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Sarah Merette Paper Presented at the Departmental Seminar (EH590) June 5th, 2013 Department of Economic History London School of Economics Preliminary Analysis of Inequality in Colonial Tonkin and Cochinchina* Abstract Despite estimates showing a significant gap in GDP terms between Tonkin and Cochinchina, its effect on the majority of the population is unclear. In this paper, we intend to design social tables for colonial Tonkin and Cochinchina, and thus to drive at the inequality that existed in these two regions of colonial Vietnam. From this, we will construct some preliminary evaluations of their respective Gini coefficient. The analytical approach will be based on Branco Milanovic, Peter Lindert and Jeffrey Williamson's "Pre-Industrial Inequality" paper. This study will be mostly limited to the 1930s, and will draw primarily from various official French publications, contemporary evaluations of Indochinese society, as well as the recent GDP estimates calculated by Jean-Pascal Bassino. Because of data limitations on income and distribution, the ratios calculated will be quite preliminary and dependent on various assumptions. Despite potential limitations, these calculations enable an initial discussion on inequality in colonial Vietnam that has, as yet, not been possible. The results show somewhat surprisingly that Tonkin was more unequal than Cochinchina, despite the latter's greater potential for high levels of extraction. * This paper is a draft. Please do not cite without the author's permission 1 I. Introduction Many colonies have had the reputation of being extractive, meaning that profits were extracted from the resources of the economy, to the benefit of European colonists. By default such extraction would have resulted in very unequal societies. Indeed, Sokoloff and Engerman have extensively used the difference between settler and extractive colonies to explain long-lasting institutional differences between countries, mainly due to the effects of inequality.1 This type of research has proven very exciting in evaluations of long-term economic development of ex-colonies. However, with respect to Southeast Asia and specifically Vietnam, this type of analysis has not been done. In fact, with respect to colonial Vietnam, little research in terms of income inequality has been done. Even in contemporary times, research on income inequality in Vietnam has been minor, with the majority of research being done using the 19921993 Vietnam Living Standard Survey.2 More research on this would allow new evaluations of the long-term economic development of Vietnam, and indeed would help test the oft debated question over the "positive causal effect of low inequality on economic growth and with low inequality of income as an independent contributing factor to East Asia's rapid growth".3 Fortunately, in the last decades, more research into the colonial economy of Vietnam has been done. For example, recent research has generated the first estimates of Vietnamese GDP during French colonial rule, separated in its three component regions of Tonkin, Annam and Cochinchina. These estimates show a staggering gap in the GDP per capita of Tonkin and Cochinchina, with Cochinchinese GDP per capita more than twice Tonkinese GDP per capita throughout the period 1900-1940. Although many scholars of Indochinese economic history have acknowledged and mentioned this gap before, these new estimates prompt further questions. Specifically, how this GDP gap was reflected into the living standards of the Vietnamese population. In this paper, we propose to evaluate income inequality in Tonkin and Cochinchina, to better understand whether these regions experienced different 1 Stanley Engerman & Kenneth Sokoloff, “Factor Endowments, Inequality, and Paths of Development among New World Economies”, Economia, Vol.3, No.1, 2002. 2 Dominique Haughton; Jonathan Haughton, Sarah Bales, Truong Thi Kim Chuyen, Nguyen Nguyet Ngu (eds), Health and Wealth in Vietnam: An Analysis of Household Living Standards, Singapore: Institute of Southeast Asian Studies, 1999. 3 Nancy Birdsall, David Ross & Richard Sabot, "Inequality and Growth Reconsidered: Lessons from East Asia", World Bank Economic Review, Vol.9, No.3, 1995, p.477. 2 colonial experiences. Consequently, this paper proposes to elucidate the question of how unequal were Tonkin and Cochinchina in the colonial era? Anne Booth has argued that “it is widely recognized that trends in per capita GDP are not reliable guides to changes in living standard: economic growth often confers much greater benefits on some groups in society”.4 Although the literature on the economy of colonial Vietnam has always acknowledge a significant gap between the economies of Tonkin in the North and Cochinchina in the South, researchers have rarely wondered whether this would have resulted in very different living conditions for the majority of the populations of Tonkin and Cochinchina. In my previous work, I have argued that in fact the general living conditions of the majority of peasants in both Tonkin and Cochinchina would have been quite similar. Considering the significant difference in the GDP of the two economies, this has prompted me to research the inequality that existed within these two societies. Because of the significance of GDP differences between the two core regions of Vietnam, it has seemed more prudent to use a regional perspective. Indeed, the differences in wages and economic structure are large enough to suggest that using a single country-wide measure would provide little use in understanding the development of this fragmented country, at least during the colonial era. In fact, even contemporary research on Vietnamese inequality uses a regional perspective, as the economic gap between the two regions remains significant.5 This research ties to a variety of literatures. On the theoretical side, it draws strongly from the methodologies developed by Branko Milanovic, Peter Lindert and Jeffrey Williamson's 2007 paper "Measuring Ancient Inequality". Indeed, their suggestion of evaluating inequality in pre-industrial economies through extraction ratios initially prompted these calculations, despite the potential limitation in data. Indeed, these authors admit that their data often is not ideal but that it does provide an initial basis for evaluation. 6 Furthermore, Williamson's earlier paper "Growth, Distribution and Demography: Some Lessons from History" provided the means to test our calculations of Gini coefficient with a cruder proxy of inequality. 4 Anne Booth, Colonial Legacies: Economic and Social Development in East and Southeast Asia, Honolulu: University of Hawai’i Press, 2007(1), p.131. 5 Paul Glewe, Nisha Agrawal & David Dollar (eds), Economic Growth, Poverty, and Household Welfare in Vietnam, Washington D.C.: The World Bank, 2004, p.75. 