HC Deb 06 May 1903 vol 121 cc1522-80

Considered in Committee.

(In the Committee.)

[Mr. J. W. LOWTHER (Cumberland, Penrith) in the Chair.]


I have some little hesitation in addressing the Committee at this stage and in making a statement with reference to the proposed loan, because I have already presented to the House, in the form of Blue-books, all the information which directly relates to the subject; and although, of course, I am most anxious to give any further explanation which may be desired, to add anything in my power to the information already conveyed, I am afraid that, in making a general statement, I may indulge in some needless repetition and to that extent weary the House. On the other hand, I have felt that the House would probably on the whole be glad that I should make something like a summary of the whole of the circumstances which have led to the loan, how it is that His Majesty's Government have undertaken this obligation, and that I should say something more as to the present condition of the two colonies which we are seeking to benefit. I am afraid that in carrying out my intention, I shall stray a little from the direct course, of the debate based on the Resolution before the Committee; but, at the same time, matters in South Africa are so closely interwoven that, if I do stray, these excursions will not be objected to. seriously. Let me say, in the first place, that this loan, which is, as the Committee knows, a guaranteed loan of £35,000,000, for the purpose of the two colonies, is closely connected with the question of the war contribution. It is true we are not dealing today with the raising of the loan of £30,000,000, which will be required in order to pay the British Exchequer the contribution the colonies are willing to make; but the whole arrangement must be treated together; and I might almost say that the support of the Committee to the loan which is now under consideration is indeed conditional upon the contribution of £30,000,000 to which I have referred. I think it would be most convenient, therefore, if I deal in the first instance with the circumstances attending this proposal on behalf of the two colonies to contribute the substantial sum of £30,000,000 towards the expenses of the war. The Committee is aware that during, and subsequently to, the war, the Government have constantly declared that it was their policy to secure this substantial contribution. They have done that through the mouth of my right hon. friend the late Chancellor of the Exchequer, and also in the speeches I myself have made. But we have always laid down two conditions on which alone we thought it possible to obtain this assistance for the British Exchequer. The first condition was that we do not intend to impose any additional taxation in the Transvaal beyond the 10 per cent. profit tax that we have put on the mining industry, and, as regards that, I do not think there ever has been, or can be, any difference of opinion. The whole burden of taxation in the Transvaal was excessively high. There is no other country or population or colony which is subjected to anything like the same taxation per head as the population of the Transvaal. These burdens affect, in the most serious degree, the cost of living, and the comfort, the happiness, and the welfare of the people; and I think it will be recognised that we were right, even while the war was going on, in saying that we did not intend, when the war was over, to impose a heavier burden in the shape of additional taxation upon the existing sources of revenue in the Transvaal. Of course that did not mean that the revenue was not expected to increase, but it meant that we were not going to invent new taxation for the purpose of a contribution from the colony to this country, or were going to make personal pressure on the individual in the Transvaal any heavier than it had been under the old administration. The second condition which we ourselves laid down for our own guidance and control was that in asking for a contribution from the Transvaal for the expenses of the war, we should not put upon them any obligation which would hinder the prompt and sufficient development of the country. That has always been a cardinal feature of the policy of the Government.

No one who has not studied this question carefully on the spot, or even at home, can form a conception of the extremely backward state of our new colonies—backward, I mean, having regard to all the circumstances of the cases. This is not a poor country. It is a country of enormous potential wealth, whether you look at it from the point of view of its mineral resources or of its possible agricultural productions. But in regard to both, owing to circumstances which I need not now develop, the progress made in the expenditure of the capital necessary for the development of its natural wealth has, up to the present time, been very slight indeed, and, in our opinion, one of the great securities for the future peace of our new colonies is to be found in the development of their prosperity. The first security for peace in any country is that the people shall be prosperous, and, therefore, contented. In my judgment, there is every prospect of the greatest prosperity, not only for the present population of the Transvaal, but for a largely increased population; but that depends on the development of all those accessories to industry and production which only the investment of a I large amount of capital can secure. Our view has been that, in the near future, sums which I am almost afraid to name I will be required, and can be profitably expended either by individuals or by the State. It is probable that, in the first I instance, at any rate, it is to the State that we must look, in an undeveloped country, of this kind to find the requisite capital. That, bear in mind, has always been our experience in regard to our experiments and our great successes in colonisation. We sometimes make the mistake of attributing to our colonies and to undeveloped protectorates and lands powers and facilities which are only possessed by a rich and civilised and old country like our own. When you are dealing with these new lands, unless the State can come in and act as the beneficent landowner would act, and find the capital to develop the estate, there is no probability that in any reasonable time any good results would be attained. We have found, as I have said, that in all our colonies, and still more our children have found it in those self-governing colonies which we have handed over to their local administration—in Australia, Canada, and South Africa itself, the State has intervened and found the capital by which the prosperity of the colony has been secured. Enormous sums are required in South Africa for the development of this vast, rich, undeveloped estate. They are required for railways. At the present moment, in the Transvaal and Orange River Colonies, there is little but the main lines of communication. Vast spaces of country, which is undoubtedly as fertile as any country in the world, are waiting for the means of communication before they can be brought into cultivation. What is the good of growing cabbages on the veldt which sell at half-a-crown in Johannesburg if there is no railway to take them there, and if the only way to bring them to the population in want of them is by the process of ox wagons and all the difficulties of unfinished roads. Therefore, great railway development is the first and most essential feature of any policy of the kind that I am describing. The railway must be fed by roads. I have had some personal experience of roads in the Transvaal—not, I believe, in the worst districts; but I can say that they are open, at all events, to improvement, and I have no doubt that a very large sum of money might properly and wisely be spent in putting into fitting condition these useful means of transport.

Then there is the much larger question of irrigation. In such an enormous country as I am referring to, of all varieties of climate, soil, and cultivation, it is impossible to doubt that there are, at the present time, vast spaces of land which are just as fertile as those places in Egypt which, under British rule, have been made to blossom like the rose, having previously been nothing more nor less than desert; and the one thing wanted in a great part of South Africa is water. Under anything like a proper system of irrigation, there is no doubt whatever that South Africa, which at present is depending for all the necessities of life, for its corn, for its flour, for its meat, for everything, in fact, upon foreign supplies, would not only be able to find everything necessary for its own population, but might probably become an important exporter. On the question of irrigation, the Committee will always bear in mind that I am speaking of results which have been achieved in a few weeks, and within a few months after a great, desolating war. But already, in regard to this question of irrigation, considerable experiments have been tried, and always with the best results. In some score or more of cases, employment has been found for the bywoners. For the prisoners and other members of that class who have returned to their homes, employment has been found in making dams on a small scale, to secure the irrigation of what are comparatively small areas. It is believed that when these dams are completed, those who have been employed in making them will be the settlers on the irrigated land thus created, and will ultimately become the owners of the land they themselves have thus helped to make fertile. Let me say, in order to avoid misapprehension, they have been well paid for doing it. It has not been done in the sense in which it is pointed out sometimes that it was done in Ireland, at the tenants' own cost; but wages have been paid to them in order to provide them with subsistence during a short period of temporary necessity, from which I hope they profit, not only by the wages they receive, but by their establishment on the land which they have helped to improve. That has been done in a considerable number of cases, but on a comparatively small scale. Hut no one who is connected with the administration of the Transvaal and Orange River Colony has any doubt that in course of time it will be most desirable that these experiments should be carried out on a large scale. In one of the recent letters I received from Lord Milner he referred to a scheme which was under his consideration for the embankment of the Vaal, which would, if it were successful, make a rich and enormous expanse of territory, and so provide means for a great additional population.

There is another source of expenditure to which I look forward as calculated immensely to raise the whole status of tie new colonies, and that is the schemes of land settlement which at present are only in their infancy. Let it be clearly understood what these schemes mean. It is not an attempt by the British Government— an attempt which would be utterly foolish and ridiculous, and which has never been entertained by any person with any knowledge of the facts—to swamp the Boer population. Nothing of the kind would be possible in my opinion, nothing of the kind would be desirable. But you have got this enormous country, at present so sparsely inhabited that over vast tracts you cannot see a house or the smoke of a chimney, which, nevertheless, has been proved to be extraordinarily rich and capable of a great and increasing production. It is desirable to bring in a larger population, in order to develop this country which otherwise must remain in its present condition. That population, so brought in, will be, to a large extent, British. I hope we may anticipate that; and that would be a good thing. I have had some experience in this matter in visiting some of the settlements already created and one interesting incident, I might mention to the Committee. In a great settlement of bywoners and others in the neighbourhood of Potchefstroom, I was told by Boers, not by Englishmen or officials, who might be prejudiced, that the settlement had already derived the greatest possible advantage from the accidental fact that a few families of Italian settlers had been placed on the same ground. I was assured that the example they gave of activity and energy, and the superior methods they brought to bear on the cultivation, had already had marvellous effects on their Boer comrades, and that the prosperity of the settlement was likely to owe a good deal to this introduction of new blood; and the same people, and others in the course of my travels, I found perfectly ready to welcome new blood, expressing a desire that in different parts of the country, where now only Boers are settled, a number of English families should be brought in to introduce new methods and to set this example of industry and of activity and generally to bring cultivation more into harmony with modern ideas and conditions. There are, therefore, four objects for which large sums of money have to be expended, and upon which I say that the greater the expenditure, and the more quickly it can be made, the more certain will it be that not only the peace (for as to that I never had the remotest doubt) but the more speedy will be the restoration of the country to its former prosperity, the increase of its prosperity and of its riches, and consequently the security which will be given by a population all of which will be in a prosperous condition.

