all labour contracts must be signed in the presence of the Protector of Chinese. Each labourer and employer received a copy of the contract numbered according to the Registration books kept in the Protectorate. The terms of the contract were explained to the immigrant in his own dialect and he was told to whom he should lodge his complaints. This drastic change to a more paternalistic approach was undoubtedly justified because the typical sinkheh was unable to protect himself in a foreign land against sophisticated commercial enterprises that were out to exploit him. Many facets of the previously unregulated system could not be considered voluntary.

An 1883 case from Penang indicates that the new system was an improvement. In Koh Boo An v Tioh Jee,Footnote ⁸⁸ the defendant had upon disembarkation entered into a written contract with his employer (Koh) to work for the latter for a period of 360 days in consideration of the employer paying the defendant’s passage money from China. The defendant duly worked for 360 days but also took further advances from his employer such that he was indebted to his employer at the end of the period of service. As the period of service had come to an end, he refused to work any longer under the terms of the original contract but was ready to do so on the usual wages paid in Penang. One of the terms of the contract provided as follows:

Given the impasse, the employer brought a charge against the defendant that:

While the employer clearly had a good civil claim against the defendant on the outstanding debt, this would have been meaningless given the defendant’s indigence. The criminal proceedings on the other hand, if successfully prosecuted, would have some prospect of coercing the defendant back to work on the original terms.

In dismissing the charge, Wood J agreed with the Solicitor-General that the defendant was only obliged to fulfil the period of 360 days under the original contract as otherwise the term of labour may be extended indefinitely by means of loans by the employer. There was nothing in the contract to oblige the defendant to work for the employer beyond the stated period and the defendant had made no attempt to abscond from the estate.

It would naturally take some time before the full effects of the new regime took hold. Many sinkhehs continued to be ignorant of their rights and abuses continued.Footnote ⁸⁹ However, a decisive step in the right direction had been taken and further reforms in the late nineteenth century meant that the more glaring ones were eliminated by the end of the century.Footnote ⁹⁰ This aspect of Straits history illustrates strongly how important it is for societies to have clear rules and strong institutions to prevent non-voluntary relationships from arising.

IV. Chinese Voluntary Organizations and Secret Societies

Given that the Chinese in the Straits Settlements were initially a minority, and most of them new arrivals in a strange land under foreign dominion that operated in a language they were unfamiliar with, it was natural for them to congregate among those of their kind with whom there was some connection. Simply being Chinese may not be sufficient because there are many different Chinese dialects and each was often unintelligible to those from a different dialect group (though see the discussion below on secret societies). Thus it is not surprising that a very important social organization of the Chinese was the dialect association. The members of the dialect group usually came from a certain geographical part of China. In addition to the dialect group, the clan organization was another important communal organization. The basic difference between the two is that clan organizations were generally composed of people with the same surname. While this could cross dialect lines,Footnote ⁹¹ clan organizations generally comprised people that spoke the same dialect,Footnote ⁹² giving rise to an overlap between speech and kinship associations.Footnote ⁹³

The earliest known dialect organization in the Straits Settlements appears to be the Chia Ying Association of Penang that claimed 1801 as its founding year. The Chia Ying people were Hakka speakers who claimed to have come from the five districts of the eastern part of Guangdong province. In 1821, the Chia Ying also founded what seems to have been the first dialect organization in Malacca, the Ying Ho Association. The first such association in Singapore was the Ning Yang Association founded in 1822.Footnote ⁹⁴ The functions of dialect associations were to perpetuate religious practicesFootnote ⁹⁵ and social customs, and provide social welfare and mutual assistance.Footnote ⁹⁶ In addition, the dialect association helped maintain law and order amongst its membersFootnote ⁹⁷ and settled minor disputes. Major civil cases such as disputes over inheritance were settled by the courts.Footnote ⁹⁸ Kin based clan organizations performed similar functions to those found in dialect associations.Footnote ⁹⁹ One difference was the existence of ancestral worship in the clan organization and another involved the arrangement of marriages.Footnote ¹⁰⁰