6 Branko Milanovic; Peter H. Lindert & Jeffrey G. Williamson, "Measuring Ancient Inequality", NBER Working Paper 13550, October 2007, p.6. 3 Furthermore, more textbook work such as Barry Chiswick's and Frank Cowell's allowed a greater understanding of the value of the ratios calculated. On a more substantive side, this work ties in with analyses of the socio-economic situation of colonial Vietnam, such as the works of Jean-Pascal Bassino, Pierre Brocheux, Paul Bernard, Jean Goudal... to name a few. Although these are renowned authors whose work has helped illuminate much of the situation in colonial Vietnam, as of yet, research or even mention of income inequality has not been extensive. On the other hand, research into inequality in other colonial economies or just developing economies has been quite significant. For example, Loren Brandt and Barbara Sands' work on Chinese inequality suggested potential reasons for unexpected results: land inequality and income inequality are not always the same, while Anne Booth's work on living standards in Southeast Asian economies has been central in providing a background for comparison and evaluation. Intuitively, it seemed that the inequality in Cochinchina would have been higher than in Tonkin, mainly because this was the locus of the economic activity in colonial Vietnam, with rubber plantations and large commercial trading houses. Moreover, because the GDP per capita was much higher than in Tonkin, while my previous research suggested that peasants forming the vast majority of the populations of both regions had similar living standards, I expected for inequality measures to show a large difference between the two regions. This proved not to be the case. This paper will first outline the background for this research, explain the methodology for the results calculated and try to explain this apparently perplexing outcome. 4 II. Background It is crucial to understand the economic background of Tonkin and Cochinchina, before tackling a more detailed quantitative analysis. The existence of a GDP per capita gap that is not explained through price-adjusted wages raises the question of inequality differences between the two regions. Figure 1 shows the evolution of this GDP per capita gap during the colonial era. Figure 2 shows the evolution of wages and prices in Hanoi relative to Saigon over a slightly shorter period of time. Figure 17 7 Using constant prices would result in an equally significant gap. 5 Figure 28 Hanoi urban wages were between 41% and 64% lower than Saigonese urban wages between 1925 and 1940. It seems clear that the lower wages in Hanoi were not compensated by proportionately lower prices. Figure 2 highlights this discrepancy. Although in 1936 the price of the basket of goods in Hanoi was almost 31% lower than in Saigon, this was the lowest differential. Furthermore, between 1928 and 1932, the price of a basket of goods in Hanoi was higher than in Saigon, presumably due to the turmoil associated with the Depression. Even though this gap in the wages of the two regions seems large, the gap between their GDP per capita was even larger: Figure 1 showed that GDP per capita in Tonkin was a mere 30% of GDP per capita in Cochinchina, on average between 1900-1940. Even accounting for cost of living differential, the wage gap between the two regions is not nearly as large as the GDP per capita gap between those regions. Clearly the economic divide suggested in GDP per capita data far over-estimates the actual differences between the standards of living of the urban populations of Tonkin and Cochinchina. Using urban data may even overstate the actual gap in the average income of the majority of the population. Indeed, rates of urbanisation were quite low in colonial 8 Methodology for the price level indication is found in Appendix A. Source for the wage data: JeanDominique Giacometti, "Wages and Consumer Price for Urban and Industrial Workers in Vietnam under French Rule (1910-1954)| in Jean-Pascal Bassino, Jean-Dominique Giacometti & Konosuke Odaka (eds) Quantitative Economic History of Vietnam 1900-1990, Hitotsubashi: Institute of Economic Research, 2000, p.163-214. 6 Vietnam. Both Hanoi-Haiphong and Saigon-Cholon were the main arteries of economic activity in Tonkin and Cochinchina respectively, as they held the political and commercial powers of their respective region. The data used to derive the relative size of each city come from the censuses. These data are limited and provide, at best, a lower bound estimate of urbanisation rates. As can be seen from Table 1, our previous explanation could be representative of a maximum of 1 to 3% of the population of each region respectively. Table 1: Estimates of Population in the Main Cities, Using Census Data, 1921-1936 Population of the Region Urban population (1000s) Tonkin Cochinchina Hanoi Haiphong Saigon Cholon 1921 6 854 3 797 75 000 118 000 83 000 94 000 1931 8 075 4 484 124 000 122 000 122 000 134 000 1936 8 680 4 616 149 000 70 000 111 000 145 000 Urban Population (% of region) Hanoi Haiphong Saigon Cholon 1921 1.09 1.72 2.19 2.48 1931 1.54 1.51 2.72 2.99 1936 1.72 0.81 2.4 3.14 Urban Population = (number of people in the city / number of people in the region) * 100 Source: Gouvernement Général de l’Indochine: Direction des Affaires Economiques, “Territoire et Populations”, Annuaire Statistique de l’Indochine, Hanoi: Imprimerie d’Extrème-Orient, 1927-1939. According to Pierre Gourou, Cochinchina was the most urbanised part of the Union, with 14% of its population living in urban centres, as opposed to Tonkin’s urban population of about 4.3%.9 Gourou identified ‘urban centres’ by the presence of ‘commercial activity’, rather than purely by population size.10 A village ceased to be classified as rural when there was a significant market for goods produced outside the village boundaries; when many inhabitants were not engaged in agricultural production; and when there were ‘foreigners’ living within the village bounds. Gourou’s research on urbanisation was more precise for Tonkinese urban centres than for Cochinchinese ones and it is difficult to evaluate his claims because he does not explain his method. 9 Pierre Gourou, Land Utilization in French Indochina, Vol.1, 2, 3, New York: Institute of Pacific Relations, 1945, p.92 & p.141. 10 ibid, p.92-93. 7 Gourou argued that these low urbanisation rates showed “the overwhelming predominance of rural activities, and above all agricultural activities, over all other forms of economic life in French Indochina”.11 Although changes in the economy during French rule did result in higher standards of living in urban Cochinchina than urban Tonkin, they may not have had any impact on the wider rural population. Scholars have argued that many of the benefits of economic works during the colonial era only accrued to the elites.12 Considering this, it has seemed crucial to undertake a more serious analysis in the breakdown of Tonkinese and Cochinchinese society. Constructing social tables permits us to delve deeper into the way in which income was distributed in both of these economies. 