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Published online by Cambridge University Press: 11 July 2014
Few crises in the British Empire demonstrated its vulnerability as did the Boer War. In addition to showing itself woefully ill prepared for military conflict, the British government strained its financial resources to the utmost during the South African struggles. Its war debt amounted to nearly one hundred and sixty million pounds and this figure did not include the effects of the dislocation of trade and long-term debt charges, and telegraph cable subsidies. From the Treasury's point of view, the War exerted extreme pressure on the fragile financial framework of taxation. Treasury officials therefore called for retrenchment and economy. But the South African conflict also demonstrated significant weaknesses in Britain's military preparedness. Many in the Cabinet, and in the country as well, called for army and admiralty reorganization and further naval construction. This in turn meant increased government expenditure which gave rise to acrimonious Cabinet debates and ultimately the Chancellor of the Exchequer Michael Hicks Beach's resignation.
The struggle between those concerned with the financial stability of the British government and those preoccupied with its political and strategic position in an increasingly hostile world provided the backdrop for the evolution of the South African Loan and War Contribution Act of 1903 (3 Ed. VII, c. 27). The Peace of Vereeniging, May 31, 1902, had solemnized Britain's annexation of the Transvaal and the Orange River Colony in the Previous year. With the war over and the Boer Republics now crown colonies, post-war rehabilitation was the order of the day. The South African Loan Act sought to facilitate the renewal of commercial, mining and agrarian enterprises in the new British possessions. Though divided on other party policies, the Salisbury and Balfour governments of 1902-3 agreed on the importance of reconstruction, but for different reasons.
1 Blain, to Lambert, : “Statement of the War Debt,” August 15, 1902Google Scholar, Public Record Office, Colonial Office 291/41/31284. (Hereafter cited as PRO, CO.)
2 Milrier to Chamberlain, January 3, 1900, Joseph Chamberlain papers JC13/1/118, Birmingham University.
3 Though written in February, this letter included a secret memorandum drafted by Chamberlain well before that date. Chamberlain to Hely-Hutchinson, February 25, 1900, Chamberlain Papers, JC 11/17/1.
4 Chamberlain to Milner, February 28, 1900, Milner papers, 27/13-14, Bodleian Library, Oxford University.
5 Milner Memorandum, March 5, 1900, Milner papers, 27/18.
6 Milner to Chamberlain, April 4, 1900, Milner papers 27/85-88.
7 Ibid.
8 Mowatt to the Colonial Office, March 29, 1900; Mowatt Memorandum, April 30, 1900; and Chalmers Memorandum, October 1, 1900, Public Record Office, Treasury 1/9626/21473. (Hereafter cited as PRO. T.)
9 Chamberlain to Milner, May 31, 1900, Chamberlain papers JC 13/1/25.
10 Milner requested the new offices and a salary increase in a letter dated May 30, 1900. The High Commissioner implied that he would resign if his request was refused. Milner to Chamberlain, Chamberlain papers JC 31/1/29. Chamberlain readily agreed to Milner's proposal. Chamberlain to Milner, June 18, 1900, ibid. 13/1/36.
11 Milner to General Prettyman, June 10, 1900, Milner papers 21/4.
12 Since the outbreak of the South African War, Hicks Beach employed various measures in an attempt to cushion the effects of the conflict on Britain's fragile tax structure. See, for example, Hicks Beach To William Harcourt, October 23, 1899, Gloucester Record Office, PCC 25. When he heard of Milner's spending programs, he was incensed. See BL Add MSS 48677/f. 63. November 30, 1900. Barbour had already assisted the Treasury translate various balance sheets forwarded by the High Commissioner for their inspection. Chalmers Memorandum, December 5, 1900, PRO T 1/9612B/26079. His appointment as a Treasury representative to the Transvaal is discussed in Edward Hamilton's diaries. See BL Add MSS 48677/f. 73, December 21, 1900; and Colonial Office to Barbour, December 22, 1900, PRO T 1/9674B/9721.
13 Hicks Beach contemplated a two or three million pound advance to the Transvaal and the Orange River Colony for the fiscal year 1901-2. The remainder of the administrative costs would come out of War Office funds. Hicks Beach to Chamberlain, March 1901, Chamberlain papers JC11/18/15. See also Ommanney to Chamberlain, January 15, 1901, PRO CO 291/32/1254.
14 Chamberlain to Milner, January 25, 1901, Milner papers 43/65-7.
15 Milner to Chamberlain, February 10, 1901, ibid. 43/16-19.
16 Chamberlain to Milner, April 1, 1901, Chamberlain papers JC13/1/137.
17 Milner to the Colonial Office, February 13, 1901, PRO CO 224/3/8133. Milner to Chamberlain, November 2, 1900, Chamberlain papers 13/1/81. Milner to the Colonial Office, February 28, 1901, PRO CO 291/27/10660, and Ommanney to Milner, May 3, 1901. Eventually the Colonial Office allowed Milner to appoint an “agent” to represent the Transvaal in London, but the Crown Agents continued to contract all of the new crown colony's business. Milner to Chamberlain, August 2, 1901, Chamberlain papers 13/1/174.