I have said that there were two conditions which we laid down—one was that any contribution from the colonies should not necessitate the increase of the heavy burden of personal taxation already borne; in the second place, that it should leave the way free for this development of improvements which it is important to assist. I now add to that a third condition, perhaps not publicly declared before, but which I think the Committee will readily accept, and that is that any contribution which is to be made by these new colonies should be made willingly, voluntarily, and not be enforced or imposed upon them by the superior Power. I ventured when I was in South Africa to promise—at all events oil behalf of my own Government, and I believe I can safely do so on behalf of the whole House of Commons—that, although technically they were Crown colonies, and, as such, subject in the last resort to any ultimatum that might be propounded from Downing Street from the Colonial Office, that the Government would treat them in all matters in which Imperial interests are not directly concerned as if they were self-governing colonies. I am perfectly certain that that is the only policy open to us. That on its own merits it will stand as a wise and prudent and an honourable policy, I do not doubt, but my point is that it is the only possible policy. You are dealing in South Africa—in the Transvaal and Orange River Colony—with a very exceptional state of things. It is not the ordinary case of a Crown colony where you have a native population, more or less, by the necessity of the case, to be treated as children. You are dealing with the Boer population to begin with, intelligent no doubt in their way, and accustomed to a great measure of independence; and you are dealing with a British population which, in my opinion, represents the very best elements of the British character, and which also, therefore, has the British love of liberty and independence with regard to its local affairs. Well, Sir, I say then that it was a necessity, in my opinion, in regard to any contribution to be made, that it should be made voluntarily. It was not to be supposed that the Boer population, our recent opponents, should eagerly come forward to contribute to the expense of a war in which they have been defeated. But I think I may fairly say in regard to them that, although they are not eager in this matter, they are practically indifferent; and during the whole time I was in. South Africa, when I met again and again individual Boers and their representatives on deputations, there was only, as far as I can recollect, one single occasion on which any reference was made by any Boer to this matter of the contribution, and then it was only to suggest that the matter should be delayed, that, in fact, it should be left to be ultimately decided at a time when in the future the colony became self-governing Why were the Boers indifferent? I think I can give a good reason for it. In the first place, the terms of surrender provide that no taxes should be put on the land, the thing in which they are chiefly interested, as a war contribution. That does not really preclude the Government of the Transvaal at some future time from establishing a land tax, supposing such a course was thought desirable; but it absolutely precludes us, as a matter of honour, from putting on any tax which would in any way be associated with the war contribution. In the second place, I may say the Boers, who generally supply their own wants from their own farms and import very little, would in any circumstances contribute a very small amount towards any such amount as might be paid over for this purpose; and any contribution that they did make would be altogether insignificant in comparison with what we are doing for the Boers in the way of granting them loans to assist them, and in the way of compensation of various kinds which we are giving them in order to enable them to restore their position. The cost of this contribution will fall chiefly on the British population, and, of course, mainly on the principal industry of the Transvaal. Under those circumstances, it is important to know what is the British feeling in regard to this matter; and to me it is a matter of some pride in my countrymen, some satisfaction to my conviction of the general patriotism of our colonial fellow-subjects, that in every case, from the highest to the lowest, there was a universal acceptance of the principle of the contribution, and a universal willingness to make sacrifices in order to meet it. That was apparent among those who are responsible for the conduct of the mining industry, upon which the chief burden will fall. It was also evident in the case of the trading and professional classes, and it was not less apparent in the case of the working classes generally. In regard to that an incident occurred which I think of great interest. When the terms and conditions of the contribution were submitted to a representative assembly, at which all classes were present by their delegates, a resolution was moved approving the arrangement, and it was carried with four dissentients. The four dissentients were two delegates of the Miners' Association and two delegates of the Trades Union Council. At first sight that seemed to imply that the working classes of the Transvaal—there, as elsewhere, the great majority—were opposed to this arrangement. But before I was a day older I received from working men and associations of working men letters full of indignant protest against what they assumed to have been the action of their delegates, and declaring that they as well as any other section of the community were not prepared to shirk their obligations in the matter, but were willing to take their part in such general contributions as were thought necessary to the expenditure of the Empire. The whole thing turned out to have been a misapprehension. The four delegates of the various working men's associations did not intend to vote against the resolution. They were voting only on a minor point—the question whether a public meeting should be held on the subject—and they, came to me later on with a desire that their names should be added to those of all the rest of the representatives. Accordingly, an absolutely unanimous vote was obtained from this most representative meeting in favour of the proposals which were made.

The principle of the contribution having been accepted, it became necessary to consider what should be its amount; and what should be the method of providing it. I must say hare that in going to South Africa I had in my mind an arrangement which, ultimately, I altogether abandoned. I was prepared to propose that any contribution should be considered as a charge upon the future assets of the Transvaal; that, in accordance with the conditions that it was not to interfere with the present development, or increase the present burden of taxation, we should earmark certain new sources of revenue to be derived from new discoveries, new mineral resources and matters of that kind, or from the increased product of existing taxes, and apply them from time to time as they occurred, to the settlement of the contribution in aid of the war expenditure. Of course, under those circumstances, it would have been necessary to fix the maximum, and I should have been prepared to fix it very high. In fact, I do not see how you could fix it low. In a matter of this kind, where so much is speculation, you must take into account that the development may be even greater than the most sanguine of us venture to anticipate. I was prepared to fix that maximum sum at £70,000,000 or £100,000,000. I have seen this matter referred to under some misapprehension. But it must be borne in mind that if we had fixed any sum of the kind—say £100,000,000—it would be only a deferred payment, which would have to be extended over a great number of years, which would have been small at first, although it might have increased afterwards; and, according to the best calculation I was able to make, the present value of £70,000,000 or £100,000,000 completed fifty years hence—which was the shortest time in which I thought that arrangement could be completed—would have been anything between £30,000,000 and £50,000,000. Therefore the actual value of the alternative proposal, which, at I say, I came afterwards to abandon, must not be put at £70,000,000 or £100,000,000, but it must be put at whatever may be calculated as the present value of a deferred payment, with a maximum of that amount. But when I got to South Africa and entered into communications with those who were best able to advise me, and who were most interested in the matter, I found a number of serious, and to my mind insurmountable, objections to the course which I had previously proposed to take. In the first place, an arrangement of that kind would have given no immediate relief to the British taxpayer. It would only come in from time to time, and in the first instance the sum received would have been extremely small; and the British taxpayer would have obtained no relief, either as a taxpayer, or as a person responsible in his proper proportion for the National Debt. In the-second place, a scheme of this kind was of course, purely speculative. I myself entertain the most sanguine views as to the future of the Transvaal. But other-people may say that those views are exaggerated and optimistic, and it is impossible for any one to prove the contrary. If a proposal of that kind had been submitted to the House of Commons, other Members, whose judgment would have been just as good as mine, and whom I could not have proved to be wrong, might have said that a compromise of this sort was. not likely to be worth the paper it was written upon, inasmuch as those large sources of revenue from which I hoped to derive these sums were not likely to arise. But from the point of view of the Transvaal and good government there was another view. Earmarking sources of internal revenue would involve, at any rate, supervision of the internal finance of the Transvaal by the British Government and the British Treasury; and every tax that was removed might lessen the security. The question, for instance, of legislation in order to secure for the State its fair proportion of the undeveloped riches of the Transvaal would have to be submitted to the British Treasury, and have to be considered—as it would be their duty to consider it—not from the point of view of the advantage of the Transvaal, but from the point of view of the probability of the Exchequer's not gaining from these sources all it had expected to obtain. I was told, and I readily believed it, that a provision of that kind, carried on over a great number of years would be found to be absolutely intolerable, would produce the greatest irritation and friction; and that at all hazards we ought to get rid of it, if possible. Lastly, I became convinced, especially when I learned more of the qualities, the great qualities, of the population of the Transvaal—that love of independence, that self-confidence which possess so many of our colonies, and especially possess those active, energetic men, who have gone as pioneers of this new industry, into this new country—when I appreciated all that, I came to the conclusion that a contribution which depended upon annual amounts paid over year by year, for a period of certainly more than a generation, was a possibility which was liable to many serious objections. Taking the people as they are now, full of a lively patriotism, full of intense sympathy with the mother country, and of a deep gratitude for all that she has done for them, that, or indeed any other arrangement might have been readily accepted by them. But who is bold enough to say that thirty years hence an arrangement of this kind might not be thought very different? Political agitation might be brought to bear against what would then be called a tribute to the mother country; and, even if the agitation failed in its purpose, still the relations between the colony and the mother country might become strained.

For all these reasons I was thrown back upon the arrangement which we have adopted, which was to fix the contribution of the Transvaal at the largest possible sum which it could pay, having regard to its present resources, in the course of the next year or two; and the proposal which I ultimately made with the approval and authority of my colleagues to those with whom I was negotiating was by them—and I think I may say by the British population in the Transvaal generally—accepted unanimously. It was that the Transvaal accepted as their contribution of the British cost of the war a sum of £30,000,000, payable in three annual instalments of £10,000,000 each, which would be provided by a loan secured solely upon the assets and resources of the Transvaal, and not guaranteed by the British Government; and, in order that the success of the loan might be made assured and to show their own confidence in the prospects of this country in which they are interested, the financial groups associated with the gold industry undertook to underwrite the first £10,000,000 of the loan so as to make its issue an absolute certainty. The loan as suggested was to be a 4 per cent. loan; but before I left South Africa I explained to those with whom I was in contact that if it should appear—as I myself think it will appear—that the credit of the Transvaal will justify the issue of a loan at a lower rate of interest, we should, without hesitation, adopt the course of issuing it below 4 per cent. In that case, however, the obligation of the mining groups to underwrite the £10,000,000 would, of course, fall to the ground. We should either abandon the condition altogether as being unnecessary, or, if we desired that it should still stand, we should have to engage in negotiations with the mining groups to see how far they would be willing to accept their portion of the loan at a lower rate of interest. But that will be decided when the loan is brought forward. All I wish to say at the present time is that, although the negotiations took place on the basis of a 4 per cent. loan, it was not certain that it should be issued at that rate, because the general condition of the Transvaal might probably justify its issue on more favourable terms. What are the advantages of this arrangement? In the first place it is a final arrangement; after three years we shall hear no more on the subject. The Bill will have been paid, the claim will have been met, and we shall have no longer any ground whatever for intervention, and all interference in the internal finance of the Transvaal will have been avoided. The loan cannot be repudiated—not that I think such a course of action would ever, under any circumstances, be possible in a British colony, but under the existing arrangement it is impossible. It is not a case of repudiating an obligation to a Government, but it would be a case of repudiating obligations to all those who should have taken up the loan, to all the private subscribers; and a country which did that would, of course, almost for ever, at all events for an immense period and until it recovered its position, absolutely destroy its credit. Now, if there is one country in the world which has need of an extensive and unlimited credit it is the Transvaal. And, therefore, even if I could conceive it possible that anybody could be dishonourable enough to suggest a repudiation of this obligation, I say it would not be able to do it. And, lastly, as I have said, this contribution, large as it is—and remember it is large if you will only take into account the white population of the Transvaal and the heavy burden which they already have to bear—has been willingly accepted. Sir, I say, having regard to all the circumstances, the losses which the great industry of the Transvaal suffered during the war, some of them direct losses, others indirect, owing to the cessation of the industry—considering the fact that up to the present time they are still hampered by the lack of labour, considering the enormous burden of taxation which the Transvaal population bears, and which amounts at the present time to considerably more than £10 per head—considering all these things, I say this contribution is indeed, in my opinion, a fair and just contribution from the colony, and may well be regarded as a generous proof of the solidarity between the colony and the mother country.

Before I leave this part of the subject, I should say that I have also to deal with the case of the Orange River Colony. At the present time the finances of the Orange River Colony show an equilibrium. The colony has never hitherto been considered as a rich colony; it has hitherto been entirely an agricultural colony, and as long as that is the case it would be perfectly unresaonable to expect from it any contribution whatever towards the cost of the war. But arrangements have been made whereby the Legislative Council of the Orange River Colony will take upon itself in behalf of the colony a hypothetical liability of £5,000,000, as a contribution towards the cost of the war, to be charged upon new resources—that is to say, to be taken as a charge upon any sums which may hereafter be received by the Government of the Orange River Colony in connection with new discoveries of mineral resources. I think myself such discoveries are, to say the least of it, extremely probable, if not almost certain; and I think, therefore, that we may probably look forward to an additional contribution of £5,000,000 from this source without imposing any additional burden on the population of the Orange River Colony. But I do not press that. The arrangement is, as I have said, purely hypothetical, and I only mention it now in order to make the whole situation clear.