11 ibid, p.141. Anne E. Booth, “Night Watchman, Extractive, or Developmental States? Some Evidence from Late Colonial South-East Asia”, Economic History Review, Vol.60, No.2, 2007(2), p.256. 12 8 III. Constructing Social Tables Basic indications of GDP per capita and wages do not provide us with a good understanding of the distribution of income within an economy; that much is clear. There is no doubt that relying on social tables is prone to result in some limitations, mainly that there is a large degree of heterogeneity within each social class. 13 However, when working in economic history, gathering the required data to answer most of the questions we have is almost impossible. Consequently, the building of the social tables that are the cornerstone of this paper has been based on several assumptions and many generalisations. This section carefully explains how the tables were built. As seen in the previous section, the urban population was relatively small, leaving no doubt that much of the population of Vietnam was engaged in rural, primarily agrarian, occupations. Goudal suggested that out of the 23 million people living in Indochina in the late 1930s, 18 million were peasants.14 This would fit with Gourou's suggestion of the size of the urban population, if we keep in mind that some people within the agrarian sector were engaged in non-agrarian work. There is no doubt that the agrarian sector was the main employer of labour. The strong tie of the workforce to the agricultural sector was clearly seen in the aftermath of the Depression: “the dismissed native workers apparently adapted themselves to [losing employment as a result of the situation] by returning to agricultural and other types of family work in their native villages, and unemployment affected Europeans far more acutely”. 15 The majority of the population remained engaged in agricultural production, if only on a part-time basis. Consequently, it is important to understand labour utilisation in the agrarian sector to gain a better understanding of income distribution. In Table 2, we provide a preliminary estimate of the breakdown of population by occupation in both Tonkin and Cochinchina. This was the first step in constructing social tables for these two regions. 13 Frank A. Cowell, Measuring Inequality, Second Edition, Hertfordshire: Prentice Hall/Harvester Wheatsheaf, 1995, Chap. 1-2. 14 Jean Goudal, Labour Conditions in Indo-China, (Geneva: International Labour Office, 1938), p.186. 15 Virginia Thompson, Labor Problems in Southeast Asia, (London: Oxford University Press, 1947), p.199. 9 Table 2: Estimated Distribution of the Population in Cochinchina and Tonkin, by Occupation, 1929, (%) Cochinchina Tonkin 'Rich' Europeans 0.275 0.150 'Average' Europeans 0.007 0.040 14.000 4.300 Commercial/Industrial Contracted Labour 0.724 0.873 Mining Contracted Labour 0.000 0.857 Agricultural Contracted Labour 0.497 1.095 Daily Wage Labour (Rural) 38.023 27.989 Tenant/Farmer/Small Landowner 46.356 63.950 0.117 0.744 Urban Population Large Landowner Table 2 provide only preliminary estimations based on various assumptions. This data is for the year 1929. In 1929, the total population of Tonkin was 9 036 million people and that of Cochinchina was 5 471 million people.16 The Annuaires Statistique de l'Indochine (ASI) provided the information for the European households paying taxes. We assumed that these taxpayers were in charge of households of an average size of 3 individuals (including themselves). A household of 3 is lower than Gourou's general assumption of peasant household of 5, and reflects the fact that many Europeans did not come with their families to Indochina. This provided the population share for the 'rich' Europeans in both Tonkin and Cochinchina. The ASI also provided the information for the total European in each region in 1921 and 1931. By assuming constant growth in this group's population, we derived that there were about 17 111 Europeans in Tonkin in 1929 and 15 444 Europeans in Cochinchina in 1929.17 We subtracted the derived number of individuals from tax-paying households from this number to obtain the share of the 'average' European population. The share of the urban population is taken from Gourou's previously cited work as 4.3% in Tonkin and 14% in Cochinchina.18 16 Maks Banens, “Vietnam: a Reconstitution of its 20th Century Population History” in Jean-Pascal Bassino, Jean-Dominique Giacometti and Konosuke Odaka (eds) Quantitative Economic History of Vietnam 1900-1990, Hitotsubashi: Institute of Economic Research, 2000, p.1-40. 17 Gouvernement Général de l’Indochine: Direction des Affaires Economiques, Annuaire Statistique de l’Indochine, Hanoi: Imprimerie d’Extrème-Orient, 1927-1939. 17 Gourou, op.cit., p.538-543. 18 ibid, p.92, 141. 10 Including the social classes for specific labourers was considered important because these are the few categories for which we have solid income data. The worker regulations established in the later part of the colonial era provided guidelines that allowed us to be precise with the suggested income for each of these classes, specifically with respect to the number of days they were employed. Furthermore, Goudal's work showed the number of workers that were engaged in contracted labour either in agriculture, mining or industrial/commercial employment in 1929.19 We used these data as the number of active workers in this category of workers. Banens' estimated share of the population that was active was used to calculate the total number of people that would have been part of this class of society (i.e. including dependents).20 Banens' estimates show that the active labour force in both Tonkin and Cochinchina was about 58% of each region's respective population, throughout this period. If we compare these labour force data to those from other countries in the area in the 1930s, we find that 42% of the Indian population was active, 37% of Indonesia's and 47% of Thailand,21 suggesting that colonial Vietnam's labour force was unusually high, in both regions, a fact that remains true today.22 Adding up these various shares provided us with a basis to estimate how the rural sector was broken down. To calculate the share of the population that owned large estates, we used the number of parcels as indicators. In 1931, Tonkin had nearly 7000 parcels while Cochinchina had 1284.23 We used this number as the number of households that owned large landholdings. In Tonkin, Gourou argued that large landholding households had on average 9.6 members. 24 In Cochinchina, all of Gourou's households were assumed to have 5 members.25 Using this, we derived the number of people that might belong to this class in each region. 