18 Barbour's Report, March 21, 1901, PRO CO 291/27/6438. After the war, a force of six thousand troops from the South African Constabulary policed the two colonies. Two thousand were stationed in the Orange River Colony and the rest operated in the Transvaal. Each colony was obligated to support the troops stationed in its territory (See pp. 63-4 of Barbour's report.).
19 Much of the mining carried on in South Africa required large quantities of dynamite. Since it was necessary for mining operations, the Boer government had taxed it heavily and even created a monopoly which sold it to the mining community. The tax became the focus of political protest and a source of bad feeling between the government and the mining interests. Milner Memorandum, April 18, 1901, Ibid.
20 Lambert Memorandum, May 15, 1901; Graham Memorandum, May 23, 1901; Ommanney Memorandum, January 30, 1901; and Chamberlain Memorandum, June 4, 1901, ibid.
21 At this first meeting, Milner asked for an advance of five million pounds to carry the new crown colonies over until March 31, 1902. (Britain's fiscal year ran from April 1st to March 31st; South Africa's ran from July 1st to June 30th.) These funds were employed to pay for general administrative costs, the maintenance of the South African Constabulary and compensation to Natal and Cape Colony citizens for war damages. Ommanney Memorandum, June 13, 1901; and Chamberlain Memorandum, June 13, 1901, PRO CO 291/28/18771.
22 Ommanney Memorandum, June 16, 1901, ibid. Hamilton preferred Barbour's figures to Milner's and therefore based his own calculations on the former's report, June 5, 1901. BL Add MSS 48678/ ff.56-7. See also Hamilton Memorandum regarding Barbour Report, June 5, 1901, PRO T 168/52/61-77. Chamberlain met with Milner during the period May 31 to June 2, 1901. Their talks touched upon every important aspect of South African reconstruction. Chamberlain Memoranda, May 31 to June 2, 1901, Chamberlain Papers 13/1/144.
23 Mowatt to Hicks Beach, June 19, 1901, PRO T 1/9998B/15997. In a memorandum to Balfour, Hamilton outlined the immediate needs of the Transvaal, and discussed the state of British finances more generally. He said nothing about the war indemnity. Bodleian Sandars MSS Eng. Hist. c. 734/68-73, Hamilton to Balfour, July 18, 1901. Administrative Costs in the Transvaal proved higher than first anticipated and advances were increased from five to six and one-half million pounds. Hamilton to the Colonial Office, August 2, 1901, PRO T 7/32/12958/01; and Austen Chamberlain to the Colonial Office, August 2, 1901, PRO CO 291/32/26948.
24 Hicks Beach to Chamberlain, September 10, 1901, Chamberlain Papers JC 11/18/9.
25 Chamberlain to Hicks Beach, September 12,1901, Ibid.
26 Hicks Beach to Chamberlain, September 16, 1901, Ibid.
27 Chamberlain to Hicks Beach, September 30, 1901, Ibid.
28 Hicks Beach to Chamberlain, October 2, 1901, Ibid.
29 While few historians have looked into these discussions in detail, some have suggested that Chamberlain distrusted the Transvaal mining community, that he feared their influence over Milner, and that he view the indemnity as an opportunity for the Imperial government to “collect for services rendered.” See Denoon, D.J.N., “Capitalist Influence and the Transvaal Government During the Crown Colony Period, 1900-06,” Historical Journal XI, 2 (1968): 301–331CrossRefGoogle Scholar; Pyrah, G.B., Imperial Policy and South Africa, 1902-10 (Oxford, 1955), pp. 204–216Google Scholar; and Amery, Julian, At the Height of His Powers (London, 1951) pp. 313–24Google Scholar.
30 Milner to Brown (Colonial Treasurer of the Orange River Colony), December 26, 1901, PRO CO 224/7/6828. For details see Ommanney Memorandum, February 4, 1902, Bodleian MS Dep. Monk Bretton 91; Bodleian MS Milner 52/94-7, Milner Memorandum on the CSAR, November 1902, Milner papers 52/94-7. For the Treasury memorandum supporting the proposal see Hamilton Memorandum, January 10, 1902, PRO T 1/9916A/20463. January 1, 1902, BL Add MSS 48679/f. 13, Hamilton did not agree however that in 1902-3 the Transvaal ought to borrow a large sum under an imperial guarantee to pay its reconstruction and general operating costs. January 22, 1902, BL Add MSS 48679/f. 23.
31 Milner to the Colonial Office, January 29, 1902, PRO CO 291/37/4127. Hamilton Memorandum: “The Financial Outlook in the Transvaal and at Home,” January 31, 1902, PRO T 168/50.
32 Milner to Hamilton, February 1, 1902, Milner Papers 35/211-4.
33 Just Memorandum, February 17, 1902; Graham Memorandum, February 18, 1902; Ommanney Memorandum, February 18, 1902; Ommanney to Chamberlain, February 19, 1902, PRO CO 291/37/6167; and Lambert to Graham, February 21, 1902, PRO CO 224/7/6825.