Now these arrangements for contribution are connected with and conditional upon the loan which I am now recommending to the Committee. That loan I prefer to describe, in order to distinguish it from any other, as the Development Loan. It is a loan of £35,000,000. Beyond that, as to the price of issue the time of issue, and all the rest, I must leave members of the Committee to learn the particulars from the prospectus; and I am sure they will feel with me that there are obvious reasons why no premature disclosures should be made on these points. But I would like to point out with regard to this loan of £35,000,000 that the major portion of it is not a new charge upon the Transvaal. The major portion of it is required in order to discharge existing liabilities, and as a substitute for existing debts. In the first place, there falls to be provided out of this new loan, repayments to the British Exchequer. They are as follows: Advances made by the British Exchequer in aid of the Transvaal and now to be repaid. In the first place, £1,500,000, which was against a deficit in the first year of the British Transvaal administration, when there was practically very little revenue: £3,000,000, a loan granted to both colonies in order to meet the loans which the terms of surrender authorised to be granted without interest in the first instance for a period of two years, and after that at 2½ per cent., in order to enable the Boers to restock their farms and make other provisions: thirdly, £1,000,000 advanced to the Central African Railway—the railway of the two colonies—for the purpose of providing additional rolling stock; and, lastly, £500,000 for repatriation and resettlement. The total is £6,000,000 to be repaid to the British Exchequer, which, of course, forms part of the charge borne by the Transvaal towards the cost of the war; and the sum which we shall receive in reduction of our previous expenditure will, therefore, not be £30,000,000 but £36,000,000. There is another sum which I have not referred to because at present it is under consideration. The military claim from the Transvaal a sum of about £1,000,000 for works executed by them in the way of railway extension and repairs. The Transvaal Government dispute this sum. It will have to be a matter of amicable arrangement between the authorities here and the authorities in the Transvaal, and, therefore, I take no account of it in the present statement; but possibly a sum of between £300,000 and £1,000,000 will come from the Transvaal to the British Exchequer in addition to the £6,000,000 to which I have referred. Another £2,000,000 will be repaid by the Transvaal to cover the compensation which we always declared during the war we would exact from the new colonies for the injury done to loyalists in Cape Colony and Natal by the first invasion of the Boers. This, added to the£6,000,000, makes £8,000,000. Then there are other charges for repatriation and compensation, including military receipts, of£2,000,000.

It may, perhaps, be a matter of interest to the Committee, if I am not wearying it, to know how this arises. There have been many funds, and it has led to great confusion. There have been many claims on the Imperial Government and on the Colonial (Government for compensation in connection with the war. Some of those are what I may call claims ex gratia. For instance, the Government agreed by the terms of surrender to apply a sum of £3,000,000 as a free gift. That was an eleemosynary gift, and other sums were also applied in the same way. But in addition, there were claims as of right—claims which arose under receipts given by the military authorities for goods commandeered or used by them in the course of the war. A second and a much more difficult item were claims arising under the proclamations which were issued by Lord Roberts, Lord Kitchener, and, I think, by Sir Redvers Buller, promising protection to Boers who surrendered and who subsequently lost their property. When I got out there I found that besides the civil commission which was sitting to deal with matters for which the Transvaal Government and the Orange River Colony were responsible, there were a number of military commissions dealing with claims upon War Office funds—claims under receipt and claims for compensation under the proclamations. This was an unsatisfactory arrangement. Owing to military exigencies the chairmen of the military commissions were constantly being changed, so that there was no continuity of policy. When a man had got to know his business well, and to understand the kind of questions likely to be presented to him, he was, by the necessities of the case, sent home or removed with his regiment, and another man had to learn it all over again. It was estimated that to conclude the work would take three or four years at the least. There was great dissatisfaction with the decisions of some of these commissions, some of which, after careful consideration, I found myself unable to justify; and altogether the progress of the country, the restoration of the country, was being most grievously hindered by the uncertainty as to what was to be the result of all those claims and commissions; and accordingly, with the authority of the Home Government, and with the assent of Lord Milner and the Government of the Transvaal, we decided to make a new arrangement. We decided to sweep away altogether the military commissions, and to unite the whole business in the hands of the civil commission. We made a calculation which appeared to show that in addition to what had already been paid out by the military anthorities, they were still liable for £4,000,000, much of which, indeed, they might have contested, but which, if not admitted, if generally repudiated, would leave behind a sense of soreness and injustice in the minds of Boers and British alike, which would be highly injurious to the future administration of the country. Therefore, we agreed that by the payment by the military authorities to the Transvaal of £3,000.000 the Transvaal Government would take the whole responsibility on its own shoulders. In doing that the Transvaal Government assumes that the cost to it will be at least £1,000,000, probably more. But while, on the one hand, the Imperial Government secures the great advantage of a final settlement and gets rid of a business which it could not efficiently control, the Transvaal Government has the enormous advantage of being able to treat this as a matter of general policy, not merely from its financial aspect, but having regard also to the question of conciliation; and under these circumstances the charge is now entered against a new loan of £2,000,000, £1,000,000 of which certainly, and possibly a good deal more, will be required in order to meet fully and fairly, justly and generously, the claims which arose under the military operations. The conversion of the old debt which is now 5 per cent. is, of coure, an economical operation; that will require £2,500,000. In addition to that it is proposed to purchase all the existing railways, and an estimated sum—it can only be an estimated sum—of £13,000,000, is assumed for that object. The total of these sums is £25,500,000, out of a total loan of £35,000,000; and the Committee will see that the whole of this sum is not a new charge, but merely a re-arrangement of existing charges. What remains is £9,500,000. Of that, £5,000,000 are to be expended, as quickly as they can possibly be expended, in the development of the railway system. And in regard to that the Committee have before them in the Blue-book a full account of the discussion of the conference of the railway authorities at Bloemfontein—a conference which, I must say, was most satisfactory, inasmuch as it disclosed on the part of all concerned a general desire to meet fairly all the exigencies of the situation. The sum of £2,500,000, is appropriated for land settlement. I may say in the figures the Committee may have found a sum of £3,000,000, but half-a-million of that is a previous grant from the British Exchequer which is now repaid. The new sum is £2,500,000. And then public works, which include roads, irrigation works, and public buildings, and matters of that kind, are put down at £2,000,000. That makes the total of £35,000,000; and I have only to add with reference to the application of the loan that it is provided any savings which may be made, are to be applied to new development. That is to say, if we can reduce in any way, without injury to the public credit and the general administration, the sums which have been put aside either for the purchase of railways, compensation, or repatriation, the sums saved will be at the disposal of the Transvaal Government for further development in the way of railways and other public works.

Now I come to what I have always considered to be a most important matter, and it will be a very satisfactory part of my statement to learn what is the security which is offered for this loan which the House is asked to guarantee. The Development Loan is £35,000,000. I will not say a word as to the price at which it is to be issued or the rate of interest, but I must take a figure for the sake of my calculation as to the cost which the loan will impose, and I will assume 4 per cent. as the charge for the interest and the sinking fund together—that is to say the charge for the development loan will be £1,400,000 per annum. What have we to secure it? In the last resort that loan is secured on the whole of the assets and revenues of the Transvaal colony, on its gold, coal, iron, copper; all its revenues of any kind, all its vast resources may be in the last resort made responsible for the payment of the interest and the sinking fund of this loan. But I do not believe under the arrangement we propose that we shall ever have recourse to that security. In the first instance, the loan is to be a charge on what I will call the common fund of the two colonies, which Lord Milner proposes to establish immediately with an inter-colonial Council representing the two colonies to advise and to administer the finances. What is the reason for this? I wish not to minimise but to magnify the importance of this new development under the administration of the two colonies. For the first time they are to be brought together by a common purse. It is on the understanding and the belief that some of their interests cannot possibly be separated. Let it be understood that they have special idiosyncrasies of their own, and nothing would be more mischievous or unpopular than to bring the two colonies under one single government. Their traditions are separate, their modes of administration previous to the war were separate; and, though many times we have discussed and criticised the administration of the old Transvaal government, we have admitted the general propriety of the administration of the Orange River Colony. There is a great local patriotism in these two colonies as between themselves. It is not a question of Boer and British, but it is that kind of particularism which makes, in fact, one corporation jealous, in a sense, of a competitor which happens to be its immediate neighbour. We cannot ignore it. We are not going to ignore it. It is bred in the bone, and it would be unwise not to give effect to this differentiation. But, on the other hand, there are many things which cannot be separated.

Take the case of the South African Constabulary. We have arbitrarily divided the cost of the South African Constabulary, not with regard to its proportionate advantage to one colony or the other but with some regard to the proportionate ability of each colony to bear the charge. We have charged the Orange River Colony with £250,000, one-fifth of the charge, and the Transvaal with four-fifths. But there is no such distinction to be drawn as regards any of the benefits which this force may confer on the country it is established to protect. I say here that I attach the utmost importance to the South African Constabulary as a great civilising and uniting influence. It may have been regarded in the past exclusively from its military capacity, and indeed during the war, while under military command, some of the most gallant actions of the war conferred the greatest credit on the members of this force. But I was impressed when I was there by the officers and the men that this part of their work was over; and we expect from them in peace greater services than those which they had rendered in war. We regard them not as a garrison but as the protectors and the friends of the people. If the House will consider the circumstances in which its administration has to be conducted, and the immense spaces to be covered, they will see what I mean. How can you bring under a central government and in personal touch isolated farmers hundreds of miles away across a trackless veldt? It is impossible. Their grievances, if they exist, could never come, in ordinary circumstances, to the knowledge of the authorities. There is no close sympathy between the government and the individual members of the community whom it has to control. The South African Constabulary already has made its position. Again and again I found on entering into conversation with the farmers that the men were learning the language of the country, were becoming the friends of the people, were welcomed at every farmhouse, doing little jobs for the inhabitants, carrying their letters and parcels, giving information, settling their petty disputes—so much so that in one case I had a serious complaint from one of the resident magistrates that his duty was becoming almost a sinecure in consequence of the action of a sergeant of the Constabulary settling all the differences without bringing them to his august tribunal. I can sympathise with the resident magistrate, though I could not but express my entire approval of the action of the sergeant of Constabulary. That is what is happening, and it will happen if only the spirit which prevails among officers and men continues. Therefore, I attach the utmost importance to the continuance of this force, to its permanent continuance, on the same footing on which it is at present. But if it is to be divided as a charge between the two colonies, which differ most materially in their financial resources, it may be well said by the administrators of the Orange River Colony that, however admirable this force is, we cannot afford it On the other hand, the Transvaal, rolling in wealth, might be well able to pay for it. It must be remembered that the Transvaal is interested as well as the Orange River Colony in all that conduces to the prosperity and peace of the whole country.