19 Goudal, op.cit., p.294. Banens, op.cit., p.33. 21 Members of the IPR International Secretariat, A Brief Political and Economic Handbook of Eastern and Southern Asia, 12th Conference, Institute of Pacific Relations, Kyoto, Japan, September-October 1954, p.17. 22 Glewe, Agrawal & Dollar, op.cit., p.55. 23 Gourou, op.cit., p.336. 24 ibid, p.538-543. 25 ibid, p.538-543. 20 11 Bernard argued that 45% of Cochinchina's rural population was engaged in work on landholdings larger than 50 hectares.26 We assumed that this meant that 45% of the remaining population was daily wage labour or coolies. This share represents 38.023% of Cochinchina's total population. The remaining part (46.356%) was thus assumed to be tenants/farmers/small to middling landowners. For Tonkin, Popkin estimated that by 1930, 69% of all rural families were either landless or cultivated less than 0.36 hectares.27 This equated to 63.953% of the total population. The remaining share of the population (27.989%) thus became part of the tenant/farmer/small landowner share of the population. These shares seemed unlikely given the generally held belief that the majority of the peasants in Tonkin owned their own land. Consequently, we switched the resulting population shares in Table 2. This switch seemed to fit Bernard's view that 60% of the rural population worked on communal lands or on landholdings smaller than 5 hectares.28 The second step to constructing social tables was to match each of these social classes to an average income. This was a trickier step than the first because it is very difficult to obtain reliable information for income for many of these social classes. The suggested social table for Tonkin is provided in Table 3 and the social table for Cochinchina is in Table 4. Table 3: Tonkinese Social Table, in 1929 Share of Population, % Average Income, $ Rich Europeans 0.150 1527 Average Europeans 0.040 333 Large Landowner 0.744 167 Commercial/Industrial Contracted Labour 0.873 136 Agricultural Contracted Labour 1.095 70 61.790 70 Urban Population 4.300 68 Mining Contracted Labour 0.857 65 Daily Wage Labour (Rural) 30.151 18 Tenant/Farmer/Small Landowner 26 Paul Bernard, Le problème économique Indochinois, Paris: Nouvelles Editions Latina, 1934, p.7. Samuel L. Popkin, "Corporatism and Colonialism: The Political Economy of Rural Change in Vietnam", Comparative Politics, Vol.8, No.3, 1976, p.156. 28 Bernard, op.cit., p.7. 27 12 Table 4: Cochinchina Social Table, in 1929 Share of Population, % Average Income, $ Rich Europeans 0.275 Large Landowner* 0.117 Average Europeans 0.007 333 Commercial/Industrial Contracted Labour 0.724 264 14.000 133 0.497 132 Tenant/Farmer/Small Landowner 46.356 96 Daily Wage Labour (Rural) 38.023 27 Urban Population Agricultural Contracted Labour 1527 673 1000 5026 * the text will explain why this category has 3 Options for class income Income for the 'rich' Europeans was calculated from the data on taxed European income recorded in the ASI. The difficulty with this calculation was that the data was not particularly detailed: for each income bracket, they recorded the number of individuals whose income fell within that tax bracket. In other words, we do not have specific incomes. This was particularly problematic for the last income bracket which was simply 'above 13 200$'.29 For all other income brackets, we multiplied the number of individuals within that bracket by the average income of the bracket. For the last bracket, we took 13 200$ as the income for these individuals. We then divided this derived 'average' income for 'rich' Europeans by 3, to achieve a 'per person' figure. For average Europeans, we took an average income that was lower than the first income bracket for Europeans paying taxes: 1000$, and divided that by 3 as the household size. Table 5: Daily Wages for Select Categories of Workers, 1929, $ Tonkin Cochinchina Specialised worker 0.77 1.5 (Male) unskilled worker 0.4 0.75 (Female) unskilled worker 0.22 0.46 Mining unskilled worker 0.37 n/a Source: Jean-Dominique Giacometti, "Wages and Consumer Price for Urban and Industrial Workers in Vietnam under French Rule (1910-1954)| in Jean-Pascal Bassino, Jean-Dominique Giacometti & Konosuke Odaka (eds) Quantitative Economic History of Vietnam 1900-1990, Hitotsubashi: Institute of Economic Research, 2000, p.163-214. 29 $ throughout this paper refers to the Indochinese piastre. 13 The income for the urban population was based on the assumption that a third of the active share of the population (based on Banens's estimates of the share of active workers in both regions)30 worked as specialised workers, another third as male unskilled workers and a final third as female unskilled workers, for an average of 250 days a year. The choice of 250 days rather than 300 is due to the potential insecure nature of some of the jobs available in the urban economy. The equivalent income for each active worker was then divided to reflect average income per person. The wages were used are found in Table 5. For contracted labour, we used unskilled wages for agricultural labour, mining wages for mining workers and specialised wages for commercial/industrial workers, this time assuming they worked 300 days a year, as stipulated by Labour Regulations (25 days of work had to be provided a year).31 The income was then divided to reflect 'per person' rather than per worker. Table 6: Income Per Person, in Various Categories of Households, 1936-1938, ($) 107.6 Middling Landowners* (8 hectares) 107.6 Small Well to do rural Landowners* (1 Landowners* (1 hectare) - 5 hectares) 18.4 36.2 104.2 Wealthy Rural Landowners** (>5 hectares) 167.4 Small Tenants* (< 5 hectares) Coolies 27 Cochinchina Middle Tenants* (5-10 hectares) 40.6 30.2 Large Tenants* (>10 hectares) Tonkin Poor Peasants* (few hundred square meters) * households size of 5; ** household size of 9.6. Pierre Gourou, Land Utilization in French Indochina, New York: Institute of Pacific Relations, 1945, p.531; p.538-543. The average income for the (Rural) Daily Wage Labour and Tenant/Farmer/Small Landowner categories of rural workers came from Gourou's research, replicated in Table 6. Specifically, rural daily wage labour income was based on the income of the lowest category of peasants in both regions, and divided by 5, as the household size, to achieve income per person. For the tenant/farmer/small landowner, the income suggested is that of an average of the middle categories in those tables, again divided by 5 as the household size for these categories. In both Tonkin and Cochinchina, the rural population engaged in rural work, as either 30 31 Banens, op.cit. Goudal, op.cit. & Thompson 1947, op.cit. 14 landless wage labour or small landholders/tenants/farmers, are shown to be the two largest classes of the population. This is in line with previous research on the rural economy of Indochina. Finding information for the income for larger landowners was more difficult. In Cochinchina, as we can see from Table 4, a number of alternative incomes were provided for large landowners. Landholdings were much larger than in Tonkin, so in Option 1, we used Bernard's classification of 50 hectares as the size of a large plot. Since Gourou's data in Table 6 only provides us with income for landholdings of 8 hectares, we did a proportional calculation to obtain the average income for the large landholding, again dividing by household size. However, this seems a very low income and it seemed unlikely that the relationship between size of landholding and income would be this proportional. In Option 2, we base our average class income on a suggestion by Michitake Aso: he suggested that a 'typical' Vietnamese rubber grower in Cochinchina would have had an income of 5 000$ and a household size of 5. 