34 Milner Memorandum, February 21, 1902, PRO CO 291/37/8532. Milner finally gave up the idea of a dynamite tax in April 1902. Milner to the Colonial Office, April 21, 1902, CO 291/38/15333.
35 February 25, 1902, BL Add MSS 48679/f. 38. Mowatt and Chalmers also expressed concern over the possible effects of the indemnity. The former warned the Colonial Office. See Mowatt to the Colonial Office, June 13, 1902 PRO T 7/32/9377/02; and Chalmers Memorandum, June 13, 1902, PRO T 1/9852B/14207.
36 Milner and Hicks Beach cautioned Chamberlain not to expect too much from the Transvaal mining industry. Milner to Chamberlain on March 9, 1902, Chamberlain papers JC 13/1/211; and Hicks Beach to Chamberlain, March 1902, ibid. 11/18/180.
37 April 2, 1902, BL Add MSS 48679/f. 59.
38 Mowatt to theColonial Offlee, May 22, 1902, PRO CO 291/49/20034.
39 Ommanney Memorandum, June 4, 1902, Ibid.
40 Chamberlain Memorandum, June 6, 1902, Ibid.
41 These letters argued that the entire future of the Transvaal would be decided in the next eighteen months, and that if British settlement was to succeed, money was required immediately. See Milner to Chamberlain, June 11, 1902, Chamberlain papers JC 13/1/260.
42 Colonial Office to Milner, July 8, 1902, PRO CO 291/39/28004. Milner's itemized list totaling thirty million pounds arrived in early September 1902. Milner Memorandum, September 8, 1902, PRO CO 291/42/40356.
43 July 8, 1902, BL Add MSS 48679/f. 122-3. Ommannery's notes on the arrangement were issued as a confidential Office print. Ommanney Memorandum, August 22, 1902, PRO CO 879/77/700.
44 Graham Memorandum, October 2, 1902; Fiddes Memorandum, October 3, 1902; Ommanney Memorandum, October 2, 1902; and Chamberlain Memorandum, October 5, 1902, PRO CO 291/42/40356.
45 Milner Memorandum, September 8, 1902, Ibid.
46 Ommanney Memorandum, October 8, 1902; and October 13, 1902, Ibid.
47 Hamilton Memorandum, February 12, 1903, Ibid. For further details see the following Hamilton Memoranda: September 15, 1902, PRO T 168/52/233-46 (also PRO CAB 37/62/132, September 15, 1902); and February 12, 1903, PRO CAB 37/64/12. September 29, 1902, BL Add MSS 48680/f. 26. Ritchie replaced Hicks Beach, who had resigned, as Chancellor of the Exchequer in July 1902.
48 The mining industry representatives included: Lord Harris, Wernher, Neumann and Goldmann of Messrs. Neumann, Christopherson of Consolidated Goldfields and S. Farrer of Messrs. Farrer. Ommanney served as secretary. Ommanney Memorandum, October 23, 1902, Bodleian MS Dep. Monk Bretton 93.
49 Bodleian MS. Milner to Chamberlain, December 26, 1902, Milner papers 43/35-45.
50 At the January 15, 1903 meeting, the war contribution was discussed briefly. Chamberlain conceded to Milner's demands for a limited indemnity, but no specific figure was discussed. He also agreed to Milner's reconstruction proposals. “Minutes of the Meeting Between Chamberlain and Milner,” January 15, 1903, Milner papers 48/A/59.
51 Milner related the results of their discussions via telegraph to the Colonial Office. Milner to the Colonial Office, January 26, 1903 PRO CO 291/54/3766.
52 Milner to the Colonial Office, February 3, 1903, PRO CO 291/54/7074.
53 Hamilton Memorandum, February 27, 1903; Chalmers Memorandum, February 27, 1903, PRO T 1 10034B/20234; Bank of England to the Colonial Office, March 6, 1903, PRO CO 291/56/13491; and Crown Agents) 224, Subfiles 1 & 2, “Guaranteed Loan: Issue and Management by the Crown Agents or the Bank of England,” 1903.
54 Mercer Memorandum: “Land Settlement Schemes of Lt. Col. Hill,” December 2, 1902, PRO CO 224/9/49776; and Mercert Memorandum, January 23, 1903, PRO CO 224/913/3131.
55 The Liberal Party took a rather different view regarding the indemnity question. When they were returned to power in 1906 with a substantial majority in the House of Commons, the Liberal leadership chose to abandon Britain's claims to a Transvaal war connribution. See Pyrah, p. 211.
56 See for example: Bodleian MS Milner to McCallum (Governor of Natal), October 23, 1902, Milner papers 20/64; Milner to Gosselin (British Representative to Lisbon), November 21, 1903, ibid.52/24-6.
57 Chamberlain to Ommanney, August 21, 1902, PRO CO 291/41/33177.