An example of the dispute resolution role played by these voluntary organizations is provided by Yen from his study of the Eng Chuan Tong Tan Hokkien clan that was founded in 1854 in Penang.Footnote ¹⁰¹ This was said to be its most important role in its early decades. Internal disputes were usually over money or personal matters and parties were required to resort to the investigation sub-committee of the clan. The head of the clan and his deputy would have the matter thoroughly investigated, and try to mediate a settlement. Punishment and satisfaction could also be ordered. The clan would also attempt to resolve inter-clan disputes that involved its members. That this was an important preoccupation can be seen from the fact that in nineteenth century Penang, five powerful clans agreed to cooperate in settling inter-clan disputes.Footnote ¹⁰²

Such private ordering by the Chinese along dialect and kinship (broadly construed) lines was clearly welfare maximizing given the context they found themselves in. As many were cut off from their families and villages in China, the mutual support, assistance, and fellowship offered by such voluntary organizations were essential. These organizations provided practical succour during times of need and the member could also be assured of a proper burial if he died indigent.Footnote ¹⁰³ In return for the benefits provided by speech and kinship organizations, the member had to submit to group authority. Disputes would be resolved within the group and between groups based on Chinese norms. English law was not a practical alternative for the average Chinese person. Not only would he be ignorant of English law, he would in all likelihood not have the means to engage an English lawyer nor would he necessarily have felt comfortable doing so. The dialect and clan organizations provided the only real means by which disputes could be resolved through a process that would be accepted by the other party. The typical immigrant wanted only to be able to earn enough to return to China and unresolved disputes that could lead to violence and injury were best avoided. Such private ordering reduced this risk.

As mentioned above, disputes over inheritances were a category of cases that tended to be resolved through the formal court system. Such cases likely involved wealthier and better informed parties. In addition, English law provided a significantly better solution for some parties and therefore there was an incentive to use an alternative system. These disputes also tend to be one-off affairs that may not necessarily have long term adverse reputational effects within the community. In the first reported decision of its kind, the Straits Settlements Supreme Court decided in 1867 that a second or inferior Chinese wife was to all intents and purposes a lawful spouse and was therefore entitled to share with the first or superior wife in the property for her deceased husband who had died intestate.Footnote ¹⁰⁴ In this case recourse to English law meant the difference between receiving nothing and a proportionate share of the percentage a wife was entitled to upon the intestacy of a husband, which at that time was a third of the estate. This approach was subsequently confirmed by the majority in the Straits Settlements Court of Appeal decision of In the Matter of the Estate of Choo Eng Choon, Deceased (also known as the Six Widows Case).Footnote ¹⁰⁵ This gave subsequent “wives” and their children much greater rights than Chinese custom would have accorded them in which they would only have been regarded as concubines.Footnote ¹⁰⁶

Relatedly, the English rule against perpetuities was also invoked to invalidate bequests of uncertain or lengthy duration. In Choa Choon Neoh v Spottiswoode Footnote ¹⁰⁷ the testator devised certain property to his trustees to be applied towards the performance of religious ceremonies according to the custom of his ancestors. These ceremonies were referred to as a charity in the will. His children sought to set aside the bequest. Maxwell CJ held that the ceremonies did not constitute a charity, the rule against perpetuities applied equally to a Chinese as it did to an Englishman, and accordingly the bequest to a non-charitable purpose in eternity was void. The property was therefore distributable among the testator’s next of kin living at his death. Although this was in direct contravention of the Chinese tradition of holding family property infinitely for ancestral worship,Footnote ¹⁰⁸ and the testator’s next of kin may well have risked the opprobrium of the community on themselves, the following passage from the judgment shows why they would have been highly motivated to act in such manner:Footnote ¹⁰⁹