Then, again, take the case of the railways. How can you separate the interests in the railways? The railways of the Orange River Colony are not mainly or principally for local distribution. They are through lines. They carry the products of an agricultural constituency to the Transvaal and the great industrial centres of Kimberley and Johannesburg; and if that is to be done it ii impossible to appropriate with any exactitude the respective liabilities of one colony or the other, or the respective share or benefit which they ought to obtain. Therefore, having regard to this and other matters, Lord Milner proposes to create a common fund for the two colonies, with revenue derivable from the two colonies and with an expenditure which otherwise will fall separately on the two Colonies. One word more. I have said that I wish to magnify this first step in the new development of colonial administration. The Committee must see that this is the commencement of the policy of federation that we have always looked forward to. I do not wish to be understood as prematurely anticipating the full completion of this policy. It is our policy, to be carried out as quickly as we think it advisable for settlement. But I attach the greatest importance to the reasoned arguments so well put by the Boer generals when they declined to join the Legislative Council of the Transvaal. In the existing state of the two colonies, where the desire of every reasonable and intelligent man is to get rid of all sources of difference and to unite and cooperate in order to restore the prosperity of the country, it would be most undesirable to provoke political agitation. Therefore, while I look forward to that crowning of the edifice and believe it may come much earlier than some of us originally anticipated, I would not like—in saying that this is the first step towards not only self-government in the Transvaal and in the Orange River Colony but towards the federation of South Africa—I would not like the Committee to think that I looked for it as the immediate consequence of what we are doing. But certainly it will pave the way to that consummation and enable us to gain considerable experience. Meanwhile the service of the loan will be a first charge on the net revenues of the Central African Railway. In the Blue-book it will be seen that that revenue is put by Lord Milner at at least £2,000,000 sterling. In a later despatch or telegram which I have received from him he feels that he may now confidently say that it will not be less than £2,500,000; and really one of our difficulties has been how to deal with the extraordinary growth which we have to chronicle and which comes upon us as a constant surprise month by month as we proceed with our return. Lord Milner has always erred, if at all, on the side of caution in his estimates, and we may take it, therefore, that the revenue of the common fund will be 2½ millions; and that is estimated after the reductions which have been made by the Railway: Conference in connection with the present exorbitant rates. These reductions are calculated to result in a loss of revenue of £500,000 per annum on the through traffic, and of £250,000 per annum on the local traffic, or altogether a loss of £750,000. And, after that loss, Lord Milner is now confidently able to calculate on a net revenue of 2½ millions. This relief to the consumer in the Transvaal and Orange River Colony of three-quarters of a million does not nearly show the whole advantage that he is going to obtain, because it is accompanied by a reduction in the railway rates of the maritime colonies—Natal, the Cape—and Portugal, and this reduction is estimated at another £300,000, so that the consumer will be benefited to the extent of over £1,000,000 a year, chiefly in regard to the necessaries of life, when these rates come into force, which will be almost immediately. As an illustration, I may say that a reduction of forty per cent has been made in wheat and flour and in articles of that kind; and all the necessaries of life which have been so exorbitantly charged will now be very much decreased in rates. The charge of £1,400,000 for the loan leaves a surplus of £1,100,000 to the common fund, without any question of resorting to any additional security which might be given by the Transvaal Government. But that does not represent the position of what I have called the common fund because it is the intention of Lord Milner to put upon it as second charges other expenditure; in the first place, the expenditure of the South African Constabulary, which is £1,500,000, and then some other joint expenditure amounting, roughly, to £200,000. The total expenditure of the common fund for 1903–4 is, therefore, estimated at £3,100,000. The total income is £2,500,000, and the deficit on the common fund is, therefore, £600,000, which has to be provided out of the separate resources of the two colonies.

That brings me to the separate finances of the two colonies. How do they stand with this ultimate liability hanging over their heads—this liability of £600,000 over and above their ordinary administrative expenses to be used for the purpose of filling up the deficit in the common fund? I must warn the House that the estimates of the Transvaal are perpetually changing. Every month we get a new estimate, but it is always a better one than the last. Never yet have we had to fear anything in the nature of reaction. I, of course, can only give the latest returns; but my own hope and expectation is that, favourable as they are even they will be improved upon. But, according to the latest estimate, the revenue of the Transvaal for 1903–4, apart from railway receipts, will be £4,500,000. The normal expenditure, apart from the constabulary, will be £3,000,000, leaving a surplus of £1,500,000. The Orange River Colony's revenue will be £500,000, and the expenditure £500,000, leaving no balance but constituting an equilibrium. This estimate is made only after deducting the loss of revenue which will follow upon the intended changes in the Customs duties. There, again, the old Customs duties were inordinate in amount, and, above all, they were grotesquely bad finance in the way in which they were levied. They were levied on the necessaries of life. [OPPOSITION CHEERS.] Yes, but without the direct taxation which in some more favoured countries accompanies the more indirect contributions. But in the case of the Customs duties of the Transvaal, which are, of course, the main element of its revenue, they did undoubtedly press with enormous severity upon the working classes. I had a calculation submitted to me of what it cost in Johannesburg for a decent working man and his wife, with the ordinary family of three children, to live. With house rent and the mere necessaries of life, I was told he could not live decently under £24 a month; and that when he gets £30 a month—as a skilled artisan does—the balance which comes to him for luxuries and other expenses is only £6 out of the £30. That state of things has been brought about by a number of circumstances which cannot be altered all at once; but it is largely due to the extravagant duties and railway rates upon the necessaries of life. The change which has been made involves a loss to the Transvaal of only £130,000 per annum—that is to say, the balance of loss due to the revision of taxation enables a reduction on the necessaries of life much greater than that. The reduction is in part made up by heavier charges on spirits, and articles of that kind. But the benefit to the people is much greater than the apparent benefit shown by the loss to the Transvaal revenue, because the maritime colonies, under a little gentle pressure, and no doubt animated by the most friendly intentions, have agreed to reduce to a minimum the old transit charges for goods paying at the ports and intended for the Transvaal; and it is anticipated that the saving under that scheme will be at least £300,000, so that the total benefit to the consumer can be reckoned to be between £300,000 and £400,000; while to the most necessitous consumer it will be a good deal more than that. The Transvaal, after making this concession, will have a surplus of £1,500,000. Deducting the deficit on the common fund, there will be a surplus still of £900,000. Next year—that is, in 1903–4—the charge will come upon the Transvaal for its first instalment of the contribution—which is not guaranteed by us, but is a charge on the assets and revenues of the Transvaal—and that will be £400,000. Deducting that from the surplus of £900,000, there will be a. surplus for 1903–4 of £500,000. Next year, assuming that the revenues of the Transvaal do not increase at all, there will be an additional charge of £400,000 for the second instalment of the loan, and the surplus will be reduced to £100,000; and in the third year the whole loan will be issued, and the total charge for it of £1,200,000 will come to bear. Then there will be a deficit of £300,000, if there is no increase in the revenues of the Transvaal. But Lord Milner says—and I think every one will agree with him—that, in the course of those three years, he thinks that it is a most moderate estimate to assume an increase in the general revenue of £600,000. The final conclusion of the argument, therefore, is that, when the Transvaal and the Orange River Colonies have paid for the £35,000,000 loan, and for the £30,000,000 of their contribution, and have made these enormous reductions on the charges on their population, they will still have for further development a surplus of at least £300,000. I say that that is an astounding result. It is now less than twelve months since the conclusion of the war; and, during that time, everything in the way of restoration has had to progress slowly, industries have had to be restarted, and are not yet in full growth. With regard to all this development, we are assuming it to be a charge which will bring with it no profit, although in many ways we believe that the loan will be very profitable, and that, whereas 4 per cent. may be paid as sinking fund and interest, the net revenue will not be less than 6 per cent. Yet in spite of all these conditions I can show such a Budget as I have had the honour of expounding.

There have been in past times and in recent times most bitter criticism of Lord Milner and his policy, because, after all, he only did his duty to those he was sent to protect, and his duty to the Government that instructed him, and to the country, whose almost universal approval hailed his appointment. But that is past; and whatever differences of opinion there may have been, and may be now, as to particular items of his policy, there is not a man who would be so ungenerous as not to congratulate him on this marvellous result of his energy, his ability and his unexampled devotion to duty. I cannot but recall, though I am not inclined to dwell upon it, the predictions which have been made by those who have been opposed to our policy in regard to its financial results. While I was in South Africa, during the most delicate and difficult task of the negotiations, a message was telegraphed over that the great organ of the Liberal Party said that I was not going to get a penny, and that I should come away empty-handed, as I deserved to do. How that was calculated to help an ambassador the Committee will understand, but at all events it represented, no doubt, an honest opinion. It represented an opinion, which I have heard expressed in this House again and again, that after such a war, and in such a country, nothing was to be expected except desolation, misery and that ruin, and that the charges of peace would be even greater than the charges of war, and that we were placing on the shoulders of the British taxpayers new and terrible responsibilities. I do not go back to that except to hope that, as these were mistaken estimates of the capabilities of a country which has become our country it may at all events encourage us,—pessimists like my right hon. friend the Prime Minister, optimists like my right hon. friend the Chancellor of the Exchequer and myself—it may encourage us all to take a favourable view of the future. If I am asked what is the reason for this, which I have described as an extraordinary result, I am indeed at a loss to give anything in the nature of a full explanation. I can only fall back on what was said to me by a Boer leader, by a man who fought against us gallantly to the very end, who since then has helped us in the work of repatriation, and at the present moment sits as a fitting representative of the bravest of the Boers on the new Legislative Council which has been created for the Transvaal. I can only say, in his words, when I asked him how it was that the value of land had gone up so much since the war, "I suppose it is because we have a stable and progressive Government." We have got a stable Government. We have in Lord Milner and his assistants, Sir Arthur Lawley and Sir John Goold-Adams—men who are imbued by his spirit—we have got a progressive Government. We have got an honest Government. We know now, at all events, that every penny collected from the taxpayer will go back for the benefit of the taxpayers, and will not go into the pockets of individuals or of corporations. In that way this great result has been achieved; and I certainly can truly say that my most sanguine expectations—and I have always been sanguine—have been more than realised.

There is only one other word I would like to say before I sit down. I admit it is rather collateral to the main subject. There has recently been held at Bloemfontein a conference of all the colonies. I believe that in its completeness, in its thoroughly representative character, it is really the first of the kind in South Africa; and the result—the extraordinary unanimity of the decisions and the satisfactory character of the conference as a whole—justifies us in forming very satisfactory conclusions as to what may happen in the future when the union becomes still closer. At this conference the arrangements which I have referred to as to Customs and other matters were carried through, I believe all the resolutions, at all events the main ones, were unanimous. Each colony was represented In the case of the Transvaal there were one or more representatives of the Boers. In the case of the Cape there were one or more representatives of the Dutch, so that it was not exclusively a British conference. Among their recommendations was one which I think is worth the attention of the House of Commons. It is the recommendation—I do not think it can be called a decision—to the various Legislative Assemblies of South Africa to give to Great Britain a preferential Customs rate of 25 per cent. I am not prepared now to predict what the ultimate end of that recommendation may be, but at least I think it must be taken by everybody as an evidence of true loyalty, as a recognition of obligation which we most gratefully acknowledge. I was told, I have been told, that when this matter comes up for discussion in the Cape Parliament the Dutch will object. I very much doubt that. I do not know why they should object, and at all events it will be contrary to the anticipations which I formed when I had the opportunity of conferring with the leaders of the Dutch party. They assured me, in the fullest possible terms, and I gladly and sincerely accepted their assurance, of the loyalty of the majority of our Dutch fellow-subjects in the Gape Colony to the British connexion and the British Crown. I ventured to tell them that I thought that hit her to the Dutch had been too provincial, that they had not sufficiently appreciated the fact that they were not only citizens of a colony but also citizens of the Empire. I confess I was very glad to find that in this view, among the leaders at any rate, there was no want of sympathy. On the contrary, they seemed to share my hope, I will not dare to call it a conviction, that, while it is absolutely impossible and would be undesirable to assimilate Dutch and British so that each should lose their individuality, still you may find for both of them, as for all the races under the British flag, the true link of union in their common devotion to Imperial interests. If this is carried out, and I am not without hope that it will be carried out, the fact that the Dutch find themselves able to support such a resolution as that which has been made by their representatives at the conference, is evidence for them as well as for us that they do desire to draw closer the ties which connect them with the other parts of the Empire. I referred to this as only collateral. It may be considered irrelevant. It is interesting at any rate, and I say it is one of those things which you have to take into account in considering such a loan as this. We are, for the first time, asked to guarantee a larger sum for our colonies than we have ever been asked before. This is no doubt a precedent, and deserves, therefore, careful attention and consideration, although in this case I believe there is not the shadow of a shade of risk connected with it. Still, the House of Commons is quite right if it takes into its account all the possibilities, and above all, if it considers the spirit of those whom it is endeavouring to assist. We have in other cases made loans and guaranteed loans to foreign countries without much assurance of any reciprocal feeling or obligation on their behalf; but now we are asked to do it for our own fellow-subjects, for our own children, for those who have given evidence of their affectionate regard, of their acceptance of the obligations as well as of the privileges of our common position. It is on that ground that I submit this loan and that I recommend it to the Committee as not only a safe, prudent, and wise measure of statesmanship, but also as the fulfilment of an Imperial duty.

