One of the oldest historical currencies in the world, the Indonesian Rupiah is just the latest iteration in a long and historically rich bloodline of currency.
Indonesia's first currency
The first currency to appear in Indonesia date back to the ninth century during the Sailendran dynasty. Three different levels of currency existed, the massa, the tahil, and the kupang. They were made of silver or gold and often inscribed with the letter ma or with the image of the sandalwood flower. These persisted into the 13th century until the Majapahit empire expanded their influence in the archipelago. At that point, cash (holed copper chinese coins and where the term for US dollars originated from) began to appear and were mimicked in Indonesia using tin or lead.
Arrival of Europeans and Dutch Colonization
At the dawn of the 17th century, the Europeans began arriving in Indonesia. With their arrival they brought gold coins from Portugal and Venice and Spanish silver dollars from the South American colonies. The Spanish silver dollar would later become the predominant trade coin in Indonesia for several hundred years. Also, during this time the Dutch East India Company was granted a trade monopoly over the East Indies which later became a Dutch colony that included most of Indonesia. During this time coinage was mainly imported in the forms of small denomination silver Dutch stuiver coins, Spanish dollars, and trade coinage.
The first banknotes would not appear until the mid 18th century with the formation of the De Bank Courant en Bank van Leening in 1752. While numerous issues were made over the next 60 years, these notes tended to lose value due to being a fiat currency and not backed by actual specie.
The Dutch East India company went bankrupt at the start of the 19th century, and with it's dissolution the territories were nationalized by the Batavian Republic, the puppet government for the Dutch that ruled at that time. The government then began to issue its own denomination of currency in the Dutch duit and gulden. Dutch national currency was also issued alongside the native currency and would be used until Indonesia gained independence after WWII.
Japan's Invasion, and Gaining Independence
In 1942, at the height of the Second World War, Japan invaded the Netherlands controlled Indies, taking complete control of the entire country by March of that year. The Japanese brought their own issue of the local money, the gulden, on their invasion ships. After the Japanese gained occupation of Indonesia, they liquidated the banks, including the colonial national bank, “De Javasche Bank” and voided all debt obligations of the people.
Originally, the Japanese money was supposed to have the same value as the currency it replaced, but due to mismanagement of the currency and excessive amount of printing, hyperinflation was in process, which caused the natives to hoard the Dutch money. By 1944, the Japanese determined that their strategic interests were better served by encouraging Indonesian nationalism and printed a second series of notes in the native language, these notes were called the Netherlands Indies Roepiah.
At the end of the war, the Allies' “Netherlands Indies Civil Administration” began to retake control of the old East Indies colonies, and issued what is now known as the NICA Gulden. The transition back to Dutch control did not go as smoothly as the Allies hoped for on the main islands of Java and Sumatra. The NICA gulden was referred to as “uang merah” which translates literally to “red money” but could also be assumed to be known as “blood money.” It faced high levels of opposition by the locals who were frustrated by the fact that even though the Dutch promised to adopt a less colonial stance after the war, the banknotes were still printed in Dutch and featured Queen Wilhelmina on it.
Due to this, the local governments in Java and Sumatra banned the use of the NICA money, and instead used the money left over by the Japanese during the war. However, because the supply of Japanese war gulden was dwindling quickly NICA decided to issue its currency in Java and Sumatra. This action infuriated the Indonesians, who immediately decreed a 5-year prison sentence for its use.
The Javanese Rupiah – Indonesia's First Rupiah
Although the Republic of Java was firmly against using the post-war Dutch NICA currency, issuing its own money was barely considered. After proclaiming that the NICA money was banned, it made the Japanese money as well as any pre-NICA dutch monies legal tender. In March of 1946, Java began printing after recovering the plates from a seizure earlier that year by allied forces. However, due to the limited supplies of the Javanese printers, it wasn't in mass circulation until October of that year. This first iteration of the Indonesian Rupiah was used to replace the pre-NICA gulden and the Japanese gulden that were in circulation. This currency war would continue between the Dutch controlled indies and the Republic of Indonesia interior enclaves until Indonesia's independence is recognized in 1949.