32 However, this was for a landholding of about 30 hectares, which does not necessarily fit with our category for 'large landowner'. Consequently, in Option 3, we base our average class income on a different suggestion by Michitake Aso: he provides the example of a household of 11 people who earned in total 75 400$, or 5026$ per individual, on a much larger plantation.33 This suggestion seems more in line with the specific class of landlords in this category, especially considering the concession regime in place in Indochina and specifically the large tracts of land being given as concessions in Cochinchina.34 The large landowner's income in Tonkin is based on Gourou's information from Table 6, and adjusted for a household size of 9.6. The income these larger landlords are suggested to have received is very low, relative to the suggestions for that same class in Cochinchina. However, it is documented that very few large plantations existed in Tonkin: Ennis suggested there were only 152 large plantations, and these were owned by French planters,35 which may have been taken into account in the 32 Michitake Aso, "Profits or People? Rubber plantations and everyday technology in rural Indochina", Modern Asian Studies, Vol.46, No.1, 2012, p.29 footnote 23. 33 ibid, p.28. 34 Alexandre Deroche, France Coloniale et Droit de Propriété: Les Concessions en Indochine, Paris: l'Harmattan, 2004, p.186, p.236. 35 Thomas E. Ennis, French Policy and Developments in Indochina, Chicago: University of Chicago Press, 1936, p.129. 15 'rich' European category. Considering that the population density of Cochinchina was so much lower than Tonkin's, it does seem to make sense that more of Cochinchina's population would have been engaged in working larger fields. As previously mentioned, in 1931, Tonkin had nearly 7000 parcels while Cochinchina had 1284.36 Although many of these parcels were further divided in smaller plots, there is no doubt that there was more potential for larger estates to be had when the land was divided into fewer parcels and between fewer people. The tradition of dividing the family plot into shares for each male offspring would have resulted in more numerous and smaller parcels in Tonkin than in Cochinchina merely because of differing demographic characteristics. Colonial policy may have perpetuated the possibility for formation of larger estates in Cochinchina: the large public works undertaken in the Mekong delta to expand the canal system, improve infrastructure and reclaim land were likely to have increased the land available for the establishment of large estates. In addition, the regulation of the property rights made it easier for larger landholdings to be established in Cochinchina than in Tonkin, illustrating why there could be such a large gap in the income for the same type of social class ('large landowner'). It may appear strange that there is no social class in Tonkin with 'average' income that can compete with Cochinchina's large landowners, especially as previous research on the structure of the Tonkinese economy suggests that this region had a thriving, if small, industrial sector. Nonetheless, Mitchell commented that there was “virtually no modern industries other than the extractive and processing enterprises required to exploit the country’s resources and prepare them for marketing”.37 Such industrial development was exemplified in Indochina's mining industry.38 Although mines had been exploited prior to the colonial period, Goudal, Mitchell and Shepherd all argued that scientific mining operations only dated back to French involvement in the sector.39 Out of 1 863 permits for mining concessions given out in 1925, 1 478 were for areas in Tonkin.40 One would assume there might have been a few rich industrialists, primarily engaged in mining activity. However, these mining ventures 36 Gourou, op.cit., p.336. ibid, p.191. 38 Jean Chesneaux, Contribution à l’Histoire de la nation Vietnamienne, Paris: Editions Sociales, 1955, p.171. 39 Goudal, op.cit., p.108; Kate L. Mitchell, Industrialization of the Western Pacific, New York: Institute of Pacific Relations, 1942, p.154 & Jack Shepherd, Industry in Southeast Asia. New York: Institute of Pacific Relations, 1941, p.14. 40 French Indochina, Service de la Statistique Générale de l’Indochine, Bulletin Economique de l’Indochine, Année 1926, Hanoi: 1927, p.651. 37 16 were not the property of any specific individuals like the rice and rubber plantations of Cochinchina, but rather of corporations. For example, 60% of coal production in Indochina was controlled by the Société Française des Charbonnages du Tonkin in 1929.41 Consequently, although there are of course limitations with regards to some of the assumptions and data used to derive Tables 3 and 4, these social tables should provide an adequate overview of the income inequality for households within each province for the year 1929. 41 French Indochina, Service de la Statistique Générale de l’Indochine, Bulletin Economique de l’Indochine, Année 1929, Hanoi: 1930, p.830. 17 IV. Results A first way to evaluate both the scope of extraction, and thus of inequality in the colonial economy of Vietnam is to look at the income share of the European population. In Tonkin the proportion of Europeans paying income taxes in 1929 represented 0.04% of the total population of Tonkin. In Cochinchina, the proportion of Europeans paying income taxes in 1929 represented 0.06% of the Cochinchinese population.42 These shares increase if we consider that these European taxpayers probably were in charge of an entire household of Europeans as we did in Tables 3 and 4, but it remains that these were the main holders of wealth in the European community. These data were collected in the ASI, in income brackets and number of Europeans paying taxes within each income bracket. As such, we can calculate the minimum share of total income that this proportion of people held in each economy. As previously explained, it is not possible to calculate the maximum share of income, seeing as the last income bracket is 13 200$ and above. In Tonkin, it turns out that the 0.04% of the population held 6% of the total income of the region. In Cochinchina, 0.06% of the population held 5% of the total income of the region. This is much smaller than we might expect, although it remains disproportionate. If we assume that the rest of the population was one homogeneous social class, the remaining share of GDP per capita would have been 35$ in Tonkin and 75$ in Cochinchina. 