Motion made, and Question proposed, "That it is expedient to authorise the Treasury to guarantee on the security of the Consolidated Fund the interest of a loan to be raised by the Transvaal Colony not exceeding in the aggregate an amount sufficient to raise £35,000,000, and the principal of any such loan by means of the guarantee of Sinking Fund payments, and to provide for the application of any sums paid by the Transvaal or Orange River Colony in respect of expenses incurred in or incidental to the prosecution of the late war in South Africa."—(Mr. Secretary Chamberlain.)


The right hon. Gentleman need not have been under any misapprehension as to any possible impatience on the part of the Committee at the length of his speech. Not only has the Committee listened with the intensest interest and with great sympathy to what he has said, but the information the right hon. Gentleman has given us is exactly what the Committee desired to know. We are now, it seems to me, almost exactly in the position we find ourselves in after the Chancellor of the Exchequer for the year has unfolded his Budget to us. We have received the information of his Estimate of all the matters concerned in that Budget, and I think we shall do well to follow the usual course which is taken upon that occasion, that is to say, that we should simply acknowledge the lucidity of the statement made by the Minister, and state that the subject is of such importance that we must have time to consider the facts and figures that he has laid before us, before we pronounce any opinion upon it. The right hon. Gentleman has, no doubt, taken an optimistic view of the situation in South Africa; but, optimistic or pessimistic, we are dealing with an extremely serious matter in this Resolution. The right hon. Gentleman has said enough to show that when we are called upon for this loan, it must not be regarded as a final discharge of all the liabilities that may fall upon us in the future, but that it may be the first of a series of other grants for assistance which may have to be given to these new colonies. On that very ground alone I think we ought to have time to consider all that he has stated. The right hon. Gentleman is well aware, probably more aware than anybody else, of the extraordinary variety of opinions we receive from South Africa. He has been there and has heard all the different views himself, but we in this country, groping about almost in the dark, hear the most contradictory accounts of the same thing day after day. The right hon. Gentleman speaks very hopefully of the agricultural value of the Transvaal and of the possibility, by the expenditure of large sums of money, of bringing large tracts of land into profitable occupation. I had an accidental opportunity two or three days ago of listening to a man of the highest importance in that country, a man entirely favourable to the policy of the right hon. Gentleman, who assured me that there could not be a greater delusion than to imagine that there was any agricultural value whatever in the Transvaal. I do not set my authority against the other, but these absolutely contradictory statements which we receive bewilder us, and make it difficult for us to estimate what our obligations may be in that part of the world.

There was one matter on which the right hon. Gentleman dwelt which I think is of some consequence, and it is the only individual point which I shall refer to, namely, the proposal now male for a joint council for the two colonies. I know that the right hon. Gentleman must be as fully aware as any of us of the great danger of anything that looks like forcing federation on the colonies in South Africa. We have had great experience already of the attempt to anticipate public feeling in that matter, and, as I have said, I have no doubt that the greatest care will be taken to guard against the impression being conveyed that this is, as it were, the thin end of the wedge put in, in order, before the I colonies have considered it, and before: some of them are clothed with that representative responsibility which they ultimately will have, to prejudice or prematurely foster some scheme of federation which, when it comes, as I hope it will come, spontaneously from themselves, will have every chance, I trust, of the most perfect success. The right hon. Gentleman said a few words—they were very few, but I regret them—with regard to the different opinions which have been held respecting the war and the doubts which have been thrown on the result of it, and especially upon the future prosperity of the colonies. He has seen somewhere some expression of opinion indicative of doubts as to his own success in obtaining any satisfactory financial agreement or arrangement whatever with the colonies. Well, I do not think that ever came from any authoritative or responsible person, at all events among those, of whom I am one, who have not been slow to criticise the policy of the right hon.

Gentleman. But I will say this of him, that we feel confident that no one could have gone out there more capable than himself, or more likely than himself, to achieve the object for which he went. The account he has given to-day, which is fuller than any we have had of the j origin of the transactions which culminate in this Resolution will, I think, convince the country that the interests of this country have been well regarded by him. But when he said that there were some, I suppose, of us who denied that the colonies would be worth anything to us at the end of the war, I think he a little exaggerated any opinion we have ever held, because what was said was that they would be left at the end of the war in a dilapidated and devastated condition, and that is absolutely proved from the mouth of Lord Milner in the early pages of this Blue-book; but we well knew their recuperative power and resources, and that probably the ultimate end would be a prosperous future for these colonies. I only rose to say that I think we ought to reserve the discussion. There may be some questions to be asked of the right hon. Gentleman, but the main discussion of this most important matter ought to be deferred until we have had an opportunity of fully considering the figures put before us—figures which I may say are not reconcileable with those given us in the Blue-book.


They are taken from the Blue-book.


I think the right hon. Gentleman in his estimate of the Budget of the Transvaal went far beyond anything that is in this Blue-book. At least I have not found anyone who is able to brace them, but a little opportunity may enable us to discover them lurking somewhere in its pages. I do not think, at all events, that we shall be able to investigate them to-day. Having them before us in the clear way in which the right hon. Gentleman has put them, we shall be better able to judge of the real financial situation of the Transvaal. With these few observations I would only again say that we are indebted to the right hon. Gentle- man for so fully explaining to us a matter of the first importance.

MR. CLAUDE LOWTHER (Cumberland, Eskdale)

said that no one more fully acknowledged than he did the Colonial Secretary's work in South Africa, but he could not allow this Resolution to be passed without expressing his bitter disappointment at the smallness of the war contribution. He appreciated the difficulties of the right hon. Gentleman, the conflicting interests he had to conciliate, and the enormous power of the mining magnates. He had watched the methods of the mining magnates from the beginning, and if their energy, now that the war contribution was settled, in developing the industry was anything like as great as their energy in belittling that industry before the contribution was settled, then he could predict that the Transvaal would have unprecedented prosperity. The Colonial Secretary had a far wider and more splendid object in view than the collection of a handful of millions. His object was the pacification of half a continent, and he agreed that any policy tending to retard that object would have been an extravagant and short-sighted economy. He considered that the British taxpayer should participate in the splendid future which the Colonial Secretary had described, and of which he had laid the foundations. After all it was entirely through our credit that the Transvaal was able to borrow this £35,000,000, and, if the country proved worthless, the liability would fall on the British taxpayer. But if they believed, as he believed, that every million invested would increase tenfold, was it not incumbent upon the Government, who lent the country's money, to intercept a proportion of those profits by ear-marking a deferred share towards the repayment of the War Debt? He regretted that the Colonial Secretary had abandoned the idea of the deferred share. He had told them that the sum might be delayed in its return for perhaps fifty years. If that was too long, would the right hon. Gentleman consider the advisability of hypothecating certain sums for a limited period—say ten or twenty years? He expected great surpluses in the future. Surely if he was able to take in the next ten years£10,000,000 into the national exchequer, that sum was something in these days when everybody was preaching economy.

MR. DILLON (Mayo, E.)

said the Committee would expect to hear something from the Chancellor of the Exchequer regarding this loan. The loan, according to belief in the City, was to be raised at 3 per cent., and that stock had already been dealt in at a premium of 1 per cent. If the City had heard already how the loan was to be raised, and if the speculators on the Stock Exchange were trading on that information, he thought the House of Commons ought to be let into the secret before passing the Resolution. The effect of the Resolution would be that the British Government would guarantee the loan, but the Committee were asked to pass the Resolution without any knowledge of the terms on which the loan was to be issued. It was a good long time since the House of Commons had been called upon to guarantee a loan of this character. It was a somewhat peculiar loan and he did not know whether there was a precedent in favour of the course adopted by the Chancellor of the Exchequer, that was to say, of asking the House to pass a Resolution guaranteeing a loan without allowing the House to know the terms on which the loan was to be raised. He wished to say a very few words with reference to the character of this transaction. The Colonial Secretary, in recommending this loan to the Committee, said that this loan and the War Indemnity Loan of £30,000,000 were inextricably bound up together. That was perfectly true. Moreover, the right hon. Gentleman said that the inhabitants of the Transvaal, really the people of Johannesburg, had consented to the Indemnity Loan on the condition that this loan would be raised and guaranteed by this country; and there were very good grounds for that, because, from a political and financial point of view, it was better to have a bird in the hand instead of capturing the bird in the bush fifty years hence. But what was the sum total of this financial operation? It was that £35,000,000 were to be added to the National Debt of England—he meant so far as the credit of England, Ireland, and Scotland was pledged for that amount—in addition to the present burden of the National Debt—whilst only a sum of £30,000,000 was obtained as War Indemnity. In other words, the result of the whole operation was an increase of £5,000,000 on the burden of debt. He believed that the Government on the Rand had shown a pretty keen sense of their own interest, and that they would come off best in this transaction. And when one listened to the Colonial Secretary explaining the results of the recent financial changes in the Transvaal, one could see that that was only a part of the consideration. The gentlemen of Johannesburg only gave their consent to underwrite part of the £30,000,000 loan because they were to get such reductions in the railway rates as would more than repay them. He did not say that the reductions in the railway rates were not a good policy. They would contribute towards the prosperity of the colony; but the immediate result of these reductions would be to increase the profits of the mines and far more than compensate the Johannesburg gentlemen for underwriting the loan. Moreover, they were going to under write the new Indemnity Loan at such a price as would undoubtedly give them an enormous profit out of the transaction. Let the Committee mark this. We were not only taking upon ourselves a responsibility for the £35,000,000 loan, but were also really pledging the credit of this country for the £30,000,000 Indemnity Loan. Did anyone for a single moment doubt that, morally, the success of that £30,000,000 loan depended on the credit of this country? This loan was being raised not by a constitutional free government, which was really the only form of Government which was capable of pledging the credit of the people; it was being raised on the responsibility of this country; and if the interest on the loan were to go into de fault, could anyone say that Great Britain would not have to pay up? The whole structure of this financial edifice, which looked so glorious when described by the Colonial Secretary, depended in the ultimate result on the political experiment of the government of the Transvaal. If the Transvaal were governed in the spirit which characterised the speech of the Colonial Secretary, or in the spirit which characterised the speeches of the right hon. Gentleman when travelling through that country, he should say that the loan would be repaid. But if another spirit got the upper hand, if the Progressive party at the Cape got the control of the whole government of South Africa, with a policy inspired by Dr. Jameson and Dr. Smartt, and if they embarked on a new career like that which led to the South African War—in that event, which was by no means impossible, the unfortunate taxpayers of England, Scotland, and Ireland, would ultimately be burdened with the whole of the £30,000,000 as well as with this £35,000,000.