An additional reason for the Chinese immigrants to organize themselves through such voluntary associations was because many trades were virtually monopolized by the different dialect or clan groups.Footnote ¹¹⁰ For example, a contemporary observer said that the carpenters, miners, blacksmiths, shoemakers, and artisans were from Guangdong provinceFootnote ¹¹¹ while the Hokkiens were chiefly tailors, shopkeepers, and merchants, making them among the wealthier of the Chinese.Footnote ¹¹² MakFootnote ¹¹³ has suggested that this specialization and monopolization came about because of the physical living environment of the particular dialect group, the sequence of migration,Footnote ¹¹⁴ continuity in occupational specialization, and the use of secret societies to perpetuate dominance in particular trades.Footnote ¹¹⁵ Yen argues this is only part of the answer and ignores the role of the dialect and clan organizations as instruments that perpetuated the monopolization of various trades.Footnote ¹¹⁶

What is clear is that as certain groups became dominant in a trade or profession, this had a self-perpetuating effect. In the absence of any formal educational system by which a person could learn a trade, one could only do so by working or apprenticing for someone already in such trade. In addition, the lack of capital among many immigrants meant that they would not have a realistic chance of starting a business even if they had the right skills. They would first have to find employment to earn some capital. Given the division of the Chinese along dialect and clan lines, a person would only be hired or apprenticed by someone within his dialect or clan group. Over time, this would lead to more members of a particular dialect or clan group gravitating into these particular trades.Footnote ¹¹⁷ The network within the group would reinforce the dominance further and could also be used to prevent others from entering the trade.Footnote ¹¹⁸

The inadequacy of the banking system was another important factor. Until the beginning of the twentieth century, all the banks established in Singapore and Malaya were foreign owned, with the first being established in Singapore in 1840. During the period 1840 to 1903, the primary purpose of these foreign banks was to finance external trade between Malaya (including the Straits Settlements) and the neighbouring countries.Footnote ¹¹⁹ Credit advances were usually short term.Footnote ¹²⁰ The Chinese would therefore not be able to obtain a loan easily and informal credit arrangements were therefore crucial to Chinese businessmen. The provision of starting capital or the supply of goods on credit (often without security) was often facilitated by one’s relationship with those already established in the trade and the level of trust between such parties.Footnote ¹²¹ Inevitably it would be someone from the same dialect or clan group. Being part of the same group meant that the parties were part of a social network that would impose some constraints on opportunistic behaviour thereby making it more likely that any credit granted would be repaid which in turn increased the likelihood of credit being advanced.

The importance of trust is further underlined by the fact that Chinese businessmen did not traditionally enter into formal written contracts but were happy to conclude agreements by word of mouth. This was particularly so when the business in question – such as the import and export of commodities – could see significant price fluctuations and therefore speed was of the essence.Footnote ¹²² Such an informal mode of engaging in commercial transactions, with the attendant risk of a dispute over the exact terms of the agreement, meant that the organization provided a safety net in the event of disputes. If a member did not honour his promise, the party affected would take steps to secure performance.Footnote ¹²³ This would include bringing the infraction to the attention of members of the organization which would lead to internal condemnation and affect the promise breaker’s future commercial prospects, given the manner in which business was transacted.Footnote ¹²⁴ Trust is a commodity that takes much time and effort to accumulate but can be easily diminished, and when one’s ability to engage in business depends on maintaining a high level of trust, this incentivizes promise keeping. For a promise breaker to act in such manner, he must calculate that the one-off benefit to be obtained is worth significantly more than the adverse consequences which is the loss of future business opportunities. As the latter is difficult to ascertain with any certainty, there is a strong bias in favour of promise keeping where reputational considerations are important and information about promise breaking can be easily disseminated.Footnote ¹²⁵ The voluntary associations’ ability to process information that might lead to the exclusion of recalcitrant members from future business made them effective institutions for private ordering.Footnote ¹²⁶