43 Comparatively, the European taxpayers earned on average 4 581$ per household in Tonkin and 4 584$ in Cochinchina. There is no doubt that this means a very unequal distribution of income in both regions. Although for Europeans in the region the difference in average income is minor, the resultant average income for the nonEuropean population does differ substantially between Tonkin and Cochinchina, by a factor of 2. This is largely due to the fact that the total GDP of the region is much higher, but it does show a very significant gap between the two regions. Unfortunately, this measurement does not provide any further evaluation of inequality between various groups in the populations of each region. As such, using 42 Gouvernement Général de l’Indochine: Service de la Statistique Générale de l’Indochine. Annuaire Statistique de l’Indochine. Volume II: 1923-1929. Hanoi: Imprimerie d’Extrème-Orient, 1931. 43 This is based on dividing (GDP-Income from taxed Europeans)/(Population-Taxed Europeans Households). GDP data from Jean-Pascal Bassino, “Preliminary Estimates of Vietnam GDP 18001970: North-South Economic Divide in Historical Perspective” in Konosuke Odaka, Yukihiko Kiyokawa & Masaaki Kuboniwa (eds) Constructing a Historical Macroeconomic Database for TransAsian Regions, (Hitotsubashi: Institute of Economic Research, 2000). 18 the previously presented social tables for both regions should provide a more subtle measure of inequality. The Gini coefficient that can be calculated for Tonkin in 1929 based on Table 3 is 38.56. The Gini coefficient that can be calculated for Cochinchina in 1929 based on Table 4 ranges from 32.75 with Option 1 to 33.21 with Option 2. The more drastic Option 3 provides a Gini coefficient of 39.02. In all but that last case, which is an extreme, it seems that the Gini coefficient for Tonkin was higher than that of Cochinchina. In 2008, the Gini coefficient for Vietnam as a whole was 35.6,44 on par with other countries in the region such as Thailand whose Gini in 2010 was 39.4 or India with 33.9.45 However, these Ginis are low when compared to Milanovic, Lindert and Williamson's calculated Gini coefficient for colonial India, which was between 48.2-49.7.46 Although I expected Cochinchina's Gini coefficient to be higher than Tonkin's, the fact that the Ginis seem to be so close to one another is not necessarily surprising. Despite some of the social groups very clearly showing stark income differences, such as urban workers, large landowners and contractual workers; the largest shares of the population did not show such a stark gap: mainly the rural daily labourers and the small landowner/tenant/farmer. In both Tonkin and Cochinchina, it seems that the single largest contributor to the size of the Gini is between those who own land and those who do not (or own too little). Consequently, if these results do not necessarily conform to our expectations, it may be due to the inability of social tables to provide us with a clear overview of land inequality. That being said, these social tables are basic and cannot perfectly represent the society in either region. Giacometti suggested that a large number of the native elite would have had access to outside sources of income apart from wages, thus affecting our evaluations of average incomes.47 Since the native elite was supposedly larger in Cochinchina than in Tonkin,48 the omission of this social class, due to data limitation, may have a significant downward bias on the calculated Gini coefficient in 44 World Bank, Gini Index Data Table, http://data.worldbank.org/indicator/SI.POV.GINI, May 31st 2013. 45 ibid. 46 Milanovic, Lindert & Williamson, op.cit. 47 Giacometti, op.cit., p.182. 48 R.B. Smith, “The Vietnamese Elite of French Cochinchina, 1943”, Modern Asian Studies, Vol. 6, No.4, 1972, p.459-482. 19 Cochinchina. In addition, workers were often paid income in kind,49 particularly in Tonkin where small landowners frequently engaged in extra daily wage labour in the slack season. This omission may suggest an upward bias in our estimated Gini coefficient in Tonkin. Milanovic, Lindert and Williamson suggest that it may be more useful to look not simply at the Gini coefficient but at the extraction ratio of a pre-industrial economy to better understand the scope of inequality within that society. To them, this ratio shows "how much of a potential inequality was converted into actual inequality".50 Table 7 shows the possible extraction ratios of Tonkin and Cochinchina, using two options for the minimum subsistence level used to generate the maximum Gini coefficient. The maximum Gini coefficient in a society corresponds to the highest possible level of extraction in an economy: where all the population bar one individual earn an income that only allows subsistence while the one remaining individual earns the remainder of the economy's product. We followed Milanovic, Lindert and Williamson's example and used a subsistence income of 300 1990$ and 400 1990$ to calculate our maximum Gini. Table 7: Calculation of the Extraction Ratio in Tonkin and Cochinchina in 1929 Extraction Extraction Max Gini Max Gini Calculated Ratio Ratio (s=300) (s=400) Gini (s=300) (s=400) Cochinchina 77.71 70.31 39.02 0.50 0.55 Tonkin 54.55 39.57 38.56 0.71 0.97 From Table 7, it seems clear that Tonkin was much closer to its maximum Gini coefficient than Cochinchina was. This seems unrealistic considering that much of the colonial economic ventures were located in Cochinchina. However, it is also true that Tonkin's much larger population and much more lengthy history of intensive cultivation of its land may have resulted in the early development of rigid social classes. In Cochinchina on the other hand, the relatively large availability of fertile land and the low population might have resulted in a much slower extractionary state. However, if we compare these extraction ratios to some of the ones suggested in Milanovic, Lindert and Williamson's work, it seems that the situation in Cochinchina 49 50 Giacometti, op.cit., p.186-187. Milanovic, Lindert & Williamson, op.cit., p.28. 