said he had listened with the greatest interest and attention to the statement of the right hon. the Colonial Secretary, but, though lucid and clear, it was so complicated that it made it a little difficult to discuss it at once. That statement consisted of two different Budgets as a justification for two different loans; but he could not say that it was wholly satisfactory. He must confess that he had been appalled lately at the readiness with which debt was accumulated in this country. He seemed never to wake in the morning without coming upon the creation of some new debt for some purpose or other. There was the £159,000,000 loan for the war, the £100,000,000 loan for the purchase of Irish land in the interests of Irish tenants and landlords; there was the loan of £35,000,000 for the Transvaal and Orange River Colonies, and there was the further loan of £30,000,000 for which, he agreed with the hon. Gentleman who spoke last, this country would be ultimately responsible. He did not know where this readiness to borrow money would end. It might be that we had ample security for all these debts, but it was a most serious thing to go on piling up debt on the shoulders of the British taxpayer. He trusted that the Chancellor of the Exchequer would bethink himself, not only of the present necessities, but of the future results. There was a certain point on which he did not find himself able to follow the Colonial Secretary. In the first place he understood that there were to be two loans; this £35,000,000 loan, which we were to guarantee and for which, in effect, we should be responsible. The interest on that, he supposed, would I amount to something a little over £1,000,000. Then there was the other loan of £30,000,000 charged on the revenues of the Transvaal, the interest on which, with sinking fund, would amount to £1,200,000. Now, he held with the hon. Gentleman opposite, that when a Crown colony contracted a loan, charged on the revenues and resources of that, colony, in the final result this country was responsible for it. We could not, in honour, escape from that responsibility. He trusted that the question would never come to a practical point here, but undoubtedly in the case of a Crown colony of Great Britain, which was part of the Kingdom of Great Britain—not like a self-governing colony—we could treat for it and undertake responsibility in respect of it. And in the event of repudiation of the debt by the Crown colony it would be wholly impossible for anyone to say that, as regarded honour, this country should refuse to pay that loan. The interest on the £30,000,000 loan would be met out of a common fund, and that common fund, as he understood, though he might be wrong, mainly arose from the profits of the railways, estimated at £2,500,000 a year. Here was the point on which he wanted information. Was it the fact that the railways did not at present belong to the Government of the Transvaal, but were to be purchased for £13,000,000? Or was it that the Government of the Transvaal had certain rights over the railways, and that the remaining rights were to be purchased for £13,000,000? These£13,000,000 were to come out of the £35,000,000. The first question he asked was, if the railways made a profit of £2,500,000 a year and if they were to be bought for £13,000,000? that was only six years purchase. That was a very small sum; it was better than the Irish tenant paid for his land. A great deal depended upon that, because it was upon that sum that the security rested, to a very large extent. He wished the right hon. Gentleman would say whether he was right or wrong in this respect. He quite conceived that a large part of the property in the railways might be in the State, and that what was to be purchased was the remaining portion of it. Here was a great difficulty in his mind. First of all, the interest on the £30,000,000 loan was £1,200,000 a year. But how about the interest on the £35,000,000 loan. He did not hear the right hon. Gentleman make any provision for that, although he provided for the interest on the £30,000,000 loan.


On the credit side of the common fund there is at present only the railway revenue. The debit side is made up of the charge for the £35,000,000 loan which at 4 per cent. for interest and sinking fund amounts to £1,400,000, and is a first charge upon the common fund. If, therefore, I am right in saying that the income from the railways is £2,500,000 there is a surplus of £1,100,000 after paying the full charge on the £35,000,000 loan.


Then there would have to be added the interest on the £30,000,000 loan.


That is not on the common fund.


said that then there would be £1,400,000 for the £35,000,000 loan, and £1,200,000 for the £30,000,000 loan which the Transvaal and Orange River Colonies would have to pay.


The hon. Gentleman entirely confuses two things. He must keep in mind that there are two funds, the common fund of the two colonies, and the ordinary Budget of the Transvaal. The £35,000,000 loan comes upon the common fund, and the £1,200,000 required for the £30,000,000 loan comes on the Transvaal Budget. When I dealt with the common fund, I showed a surplus of £1,100,000 after paying for the £35,000,000 loan. When I came to deal with the Transvaal Budget, I showed a surplus of £1,500,000 which was available for the charge of the £30,000,000 loan.


said he was obliged to his right hon. friend for making the matter clearer. The £35,000,000 loan was secured on the common fund arising out of the railway; but there remained a charge of £1,200,000 for the £30,000,000 loan, which was secured on the revenues of the Transvaal amounting at present to £4,500,000. That was a very large proportion of the revenues of the Transvaal to pledge. He agreed with his right hon. friend that it was probable that the Transvaal revenues would largely increase, but £1,200,000 out of £4,500,000 was a very large proportion to pledge at the inception of the career of the colony. With regard to the advance of £6,000,000 and to the military charges to be met, he confessed he could not thoroughly follow his right hon. friend. It seemed to him that, properly speaking, these were military charges which ought to be paid out of the Estimates of this country. He knew that there was great confusion and uncertainty as to what should or should not be put on the Estimates. When he was on the Public Accounts Committee, the Committee was told by the War Office that they could not tell within a million or two what the very charges alluded to by his right hon. friend would amount to, viz., the charges incurred by officers in the field for the purchase of necessary stores. All this rendered it extremely desirable that some statement should be circulated to hon. Members embodying in an abstract form the interesting figures given by the right hon. Gentleman, and he thought the right hon. Gentleman and the Committee would recognise that it was almost impossible to criticise the right hon. Gentleman's statement in any detail. His only criticism would be this—that he felt increasing alarm at the increasing debt which was being piled up on the country. He did not know when it was proposed to take the Bill; but he presumed that a sufficient period would be allowed to elapse in order that the statement which he hoped would be circulated might be considered.

MR. BUCHANAN (Perthshire, E)

said he was not quite sure that he understood the statement of the right hon. Gentleman as to the security for the two loans. The right hon. Gentleman said in reply to the hon. Member for Kings Lynn, that the security for the £35,000,000 loan would be the inter-colonial fund, and that the security for the £30,000,000 loan, would be the surplus of the Transvaal Budget. He understood the right hon. Gentleman in his speech to say that for the £35,000,000 loan there would be the security of the assets of both the Orange River Colony and the Transvaal. Now he rather gathered that the security for the £35,000,000 loan was to be limited exclusively to the railway revenue.


I never said that. I said that in the last resort we would have the security of the whole of the assets, and the revenue of the Transvaal; but that, in the first instance, the charge would lie on the common fund; and as I believe that the common fund will always be twice, or thrice, or even more the amount that will be sufficient to pay the charge, I do not think it very likely that we shall ever have to resort to the Transvaal revenue.


said he was obliged to the right hon. Gentleman. Then there was another question. As the inter colonial fund did not at present exist, and as he gathered from Lord Milner's statement that an Order in Council would be required to constitute it, he presumed that the right hon. Gentleman would be prepared to consent to the Order being promulgated. They might, therefore, conclude that the security for the £35,000,000 loan stood altogether higher than the security for the £30,000,000 loan, and had first call on the railway receipts, and after that, a call on the assets and revenue of the Transvaal. [Mr. J. CHAMBERLAIN: Hear, hear.] The right hon. Gentleman stated in the course of his speech that he had received a telegram from Lord Milner in which he stated that the railway revenue amounted to £2,500,000 for the present year.


That is the estimate for 1903–04.


said that Lord Milner had stated that that was a some what exceptional increase, and that, as regarded the future, the net estimated revenue should not be taken as more than £2,000,000. Was the Committee to understand that Lord Milner had modified his view, and that the Committee might consider the future estimate to be £2,500,000.


Yes, Sir.


said that, of course, increased the security for the loan. In the latter part of his statement the right hon. Gentleman gave a glowing account of the possibility of an increased Transvaal revenue in the next few years; but the right hon. Gentleman did not make any statement as to whether there was not likely to be a considerable increase in the annual expenditure of the Transvaal, because it appeared from the Blue-book that that expenditure was rapidly increasing at present. They were introducing into the country new schemes which would undoubtedly cost a great deal of money. There were schemes for agricultural development, educational development, public works and native labour, no estimates of the cost of which had been given; and the Committee should have some information from the right hon. Gentleman as to the probable increase in the expenditure of the Transvaal. If the right hon. Gentleman could give that information he would enlighten the Committee more as to the ultimate security for this large loan. It was a serious matter to impose on a limited community a debt of £65,000,000, which was more than double the debt of Cape Colony.

MR. COHEN (Islington, E.)

said he would not have intervened in the debate were it not for a remark which fell from his hon. friend the Member for King's Lynn. His hon. friend said that this country never would, and indeed never honourably could, repudiate a liability incurred by a Crown colony in respect of a loan. His hon. friend probably had not observed that in every prospectus issued by a Crown colony a passage appeared that the revenues of the colony alone were hypothecated to the security, and that neither the Consolidated Fund nor the Lords Commissioners of His Majesty's Treasury were responsible, either directly or indirectly. Therefore, it could not be represented that this country would incur any legal, or even any moral, liability, in respect of the £30,000,000 loan. There was the liability of the government of the colony in question—that was the security, and there was a reasonable conviction—he put it higher than a hope—that there could be no conceivable risk incurred by anyone investing in the £30,000,000 loan. Because of that, he was not very pleased at the prospect of the commission to be paid to the gentlemen who had under written the loan. He was quite certain that the House of Commons and the country would be glad to know there was no claim for that. Having said that, he thought that those who managed these negotiations did no more than was right. They had secured the basis of the loan, and had made absolutely certain the prospect of the loan being placed and the indemnity to be paid by the colonies being received into the Exchequer. He had noticed one discrepancy in the speech of the right hon. Gentleman the Colonial Secretary. Lord Milner had fixed the sum necessary to compensate the shareholders of the railway at £15,000,000. The right hon. Gentleman put it at £13,000,000. That was a large discrepancy, and he hoped the figures of the right hon. Gentleman were right. But it was scarcely a business-like thing to ask a Committee of this House to guarantee a loan, as to the form of which, and with regard to which, the Committee had no information. He quite appreciated the reasons, perhaps better than anybody else, which rendered it expedient that this information should not be given, and so far as he was concerned he approved of the secret being kept if it was not intended to issue the prospectus immediately, but if the prospectus was to be issued to-morrow he thought the Committee should be given the information and not be asked to give this guarantee in the dark.

SIR ROBERT REID (Dumfries Burghs),

whose opening remarks were very indistinctly heard, was understood to say, he agreed that this was not the time for any real discussion upon this matter, and he sincerely hoped the sanguine expectations of the Colonial Secretary would be realised. He com- plained that there was no proper statement with regard to this matter on which the Committee could rely—there were no estimates which did not vary. He hoped the expectations of the right hon. Gentleman would be realised, but at the same time it was only right to remember that the Transvaal now was taxed in indirect taxation alone to the extent of £10 a head of the population, whilst we, who thought we were fairly taxed, were taxed indirectly to the extent of only £2 per head, so that the people of the Transvaal paid five times as much as we in indirect taxation. One point which he desired to draw attention to, not to depreciate the statement that had been made by the Colonial Secretary, but because it offered food for reflection and would enable the Committee to realise what it was doing, was that a loan of £65,000,000 to a population of 400,000 amounted to a loan of £160 a head. In this country we had a loan of £880,000,000 which worked out at £18 a head. It was impossible for business men not to look upon this loan as a very serious proposition. Then there was the revenue. He respectfully reminded the right hon. Gentleman of the suggestion made by the hon. Member for Kings Lynn that we ought to have a statement of the revenue in a handy form. From the estimated revenue it appeared that £2,000,000 was estimated as the average profits of the railway, but the Colonial Secretary had stated it at £2,500,000. That was a most important difference, and there should be some official statement in this matter on which the Committee could rely. Part of this loan was to be spent in payments to those who had an interest in the railway. The right hon. Gentleman said £13,000,000, but in the Blue-book Lord Milner's first estimate was £13,000,000 and his later one £14,000,000.