As the Chinese speech and kinship groups were initially established for social and religious reasons such as security, recreation, mutual assistance, and ancestral worship, they provide an example of a private legal system (another term for “private ordering”) that evolved in two stages.Footnote ¹²⁷ Essentially, in the first stage a network creating a centralized bonding mechanism develops, usually as a side effect of regulating a low-enforcement-cost norm (i.e. one to which members adhere without coercion). At stage two, the network evolves to regulate a higher-enforcement-cost norm if there is demand for such regulation and the network can perform this role efficiently. Examples of such a network are social and religious networks. In social networks, for example, reputation is important (where the member derives utility from membership) and the enforcement costs of its norms are sufficiently low to form spontaneously and survive. This is because a member who behaves in a deviant manner will likely attract gossip that will cause a negative reaction among the members of the network. When members of the same social circle are also part of another network (such as a commercial network in the case of the Chinese immigrants), the social network can align most members’ response to a member’s unacceptable behaviour in the other network. As there is no need for two separate networks, however, an existing social network will evolve to provide the required regulation if it can do so efficiently. Enforcement of the new, higher-cost norm (such as proscribing opportunistic conduct through business sanctions) is possible through control of the existing members of the social network where this is beneficial to them.Footnote ¹²⁸ The ability of the Chinese voluntary associations to regulate the behaviour of their members was also enhanced by the relative inability of individual members switching to another voluntary association given the homogeneous nature of these associations. The strong “bonding” social capital within speech and kinship groups made it difficult for outsiders to “bridge” different groups.Footnote ¹²⁹

It is interesting to observe that despite commerce not being given a place of prestige in typical Chinese society, Chinese businessmen succeeded in dominating the business environment in many parts of Southeast Asia. This is one of the principal reasons for tension between the indigenous people in many Southeast Asian countries and those of Chinese ancestry. A cause of Chinese success can be attributed to the network of relationships built on trust, often reinforced by kinship or dialect links that cut across geographical lines,Footnote ¹³⁰ that reduced the transaction costs and information asymmetry of engaging in commercial dealings between parties in different parts of Southeast Asia.Footnote ¹³¹ A strong norm that promises are generally to be kept is clearly one that conduces to overall welfare. In a study of Wisconsin businesspeople, one of the norms that was widely accepted was that commitments were to be honoured in almost all situations.Footnote ¹³² Detailed negotiated contracts could get in the way of creating good exchange relationships. It indicated a lack of trust and might also reduce the flexibility to negotiate matters in light of the actual circumstances post-contract and thus some vagueness in the terms was to be welcomed.Footnote ¹³³ Indeed, even in many contracts today in Singapore that are lengthily negotiated with the assistance of legal advisers, it is not uncommon for certain clauses to lack the precision that one might expect. Such clauses often reflect a compromise over the language used that gives each party some assurance that their perspective has been incorporated; there is therefore a degree of ambiguity by design to facilitate negotiation in the future should disputes arise.

While a group may wish to perpetuate its dominance, in a dynamic economic environment there was nothing to prevent persons from another group with the right skills from being engaged in a trade dominated by the incumbent group. Such persons might be able to obtain support from his dialect or clan group. After all, it could not be that there were no artisans among the Hokkiens or the Teochews. Thus while dialect and clan associations were undoubtedly an important factor in occupational dominance, this may not be a sufficient explanation. It has accordingly been suggested that some external element, namely secret society involvement, was likely. Among other things, the secret societies were organizations for self-protectionFootnote ¹³⁴ and control within the Chinese community,Footnote ¹³⁵ and certain societies were organized around type of employment.Footnote ¹³⁶ Without a certain degree of law and order enforced by state mechanisms, close-knit groups may seek to protect and advance their rights through improper practices including force rather than legitimate competition, or otherwise act in a manner that does not enhance the welfare of the wider community. The state must therefore set out certain fundamental ground rules that limit the ability of groups to pursue their interests at the expense of the community as a whole such that overall welfare is diminished rather than maximized. This is one of the reasons for anti-monopoly laws and we see a modern resonance in some cartel activities that in the past would have been legal in Singapore but are now illegal under the Competition Act.Footnote ¹³⁷ It is tempting to speculate that Singapore’s history of occupational dominance was a major factor why such a law was never seriously contemplatedFootnote ¹³⁸ until it became one of the conditions for the US-Singapore Free Trade Agreement Footnote ¹³⁹ which disrupted the path dependency that allowed anti-competitive conduct to be tolerated.