20 was particularly good, while that of Tonkin was more realistic, but not drastically bad, for a colony. Indeed, British India's extraction ratio was 0.97 when using 300 1990$ as the subsistence income, but a staggering 1.41 when using 400 1990$.51 This is much more than what we see in Tonkin, let alone Cochinchina. A good way to test our calculated Ginis is to compare them to a 'reliable' proxy measure. Advocates of the w/y ratio argue that it is correlated to indicators of inequality.52 This ratio is useful because it relies on data that is more readily available in developing economies prior to World War 2. The rationale behind this ratio's correlation to inequality is that as the daily wage for unskilled labour gets closer to the daily GDP per worker, inequality is falling, and vice versa.53 This is logical: the unskilled worker is generally representative of the lowest class of the population. If his wage gets increasingly close to the wage of the average worker, than his income gets closer to the mean income and thus we see a decrease in inequality. Table 8 shows an example of these calculations for 1929. Table 8: Calculation of the W/Y ratio, 1929 Tonkin Unskilled Labour: Daily Wage (in $) Cochinchina 0.4 0.75 360 661 000 445 198 000 5 303 624 3 211 538 1 591 087 200 963 461 400 GDP per worker-day 0.23 0.46 W/Y 1.76 1.62 GDP (in current $) Active Labour Force Total days worked per region (assuming 300 per worker) Wage from: Jean-Dominique Giacometti. “Wages and Consumer Prices for Urban and Industrial Workers in Vietnam under French Rule (1910-1954)” in Jean-Pascal Bassino, Jean-Dominique Giacometti and Konosuke Odaka (eds) Quantitative Economic History of Vietnam 1900-1990. Hitotsubashi: Institute of Economic Research, 2000. Pp.163-214. GDP from: Jean-Pascal Bassino, “Preliminary Estimates of Vietnam GDP 1800-1970: North-South Economic Divide in Historical Perspective” in Konosuke Odaka, Yukihiko Kiyokawa & Masaaki Kuboniwa (eds) Constructing a Historical Macroeconomic Database for Trans-Asian Regions. Hitotsubashi: Institute of Economic Research, 2000. Active Labour Force from: Maks Banens. “Vietnam: a Reconstitution of its 20th Century Population History” in Jean-Pascal Bassino, Jean-Dominique Giacometti and Konosuke Odaka (eds) Quantitative Economic History of Vietnam 1900-1990. Hitotsubashi: Institute of Economic Research, 2000. Pp.1-40. 51 Milanovic, Lindert & Williamson, op.cit., p.77. Jeffrey G. Williamson, "Growth, Distribution and Demography: Some Lessons from History", NBER Working Paper 6244, October 1997. 53 Michael D. Bordo & Christopher M. Meissner, "Do Financial Crises Always Raise Inequality? Some Evidence from History", Working Paper, 9/13/2011, p.13. 52 21 Figure 3 shows the evolution of this ratio between 1914 and 1939 for Tonkin and 1924 to 1939 for Cochinchina. Although in this figure we only show the relationship between the wage of male unskilled worker and GDP per worker-day, the relative proportion would not change if using the wage for female unskilled worker, nor would a change in the number of days worked per year per worker significantly alter the look of this relationship. Figure 354 We see that at least until the end of this time period, this proxy also suggests that inequality was higher in Tonkin than in Cochinchina. Interestingly, it seems that 1929 was a year where inequality in these two regions was most closely similar, suggesting our Ginis derived from our preliminary social tables may, in fact, be relatively solid. It may be that the main reason for Tonkin's apparently greater income inequality is the very large proportion of peasants with very low incomes. Indeed, Tables 3 and 4 clearly show that the even if annual income for rural daily worker was low in both Tonkin and Cochinchina, it was particularly low in Tonkin. However, this preliminary 54 W is the (male) unskilled wage taken from Giacometti, op.cit., & Y is the GDP per capita taken from Bassino, op.cit. 22 evaluation may be misleading. The suggested income may in fact hide part of the situation and that Tonkinese peasants may have been better off than it seems in these previous tables. Table 6's data showed the differences in income for various classes of peasants in Tonkin and Cochinchina. For both regions, Gourou recorded that the majority of total income came from wages earned collecting the harvests and from jobs tending to the collected harvest such as husking rice. In addition, some secondary crops and stock raising supplemented the peasants' income. Gourou’s research prompted him to suggest that “in Cochinchina there does not seem to be a class at so miserable a level as in Tonkin”.55 Certainly a preliminary glance at Table 6 showed a relatively large gap in the income of the Tonkinese 'poor peasant' compared to the Cochinchinese coolie/small tenant. Poor Tonkinese peasants earned 30-40% less than the coolies or small tenant of Cochinchina, respectively. However, in Tonkin, even the lowest income households owned some land, allowing them access to some home-grown products and potentially reducing the needs for monetary income. Moreover, more peasants in Tonkin also engaged in some rural manufacturing such as textile spinning or weaving to supplement their income than in Cochinchina. It is unclear if Gourou's data fully accounted for this extra income, but it seems likely that Tonkinese peasants would have needed less monetary income than their Cochinchinese counterparts. It is therefore not necessarily true that the Tonkinese peasant was significantly more miserable than the Cochinchinese peasants. Furthermore, the income patterns of the other classes of peasants in both regions show much more similarity. Considering that in both regions a large share of the population would have fallen within these categories, the judgment that Tonkinese peasants experienced worse living standards than Cochinchinese peasants seems an exaggeration. Consequently, inequality may in fact have been lower in Tonkin than in Cochinchina, but this cannot be further tested due to insufficient data. 55 Gourou, op.cit., p.552. 23 V. Conclusion This paper has attempted to shed some light on inequality in colonial Vietnam. Although much of the literature on colonial Vietnam has acknowledged an economic gap between Tonkin and Cochinchina during the colonial era, its impact on the living standard of the populations of these regions has not been extensively discussed. This paper produces some preliminary estimates of income inequality in these two regions so as to foster further research into the actual living standards of the colonial economies of Tonkin and Cochinchina. It is our opinion that although these measures suggest that income inequality was relatively similar in both regions, income inequality may not be the best indicator of living conditions for populations. These measures rely too much on monetary measures that may be inappropriate in societies that are not as 'marketised' as modern societies. Nonetheless, it is also our opinion that these measures are useful tools in understanding the workings of these two economies. The Gini coefficient, a traditional measure of inequality, suggests that income inequality was more significant in Tonkin than in Cochinchina