Colonial capitalisation and business investment in the Federated Malay States in the interwar years

This article adopts a neo-mercantilist approach to examine the interventionist role of the Federated Malay States (FMS) government in facilitating colonial capitalisation during the interwar years. It challenges the dominant laissez-faire framework often used to interpret the development of colonial business and economic systems, which tends to marginalise the role of the state. The article highlights how the evolution of neo-mercantilist policy during this period underscored the importance of export-oriented economies within the colonial empire for the survival of British businesses amid global economic uncertainty. In the case of the FMS, the government played a central role in capital formation by mobilising public loans and promoting the emergence of micro-capital among Asian smallholders. The article also explores the role of British banks as intermediaries in channelling capital. It argues that neo-mercantilist strategies ultimately subordinated the colonial economy to imperial interests through financial dependence and the dominance of British commercial enterprises.