The terms “triad” and “secret society” come with negative connotations in modern society. This was not always the case in China and the Chinese communities overseas where secret societies existed. These societies were formed originally by loyalists to the fallen Ming Dynasty to carry on the struggle against the Manchus of the Qing Dynasty. One of the leading societies was the Heaven and Earth Society which is also referred to as the Triad Society because of its emphasis on the harmony of heaven, earth, and man.Footnote ¹⁴⁰ The various Chinese secret societies in Malaya may have originated from the Triad Society.Footnote ¹⁴¹ To a degree they may be regarded as voluntary associations even if they also used coercion against some to become members.Footnote ¹⁴² Candidates for admission vowed to keep the secrets of the fraternity. During the rite of initiation, the middle fingers of their left hand were pricked and some blood squeezed out into a bowl which contained a mixture of chicken blood, Chinese wine, sugar, and other ingredients. The candidates would drink some of the mixture and with this became blood brothers with all members of the society. Each new member was handed a certificate of membership bearing the name of the lodge and other secret inscriptions.Footnote ¹⁴³ The rite of initiation, the mysticism, the secret symbols and words, the concept of brotherhood, were all meant to bind the individual to the society.

In the Straits Settlements, secret societies generally quickly lost their political purpose and evolved instead to become control and self-protection organizations.Footnote ¹⁴⁴ It may be that secret societies arose when the Chinese were denied some measure of political independence. This could amount to little more than the relatively mild interference of an authority trying to maintain public order.Footnote ¹⁴⁵ However, in the context of the Straits such an explanation does not sit well with the colonial policy of the time to largely allow the Chinese to govern their own affairs.

Rather it is more likely that secret societies in the Straits Settlements emerged and flourished for two reasons. First, many of the Chinese in the Straits Settlements had fled China because of unsuccessful resistance to Qing rule. They were already members of the Triad Society and it was natural for them to establish a structure they were familiar with in their new homes. They also established overseas branches in the hope of returning to drive out the Manchus.Footnote ¹⁴⁶ Accordingly, the Triad was the earliest Chinese organization in the Straits Settlements.Footnote ¹⁴⁷ The second reason has been discussed earlier, being the governance vacuum because of the inadequate colonial administration. This vacuum was readily filled by Chinese secret societies which “set up mechanisms of ‘law’ within the Chinese community.”Footnote ¹⁴⁸ Indeed right from the outset of indirect rule, initially through Kapitans, secret societies were likely used to exercise control.Footnote ¹⁴⁹ There is certainly circumstantial evidence of this in Penang where the first Kapitan, Koh Lay Huan, was in all probability a member of the Heaven and Earth Society in Fukien province, given that this society was active in southern China.Footnote ¹⁵⁰ The followers who fled with him after the rebellion against the Manchus failed must have been fellow members of the Society. Koh Lay Huan as Kapitan would naturally have relied on the members of his secret society to police and control the Chinese community.Footnote ¹⁵¹ After the abolition of the Kapitan system, the secret societies and the powerful community leaders continued to retain close links.Footnote ¹⁵²

