Blood Rubber* Sara Lowes† Eduardo Montero‡ Bocconi University, IGIER, and CIFAR Harvard University 27 November 2017 Most Recent Version Here Abstract: We examine the legacy of one of the most extreme examples of colonial extraction, the rubber concessions granted to private companies under King Leopold II in the Congo Free State, the present-day Democratic Republic of Congo. The companies used violent tactics to force villagers to collect rubber. Village chiefs were co-opted into supporting the rubber regime, and villagers were severely punished if they did not meet the rubber quotas. We use a regression discontinuity design along the well-defined boundaries of the ABIR and Anversoise concessions to show that historical exposure to the rubber concessions causes significantly worse education, wealth, and health outcomes. We then use survey and experimental data collected along a former concession boundary to examine effects on local institutions and culture. We find a negative effect on local institutional quality and a positive effect on culture. Consistent with the historical co-option of chiefs by the concession companies, village chiefs within the former concessions are more likely to be hereditary, rather than elected, and they provide fewer public goods. However, individuals within the concessions are more trusting, more cohesive, and more supportive of sharing income. The results suggest that colonial extraction may have different effects on institutions and culture. Keywords: Africa, development, culture, institutions, colonialism. JEL Classification: O15,N47,D72,O43,Z13. * We thank Alberto Alesina, Robert Bates, Alberto Bisin, Melissa Dell, James Feigenbaum, James Fenske, Claudia Goldin, Robert Harms, Adam Hochschild, Richard Hornbeck, Stelios Michalopoulos, Nathan Nunn, Rohini Pande, James A. Robinson, Guido Tabellini, Marlous Van Waijenburg and participants at the Harvard Development Lunch, Brown Macro Lunch, Harvard Economic History Lunch, Stanford Economic History seminar, NEUDC, WGAPE, and the Conference for Inclusive Growth in the DRC for excellent feedback. We would like to thank Cammie Curtin and Adam Xu for excellent research assistance. We would also like to thank Raissa Fabregas, Ben Morse, Eva Ng, and Alex Segura for helpful comments and suggestions. We thank Mossai and Sabuli Sanguma for their help and hospitality. We thank our excellent research team in Gemena. We are grateful for the financial support from: the Danielien Travel and Research Grant, The Eric M. Mindich Research Fund for the Foundations of Human Behavior, Lab for Economics Applications and Policy, Warburg Fund, IQSS, Weatherhead Center Graduate Student Associate Grant, the History Project and the Institute for New Economic Thinking (INET). Sara is grateful for financial support from the NSF Graduate Research Fellowship Program. This project has IRB approval from the Harvard CUHS (IRB15-2086). † Bocconi University, Department of Economics, IGIER, and CIFAR. Email: [email protected]. Website: www.saralowes.com. ‡ Harvard University, Department of Economics, 1805 Cambridge Street, Cambridge, MA, 02138. Email: emon- [email protected] Website: http://scholar.harvard.edu/emontero. 1. Introduction A large literature examines the origins of sub-Saharan Africa’s comparative development. Of particular interest has been the role of pre-colonial and colonial institutions. Pre-colonial ethnic- group level characteristics such as political centralization and exposure to the slave trade are im- portant for understanding present day development (Gennaioli and Rainer, 2007, Michalopoulous and Papaioannou, 2013, 2014, Alsan, 2015, Nunn, 2008). Similarly, a large body of literature suggests that colonial institutions, and in particular colonial identity, have influenced African development (La Porta, López de Silanes, Shleifer and Vishny, 1998, Acemoglu, Johnson and Robinson, 2001). Colonial rule was a bundle of goods comprised of investments and extraction. Investments in education, health, and infrastructure, either by the colonial state or missionaries, have been shown to have persistent, often positive, effects on development outcomes. However, colonial institutions also comprised elements of extraction (Heldring and Robinson, 2012). For example, the use of labor coercion was nearly universal (van Waijenburg, 2015). A common strategy was to use indirect rule – the co-option of local institutions – to achieve a colonial goal (Mamdani, 1996, Acemoglu, Reed and Robinson, 2014). While the effects of investments made by colonial governments have been studied (Huillery, 2009, Cage and Rueda, 2016, 2017, Osafo-Kwaako, 2012, Wantchekon, Klasnja and Novta, 2015, Lowes and Montero, 2017, Glaeser, La Porta, Lopez- De-Silanes and Shleifer, 2004), there is