I may say at once that the £13,000,000 is for railways. The sum of £14,000,000 includes £1,000,000 for rolling stock, which I treated as a separate item. That accounts for £1,000,000. There remains the fact that at a much earlier period Lord Milner, who knew nothing about our negotiation and could only make a guess, said— I suppose £15,000,000 will be the outside of what is required. We think there is justification for the statement that£14,000,000 will be the outside figure, including£1,000,000 for rolling stock; but it is impossible to go into the details, because we are dealing with these railways. We have made offers to the shareholders and debenture holders of certain of these railways, and we cannot disclose the course of the negotiations. We can only say generally what is our expectation.


said he did not challenge the good faith either of Lord Milner or the right hon. Gentleman. He merely called attention to the fact that they had not these figures, and he merely pointed it out as an illustration of the un business like way in which this matter was being dealt with. There was another consideration which he only desired to adumbrate. The right hon. Gentleman in the optimistic policy he supported, gave a rosy picture of the future conditions of the Transvaal. That bring so he could not see why the Transvaal should require this guarantee at all. But putting that on one side altogether, why should we guarantee money for the purpose of buying the railways already built? Why should the Government buy railways which exist now and which now and in the future would assist in developing the country? There might be good reasons, but unless the Committee were told those reasons it did not seem to him that the £13,000,000 they were asked to guarantee were necessary. They were also asked to pay something to build new railways. Railways in the colonies were generally built by contract. If the Transvaal was so prosperous, and likely to remain so, why should not those railways be built by contract instead of this country being asked to guarantee a loan of £13,000,000 for them. The settlement of the land was a more difficult problem. Already a sum of £1,000,000 had been spent in land settlement since the war ended. The whole of that sum had gone in the purchase of land, and it appeared from the Blue-book that the number of settlers settled in the Orange River Colony was about 360. These settlers had about 1,500 acres apiece, or a total, roughly speaking, of 500,000 acres, which according to his calculation represented a cost of £1,200 per head to the State. The right hon. Gentleman had spoken of a large settlement of British people to give a "colour" to the entire population, and Lord Milner, in a previous dispatch, had estimated the cost at £1,000 per head. He pointed out these facts in order that the Committee should appreciate the character of the enterprise in which they were being asked to embark. Whether the policy was right or wrong these were the facts, and Members might well reserve their opinion. Another question was that of irrigation; though it appeared in the present Vote only to a small extent, the Colonial Secretary had suggested that they should look forward to an enormous expenditure on irrigation works, and a long Report in a former Blue-book had recommended an expenditure of £30,000,000 in that direction. When he found that about £23,000.000 out of these £35,000,000 were to be spent either on buying or building railways or in settling lands, it seemed to him there was a danger of this country having thrown on its hands the development of this great tract of territory in South Africa. There were differences of opinion as to the mineral and agricultural wealth of the new colonies, and it was an enormous speculation to embark on an enterprise which would not, or might not, end with this loan, and which already involved an expenditure of £35,000,000 on our credit, and, as he believed, practical or possible responsibility for another £30,000,000. It was a thing which ought to give reasonable men pause. The right hon. Gentleman had the art of persuading where less practised orators would fail. Many serious questions were involved. This was but the beginning of a serious enterprise, and he believed Members were not altogether satisfied with the financial position of the country, though he did not suggest that the national credit was weakened in the sense of there being any doubt of their ability to pay their debts. While he agreed it was not the duty of the Committee to form a hasty judgment on so grave a matter, he did not think Members ought to go away believing everything was as rosy as might be supposed from the Colonial Secretary's statements.

SIR J. FERGUSSON (Manchester, N. E.)

said the considerations advanced by the hon. and learned Member were well-deserving of attention, but he could not follow him in the particular view he had put forward. It had recently been pointed out that the price of the Funds compared with the rate of interest was higher than when the interest was 3 per cent.


said that if the right hon. Gentleman desired to make a comparison which was beyond doubt, there were a small quantity of 3½ per cents, in existence before the recent war; they then stood at 107 or 108, and they were now at about 91.


held that the fact of the price being higher compared with the rate of interest showed that the public credit had not been injuriously affected. The hon. and learned Member had asked what was the object of acquiring these railways. He took it that one reason was the same as that which actuated the Government of India in taking advantage of their powers to acquire the Indian railways at the statutory periods. They were acquiring the railways one by one, to the great advantage of the State, and by pursuing a similar policy in the new colonies they were adopting a course the advantages of which would increase as the colonies were developed. The hon. Member for King's Lynn had referred to the great expansion of public and local debt. But, so long as the debt was incurred for legitimate and profitable objects, the material wealth of the country was not thereby diminished. The public debt of India, in which in the last resort the credit of this country was involved, amounted to £160,000,000 or £170,000,000 but the greater part of it was invested in works of a remunerative character. The railways alone were worth the whole of the debt, and the fact of their being in the hands of the State acted and reacted on the prosperity of the country, because the reduction of the cost of transport gave a larger profit to the labour of the country and generally added to its wealth. There had never been a better investment of public funds, or one more calculated to benefit a country, than the money spent on public works in India. In the same way he believed the large sums we were proposing to invest in public works in the new colonies would constitute the best means of turning to advantage the resources of those territories, and rendering them profitable possessions of the British Crown. To allow those colonies to remain in an unimproved and undeveloped condition would make their acquisition a foolish adventure indeed. He could speak from experience of the great advantage of having a well organised force of police distributed throughout the country. While a governor in Australia a quarter of a century ago, he had many opportunities of observing the beneficial effects of such a force. They were well-paid, respectable men, and generally well educated, and they were of the greatest possible advantage in keeping peace in those colonies. An armed police force was of the greatest possible advantage in restoring peace and in serving the country in many ways. He hoped the police force which had been established in the Orange River and Transvaal Colonies would prove to be as useful as the similar forces in the Australasian Colonies. He thought this was the wisest possible course to adopt, and he felt sure it would conduce to the stability of the country to substitute police for military establishments.

MR. M'KENNA (Monmouthshire, N.)

said the Colonial Secretary had described himself as an optimist, and he ventured to agree with him in that opinion. The right hon. Gentleman had spoken of what the finances of the new colonies would be three years hence, when the full amount of the interest on the indemnity loan came to be charged upon those colonies, and he said there would be a surplus of £500,000 in the first year, and in the second year £100,000; and then there would be a deficit of £300,000 in the third year. The right hon. Gentleman further stated that that deficit would be more than met by an anticipated increase of the revenue by £600,000 a year, which was to take place in the third year. The Colonial Secretary had spoken of this as an unexampled result of Lord Milner's services. Speaking in the year 1903–4, it was optimistic to declare that three years hence they would have a surplus of this kind; when that surplus was realised it would be time enough to speak of it as an unrivalled success. In the meanwhile they ought to take the cautious view. He wished to ask the Chancellor of the Exchequer, when this year he reduced by £500,000 a year the amount being paid in discharge of the interest and Sinking Fund of the National Debt, whether he took into account the fact that he was going to add another liability for £35,000,000 to the Debt?


I did not reduce the Sinking Fund by £500,000, and we did not take this into account.


said the right hon. Gentleman had reduced the total amount which was set aside for payment of interest and Sinking Fund by £500,000.


I do not think we ought to discuss this matter at present.


said he accepted the right hon. Gentleman's statement that he had not taken into account this £35,000,000, which might constitute a new and serious liability on our Exchequer. He thought the Chancellor of the Exchequer ought to take that item into account, and if he had not already done so they ought not to go to a vote on the question of this loan. In the first place they ought not to sanction a loan which they did not know the full terms of; and secondly, they ought not to sanction it until they had an assurance from the Chancellor of the Exchequer that proper provision to meet all possible liability in respect of that transaction had been made by him. Under the circumstances he felt that they ought not to be pressed to sanction this loan now, and if a Motion were made to report progress he should support it.

MR. CAWLEY (Lancashire, Prestwich)

said the right hon. Gentleman had referred to the gloomy forebodings which had been predicted in regard to South Africa, but he wished to point out that in several Unionist papers it was stated that the cost of the war would be paid for by the Transvaal itself. The sum of £30,000,000 was not much towards a total expenditure of £250,000,000. The right hon. Gentleman stated that the financial houses were contributing this money, and that this country was only guaranteeing the loan. Considering the intolerable burden which the war had thrown upon South Africa he thought it was the duty of those financiers to come forward in this matter. The Colonial Secretary had dwelt a good deal upon the enormous potentialities of wealth in the Transvaal, and as far as the mineral wealth of the Transvaal was concerned he quite agreed with him, for it was enormous. But as far as the agricultural potentialities went he was not quite of the same opinion. He did not like to set his own opinion against that of the right hon. Gentleman, but he wished to inform the Committee that ten years ago he went over a great part of the Transvaal, for he made the journey to Kimberley, Johannesburg, Pretoria, and through Natal. He travelled by Cape cart, and thus had a better chance of seeing the agricultural capabilities of the country than if he had travelled on the railway. His own opinion of the agricultural value of the Transvaal was that it had been greatly exaggerated. He had met a great many men from the Transvaal, but he had never yet met one who had been there any considerable time, and who had any real knowledge of the land, who was not extremely sceptical in regard to the future value of agriculture in the Transvaal. Up to now the Transvaal had imported nearly everything, including corn, Swiss milk, and tinned meat, and if their agricultural prosperity had been so great as it had been made out, they would not have had to import these things. There were lots of ways in which they might spend the money in helping the cultivation of the land nearer home than in South Africa. In regard to the contribution to be made by the Transvaal, he wished to ask the Colonial Secretary whether the financial houses who were going to underwrite this £30,000,000 were going to get any underwriting fees.




thought a 4 per cent. Transvaal Loan was a great deal better than the Cape Loan, which was only 3½per cent. Instead of being thankful to these financial houses he wished to point out that they were making an enormous profit, and yet this was held up as a great virtue on their part. The whole of South Africa depended on the Transvaal, and if that country was not prosperous the whole of South Africa would become of very little value, because nearly everything depended on the mining industry. He had heard something about Italian settlers in South Africa. Anybody who knew the habits of white people there knew that they worked very well for a year or two, but eventually looked to the black people to do the work. In many ways the black people were a curse to the prosperity of South Africa. White men emigrated from this country with every intention of working, but they always delegated their duties to the black people. The Colonial Secretary should take the statement as to the success of that settlement with a pinch of salt and wait a year or two to see whether it was to be a success or not. He was pleased to hear of the satisfactory progress made so far, and he was only sorry that the Transvaal, with its tremendous potentialities, was not going to contribute more to the cost of the war, which the financial houses there had done a good deal to bring about.


I think the House ought to have an answer from me on the question alluded to on both sides as to what will be the terms of the loan. It is suggested that we are pursuing an unprecedented course in not informing the House what the terms of the loan are to be. That is an entire mistake. In my recollection no such statement has ever been made by the Chancellor of the Exchequer when a Resolution of this kind was before the Committee. It is quite evident that it would be, for many reasons, very imprudent for a Minister to make any declaration of this kind on such an occasion. The calculations put before the Committee have been on the basis of a 4 per cent. charge for interest and sinking fund together, but as to what are the terms on which the loan is to be issued, I do-not think that we should be called upon to make any statement, because it would completely tie the hands of the Chancellor of the Exchequer. As I have said there are many reasons, but that is the main reason. It is not to be expected that the Chancellor of the Exchequer should tie his hands until the last moment before the issue of the prospectus. The prospectus will, I hope, be in the hands of the public before long, and until it is in their hands I do not think there should be any disclosure made of the terms. We are acting in strict conformity with precedent.


When will the prospectus be issued?


I hope to-morrow afternoon.