Although it has been posited that for the most part the respectable Chinese, i.e. the prominent merchants, were not leaders or members of the secret societies,Footnote ¹⁵³ this is probably incorrect. The social and hence power structures in the Straits Settlements were very different from that in China. In China, the typical social structure would have scholars and government officials at the apex followed by farmers, artisans, and finally merchants. The relatively high status of farmers was indicative of the importance of agricultural pursuits in China while the relatively low status of merchants was due to commerce being regarded as a parasitic profession that did not create anything.Footnote ¹⁵⁴ In the Straits Settlements this social ordering was inverted. As the three territories were substantially urban centres, agriculture was not as important as it was in China and its importance diminished considerably over time. There were of course virtually no scholars, and even if there were, the scholars would be without influence or power in a system of government to which they were strangers. The true mark of success was wealth and being a successful Chinese merchant therefore meant that one had social status which was reinforced by the colonial government’s reliance on rich Chinese as leading members of Chinese society to manage their communities. This necessitated links with the secret societiesFootnote ¹⁵⁵ in the absence of a robust legal system and an effective police force.Footnote ¹⁵⁶ It is difficult to see how the Chinese community leaders, whose status depended on their success in commerce, could maintain their business interests and also manage their communities without the assistance that the secret societies could offer.Footnote ¹⁵⁷ It is therefore likely that some community leaders must have held leadership positions within the societies.Footnote ¹⁵⁸ After all, until 1890 secret societies were not illegal and were even thought to be useful, and a large proportion of Chinese were members of such societies.

Unlike dialect and clan organizations, membership in secret societies could run across different dialect and kinship groups. For this reason VaughnFootnote ¹⁵⁹ thought that secret societies were a positive force that helped to dissipate the traditional ill feeling among the different groups of Chinese,Footnote ¹⁶⁰ although over time the division of the original society into rival branches introduced more elements of discord. In much of the nineteenth century, the secret societies dominated the Chinese in the Straits Settlements. In 1876 Pickering said that over sixty percent of the Chinese population in Malaya were sworn members of the secret societies and the remaining forty percent were subject to their influences.Footnote ¹⁶¹ This must have meant that while the speech and kinship groups were functionally separate from the secret societies, many Chinese were members of both groups and it was a fluid situation.Footnote ¹⁶² Khoo Thean Teik who was both a director of the Khoo KongsiFootnote ¹⁶³ and the leader of the Tua Peh Kong secret society (also known as the Kien Tek society)Footnote ¹⁶⁴ provides a good example. During the Penang Riots of 1867 many of the Hokkien members of the Tua Peh Kong society that fought against the Cantonese in the Ghee Hin society were also members of the Khoo Kongsi.Footnote ¹⁶⁵

Although the secret societies did bring about some positive outcomes, a situation where secret societies were the means of control over a substantial part of the population could never be legitimate as an imperium in imperio was the consequence. Whatever good secret societies may have done was also outweighed by the social costs of such organizations. Secret societies were involved in unlawful activities such as gang robberies and extortion.Footnote ¹⁶⁶ Conflict between the societies and abuses were also inevitable given the types of commercial activities the secret societies were engaged in and this added to the lawlessness of the period. For example, the opium farm system was very lucrative and successful bidders used their secret societies to prevent illegal smuggling by other merchants who also had backing from their secret societies.Footnote ¹⁶⁷ Such unlawful and unsavoury activities gradually brought about a change in public attitude towards the societiesFootnote ¹⁶⁸ that led initially to measures requiring secret societies to register themselves and eventually to legislation that outlawed them.Footnote ¹⁶⁹

After such time, the dialect and clan organizations became the principal groups through which the Chinese ordered their affairs and the colonial government dealt with. Even though speech and kinship groups had been involved in some violent activities, they had a veneer of respectability and it was in any event impossible to ban all Chinese organizations. To maintain good standing with the colonial authorities and the social prestige that came with it, the leaders of the Chinese community had to cut their links with the secret societies once they became illegal organizations. While it made sense to have links with secret societies when they were perceived as having some social value, little advantage could be obtained by respectable members of the Chinese community from such association once they became illegal organizations. Instead they strengthened their links with the dialect and clan organizations.Footnote ¹⁷⁰ While secret societies continued well into the twentieth century and posed significant law and order challenges they were not able to exercise as much power as they used to and over time became small scale criminal gangs.Footnote ¹⁷¹