much less evidence on the effects of colonial extraction in Africa. We examine one of the most extreme cases of colonial extraction, the Congo Free State (CFS). The CFS, what is today the Democratic Republic of Congo (DRC), was the personal colony of King Leopold II of Belgium between 1885 and 1908. Leopold designated large parts of the CFS as concessions to private companies. The companies used extremely violent tactics to force villagers to collect rubber. Historians have noted that the rubber concessions granted under Leopold II had disastrous consequences for local populations. As Hochschild describes, "the world has managed to forget one of the great mass killings of recent history...it was unmistakably clear that the Congo of a century ago had indeed seen a death toll of Holocaust dimensions" (Hochschild, 1998, pp. 3-4). In fact, an estimated 10 million people, approximately half of the population of Congo, died between 1880 and 1920 (Vansina, 2010, Hochschild, 1998). Despite the magnitude of the event, 1 scholars have yet to empirically examine its implications for present-day development. Exposure to the rubber concessions was characterized by the extraction of rubber, violence, and the use of local institutions, namely village chiefs, to enforce rubber quotas. The concession companies were given monopoly rights over natural resource extraction within the concession boundaries. European agents had monetary incentives tied to rubber production and were encouraged to use whatever means necessary to collect rubber. In fact, they were given state resources, primarily soldiers from the CFS armed forces (the Force Publique) and a state mandate to use coercive means, to reach their rubber extraction goals. The other critical component of exposure to the concession companies was the use of indirect rule. Historical accounts of the rubber concession period highlight how the rubber companies forced village chiefs to support the rubber regime. Those who did not support the rubber regime were killed and replaced by outsiders willing to enforce the rubber quotas (Harms, 1975). The historical episode is particularly well-suited to examining the effects of exposure to colonial extraction because, unlike in other contexts where colonial governments or associated businesses also made investments for production (e.g. see Juif and Frankema (2017) for an example from southwestern DRC or Dell and Olken (2017) for an example from Indonesia), these companies did not make productive investments in these areas. Rubber is a unique commodity in that it requires little capital investment to be collected and does it not require training of the labor force. The primary input is labor, and the concession areas are connected to river networks so that there was no need to invest in road infrastructure. Thus, the key focus was extraction. We use the well-defined boundaries of the two largest rubber concessions, ABIR and An- versoise, to examine the long-run effects of colonial extraction on economic development. The boundaries of ABIR and Anversoise were determined at a time when there was little knowledge of the geography of the interior of Congo. Thus, the CFS used the extent of river basins, which are defined as a river and its tributaries, and a 25 kilometer buffer around the river basins to define the boundaries of the concessions (Harms, 1975). Consistent with the idiosyncratic manner in which the historical boundaries were determined, we demonstrate that those areas designated as concessions are geographically similar to the areas just outside of the concessions. We use Demographic and Health Survey (DHS) data from 2007 and 2014 to estimate the effects of historical extraction on present-day education, wealth, and health outcomes. Using a geographic regression discontinuity design, we find that individuals from the former concessions 2 areas have significantly worse education, wealth, and health outcomes than individuals from just outside the former concessions. We analyze the DHS data by age cohort and find that there is little evidence of convergence in years of education, wealth, or height-for-age over time. We also use archival data to digitize the locations of posts where European agents were located within the rubber concessions. We create proxies for intensity of exposure to the rubber concessions at the post level: the length of time a post was in existence and estimates of the quantity of rubber collected by villages around the posts. We find that greater intensity of exposure to rubber extraction is correlated with lower wealth today for villages near posts. We address several possible concerns with examining the effects of the historical rubber concessions: the use of river basins (plus the 25 km buffer) to define boundaries,