in 1929. A proxy measure of inequality, the w/y, suggests this may have been the case throughout most of the 1920s and 1930s. Both of these indicators, however, do not suggest a massive difference in the scope of the inequality. In fact, both regions seem to have been in relatively similar positions as today's Vietnamese economy, as well as other excolonies. Furthermore, the extraction ratio calculated based on this preliminary evaluation of Tonkin and Cochinchina's economies suggest that Tonkin's economy suffered from a greater degree of inequality than Cochinchina's considering the potential for inequality that existed within these economies. These results are at odds with out initial intuition. Between 1900 and 1940, Cochinchina's total GDP was much higher than Tonkin's and its GDP per capita was more than twice Tonkin's. Although wages and income were higher in the Cochinchina than in Tonkin, even when taking into account the higher prices, there remained a substantial gap between these two economies. Intuitively, we believed this would have resulted in larger inequality in Cochinchina than in Tonkin. The fact that this is not reflected in the previous measures suggests that measures of income inequality may hide existing inequality, for example in land and wealth. It is also possible that the construction of our social tables was flawed. Indeed, it seems clear 24 that there is 'income' suggestion for various classes are not robust. This is particularly true for peasants in Tonkin who were rumoured to have access to a more home-grown food and home-produced goods, reducing their dependency on monetary income. Such a situation would place some doubts over our suggested social tables and may hint at these measures of inequality being mis-calculated. Nonetheless, the idea of a more unequal society in Tonkin may not be at odds with historical evidence. Indeed, inequality could be the result of various historical and institutional factors that evolved over time. 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May 31st 2013. http://data.worldbank.org/indicator/SI.POV.GINI. 31 Appendix A: Constructing the Price Index The wages used in this paper are for the working indigenous class. The French constructed cost of living indices for the indigenous middle-class of Hanoi and Saigon. Because we cannot find information for the breakdown of the basket of goods for Saigon's indigenous middle-class, we use that of Hanoi's as a common basket for both cities. It is unlikely that there would have been a great deal of difference in the weights associated with various categories of goods included in a typical basket in both cities. Table A.1 shows the weights French authorities associated with various goods included in this basket. Rice was the most significant expense, but it seems rational to expect a more complete basket of goods to temper the conclusions we reached when looking solely at rice wages. Unfortunately, as previously mentioned, matched prices are only available for the goods found in the European basket of goods. Table A.2 shows, however, that the price differential between the same goods purchased in Hanoi by Europeans and indigenous people alike were rather similar. Price differential were likely the result of the greater bargaining power of the indigenous population, as well as the cheaper options of seats in either the theatre or the trains. Considering this, we will assume that the prices for goods included in the European basket of goods were representative of urban prices and that the differential between European and indigenous people in Saigon would have been rather similar to that in Hanoi. Consequently, the ratio of prices in Saigon and Hanoi were probably similar when using goods purchased by Europeans or by indigenous people. Problematically, not all the goods included in the indigenous basket of goods shown in Table A.1 were included in the European basket of goods. We therefore need to use a smaller basket. Table A.3 shows the goods that were included in the basket of goods of the indigenous populations for which we can find matched prices and the weights associated to these goods in our new basket. The weights provided are based on Table A.1's, with some modifications due to either unavailability of prices or incomparable units. Prices for these goods were recorded for the years 1910-1922 in Hanoi and 1910-1925 in Saigon. Using the cost of living indices the French published, prices can be extrapolated until the end of the time period. Because we want to know how the 32 price of this basket of goods evolved in Hanoi relative to in Saigon, we compiled a ratio of the price in Hanoi relative to the price in Saigon for each good. Table A.4 shows an example year for this calculation. Using these ratios and the respective weights associated to each goods, it is now possible to track the movement of the price of this basket of goods in Hanoi relative to Saigon. This is what is represented in Figure 2. Table A.1: Weights for Hanoi's Indigenous Middle-Class's Basket of Goods Rent 8.3 6.4 Chinese vermicelli 1.4 Bean paste 2.4 Petrol 2.6 0.8 Calico fabric 7.5 Silk 0.4 Clothing Fresh vegetables Eggs Water Wood 0.4 1.3 Beef 3.5 Pork 2.8 Soap 0.3 2 Train 1.4 Tuktuk 0.6 Chicken Grease 0.3 Various fishing products 5.2 Brine 2.5 Fresh fruit 4.9 Tea Rice alcohol Other Food 32.1 Lodging expenses Rice 1.5 Theatre 2 9.4 French Indochina, Service de la Statistique Générale de l’Indochine, Bulletin Economique de l’Indochine Année 1923, Hanoi: 1924, p.551. 33 Table A.2: Annual Average of Retail Prices of Goods in Hanoi for Europeans and Indigenous People, 1912-1922, ($) Indigenous Hanoi European Hanoi Rice 2nd quality (100 kg) 7.18 7.59 Eggs (100) 1.50 1.85 Fish (kg) 0.31 0.59 Railway (ticket) 0.64 3.09 Tuktuk (ride) 0.05 0.10 Theatre (ticket) 0.18 0.57 French Indochina, Service de la Statistique Générale de l’Indochine, Bulletin Economique de l’Indochine Année 1925: p.442-447; Année 1922: p.645-652; Année 1923, p.556, Hanoi: 1923-1926. Table A.3: Suggested Basket of Goods for the Indigenous Populations of Saigon and Hanoi Weight Rice (2nd quality) 52 Egg 0.8 Beef 3.5 Pork 2.8 Chicken 2 Fish 5.2 Beer 9.4 Heating Wood 12.6 Calico 7.9 Soap 0.3 Tuktuk Cinema Ticket 2 1.5 34 Table A.4: Prices in Saigon and Hanoi for Goods Included in Typical Basket of Goods, 1910* Hanoi Prices ($) Hanoi/Saigon (ratio) 6.26 6.6 1.05 1 0.02 0.01 0.67 Beef kg 0.26 0.25 0.96 Pork kg 0.49 0.43 0.88 Chicken couple 0.6 0.7 1.17 Fish kg 0.26 0.55 2.12 Beer 48 bottles 12 0.27 0.02 Heating wood 100 kg 5 2.43 Calico meter 00.32 0.25 0.78 Soap kg 0.3 2.12 7.07 Tuktuk per ride 0.25 0.1 0.4 Cinema seat 0.8 0.5 0.63 Good Quantity Rice 100 kg Eggs Saigon Prices ($) 0.49 French Indochina, Service de la Statistique Générale de l’Indochine, Bulletin Economique de l’Indochine Année 1925: p.442-447; Année 1922: p.645652; Année 1923, p.556, Hanoi: 1923-1926. 35