MR. WHITLEY (Halifax)

said he was sure that the Committee appreciated what the Chancellor of the Exchequer had said, and would not insist upon any statement as to the terms of the loan which would not be in the public interest. The fact was that a very glowing prospectus had been presented to the House this afternoon, and the only thing they could usefully do at present was to discuss the Resolution in its broad aspect, without entering into details of the statement just made by the Colonial Secretary. It appeared that under Mr. Kruger's Government the Transvaal had a debt of £2,500,000, and very shortly under the British Government the colony would have a debt of no less than £65,000,000. The broad business question for them to consider was whether that increase of the debt was justified by the state of affairs at present, and by the immediate prospect in the Transvaal. This territory was now part of the Empire and its liabilities were our liabilities so long as it remained a Crown colony. He was not against the expenditure of public money when it was really beneficial and reproductive, and therefore the one question which he asked was how much of this £65,000,000 would be represented by assets reproductive? Looking down the list of figures supplied by the Colonial Secretary this afternoon he could only make out a total of £25,000,000 which would be in any way reproductive. That sum included £13,000,000 for railways, £1,000,000 for rolling stock, £5,000,000 for new railways, £2,500,000 for land settlement, and two or three smaller items, one of which was the rather doubtful one of "repatriation." They ought to carefully consider the position of the new colonies in respect to the fact that their liabilities were just as much our own as if their debt were part of our Consols. He was very glad to hear the Colonial Secretary say that he had given up the idea of al owing £10,000,000 of the indemnity loan to be underwritten by financiers in Johannesburg. Many hon. Members greatly disliked the idea of any portion of the liabilities of the Empire being underwritten by a cosmopolitan ring of financiers in any place whatever. He also objected on the grounds of policy, because if those persons had been allowed to underwrite part of the liabilities of the Transvaal they would have claimed a moral right, with some justice, to have a special voice in the direction of the policy of that colony. He hoped the Chancellor of the Exchequer and the Colonial Secretary would see to it that the second loan on the security of the assets of the Transvaal would be floated without a group of financiers particularly interested, having anything to do with its flotation. He urged that when British credit was being used in this way they should see that the money was spent, and everything possible done, to improve the whole bulk of the people in the colony. A great part of the money was to be spent on the purchase of rails for the extension of railways. These rails would have to be shipped, and he hoped that the shipments would not be made in such a way as to support the present monopoly in freights to South Africa. They all hoped that the reduction of duty on imports and the reduction of railway rates would have a great effect in bringing down the cost of living for white people in Johannesburg, and they hoped also that the Colonial Secretary would do everything he possibly could in his Department to bring about free trade with South Africa in the matter of shipping freights, so that traders in this country could have a fair chance in the development for which the Committee was now asked to vote £35,000,000. If the right hon. Gentleman did that he would receive the gratitude of the traders of Great Britain, as well as of the people of the Transvaal. He wished the Colonial Secretary had kept to his first intention with regard to the war contribution. The right hon. Gentleman had stated that he went out to Africa with the intention of holding that the State should have some right in the future mineral assets of the Transvaal. By adhering to that he would have adopted a very much sounder policy, although the actual money received might have been deferred for some years, than he had done by the bargain he had made. He was sorry indeed that the right hon. Gentleman had been persuaded to confine himself to a 10 per cent. tax on the gold mines in the Transvaal, for he must know that that 10 per cent. had been more than recouped by the saving on the cost of dynamite alone. After all, what tax was fairer than a tax on profits? He was glad that the right hon. Gentleman had been able to announce a great reduction in railway freights, which would make it easier for poor white men to live in Johannesburg, but sorry that he had not claimed a greater share of the mineral wealth of the Transvaal to meet the expenditure on the war.

MR. MARKHAM (Nottinghamshire, Mansfield)

said that the Colonial Secretary had referred to the excessive taxation of the Transvaal previous to the war. It was said that the Transvaal was then groaning under the taxation of the Boer Government. Now, the taxation under the old Boer Administration amounted to £3,800,000 a year, while the expenditure of the British Administration vastly exceeded that amount. At the last election in this country they were told from every platform of the excessive burden of taxation that was levied on the white population in the Transvaal, but by some extraordinary coincidence there was under British Administration higher taxation than that levied under Mr. Kruger's Government, and that was before any cost whatever for this loan came into account. The Colonial Secretary stated that under Mr. Kruger's Administration capital expenditure was slack, and further that unless this country found the money for the advancement of the Colony by the proposed public works, the Transvaal would remain in its present condition. He thought the Committee would hardly agree, if they looked at all the facts, that that was a right conclusion. The gold-fields were discovered in 1888, and in ten years the prosperity of the Transvaal had advanced by leaps and bounds, and its revenues had increased to about £4,000,000 without the aid of the British taxpayer. He looked upon this question as one of policy. It was an Imperial policy, which commended itself to the majority of the House of Commons, to take the money and credit of this country and spend it in the colonies instead of spending it at home. He submitted that this guarantee which they were now called upon to give necessitated large sums of money being taken out of this country which ought to be spent in this country, and sent to South Africa not in the interest of the people in this country, but in the interest of the people in South Africa. He did not agree to that policy. It was our duty, of course, to try and bring back prosperity to the Transvaal, but he did not think it would be a success, from a commercial point of view, to pledge our credit and spend money right and left to promote an Imperial policy abroad. He was, however, glad to notice that the Colonial Secretary, by his visit to South Africa, had created a better feeling in all parts of the South African colonies, and that a different spirit now permeated the newspapers out there. That was to the everlasting credit of the Colonial Secretary. But although the presence of the right hon. Gentleman in South Africa had had an enormous effect for good, yet that must not be taken as a sign that the past was all forgotten. While giving the Colonial Secretary credit for what he had done since the conclusion of the war, he ventured to believe that had the right hon. Gentleman been in South Africa before the war, that war would never have come about. He was also glad to hear that the Colonial Secretary had become an Army reformer, and that he had swept away the incompetency of the War Office in the frequent changes made on the Settlement Board. But why, in the name of conscience, could not the right hon. Gentleman go farther in the direction of sweeping away in competency at the War Office?

The right hon. Gentleman did not tell the Committee the conditions under which the £30,000,000 loan were fixed. The Committee, no doubt, were not aware that when the right hon. Gentleman arrived at Johannesburg he had an interview with the leading mine owners or their representatives, and as a result a private agreement was come to, fixing the war indemnity at £30,000,000. Although the mining representatives were not in a position to agree to that off-hand, without a reference to their principals in London, the right hon. Gentleman insisted that the whole matter should be settled before he left Johannesburg. The right hon. Gentleman told the President of the Chamber of Mines that unless the amount of the indemnity was fixed before he left Johannesburg he could not say what Parliament would do in the future. Whereupon, so he was informed, the representatives thought it better to come to an arrangement at once with the right hon. Gentleman. The Colonial Secretary went on to say that it would be dishonourable for the people of Johannesburg to repudiate the payment of the sum named. He did not think it would be dishonourable to repudiate a transaction forced on the representatives in Johannesburg within a fortnight of the right hon. Gentleman's arrival in South Africa, within six months of the conclusion of the war, and before the men representing all shades of public opinion had returned to the Transvaal. No public meeting had been held in Johannesburg or elsewhere in South Africa to ratify that agreement; and his contention was that if the people of Johannesburg could come to an arrangement of that kind, then the time had arrived to grant them representative government. They were told that 85 per cent. of the profits of the railways was to be handed over to the Transvaal Government in payment of the £13,000,000 for railway extension, etc. Did that apply to all the other railways as well?


Yes, to the other railways as well.


said that the net profit from the railways under the Boer Government was only between £300,000 and £400,000; but now they were told it was to be £2,500,000. He was sure that the present profits of the Transvaal railways were enormous, but that was caused by the large amount of material that was at present being sent out to South Africa to make up for the losses caused by the war; and when that special traffic was ended the revenue from the railways would be very much decreased. If so, then the guarantee for the loan would be gone. So far as he was concerned, he hoped that the prosperity of the Transvaal, foreshadowed by the Colonial Secretary, would be realised. He had no doubt it would be realised; but it could only be realised if they met the labour difficulty in South Africa in a reasonable and proper manner. The future of South Africa depended largely on cheap labour; and he maintained that ample facilities should be given to the mining industry to obtain labour. In his opinion, that was the only way in which the future prosperity of South Africa could be assured.


said there were two questions which he wished to put to the right hon. Gentleman. He understood from the right hon. Gentleman that the large sum of £35,000,000 which they were asked to guarantee was only an instalment. Lord Milner in his dispatch stated that the first principle of the situation was that a liberal expenditure on the development of the new colonies was a condition precedent to that great expansion of revenue to which they must look, as well as to provide for their own needs as to share the burden of the British war debt. The right hon. Gentleman did not allude to that very important statement. From that point of view the loan was a security for a war contribution. The right hon. Gentleman himself in his speech at Johannesburg stated the loan would be merely an instalment, and said that he was only asking for what could be spent in two or three years. Therefore, in sanctioning the loan the House of Commons was committing itself to a course of expenditure, without having any information as to its ultimate limit. Could the right hon. Gentleman state now, or at the Second Reading, how much more money would be required for the development of the Transvaal under the scheme propounded by Lord Milner. He would be glad if the right hon. Gentleman would state what was the ultimate limit that was likely to be reached in the course of expenditure on which they were asked to embark. The right hon. Gentleman in his speech said very little about the land settlement. There might be information about it in the Blue-book, but he had been unable to discover it. He had, however, seen some extraordinary statements in the South African newspapers about that scheme. He read in the Cape Times an interview with a certain Captain Owen Thomas, who said that the people employed to make the purchases were incompetent and did not know the value of land, and, to quote his own phrase, "they were going about buying land with a brass band." In one instance, they paid £5,000 for a farm which was sold a few years ago for £200. The person to whom that farm was let was charged a rental of £250 for land which he could obtain from a private owner for £15 or £20. He hoped some account of those transactions would be given before the Second Reading. He gathered from the Cape papers that Captain Owen Thomas had been employed in some official capacity in connection with this question, and had reported to the Transvaal Government.


Captain Thomas has not been employed in any official capacity. He is, I am informed, the agent for a large land company and his report was a private report, made to his employers.


said he was obliged for the information; he understood that the report was made to Lord Milner. Anyway he thought they were entitled to know something about the land settlement as far as it had gone, in view of the serious statements which had been published. With reference to the cost of the military occupation of South Africa which still continued to fall entirely on the shoulders of the Imperial taxpayer, nothing had been said to-day to lead them to believe that any part of it was to be shifted on to the shoulders of the Transvaal. Before the House committed itself, considerably fuller information on the matters he had mentioned ought to be given.

THE MASTER OF ELIBANK (Edinburgh, Midlothian)

said he wished to ask if the Government had acquired the property of the Netherlands Railway at Delagoa Bay. It was an extremely valuable property, and was likely to become even more valuable. He was informed that the Portuguese Government were trying to put obstacles in the way of the British Government acquiring the property, and, perhaps, the Colonial Secretary would inform the Committee if any arrangement had been arrived at.


We are in negotiation with the Portuguese Government on that subject, and I have no further statement to make at present. The hon. Member for Dundee asks whether this loan is only an instalment? Certainly, that is the case. He also asks what is to be the extent of the expenditure in the Transvaal? I should be very sorry to put any limit to it. I hope it may rise to hundreds of millions; but that is a matter which does not concern this House. All that concerns this House is the particular instalment of £35,000,000. The cost of the development of the Transvaal may be many times that amount.


Is anything more to be asked for in this way?


No, at present there is nothing in the mind of the Government beyond what we are now asking for. Any future expenditure which may be incurred is a matter entirely for the future; and one on which I have no statement to make. The hon. Gentleman also asked for information with reference to the land settlement. We have given the House everything we possess in regard to that, and we have nothing further to offer. When, however, the hon. Gentleman repeats statements as to the in competency of the persons appointed in connection with the land settlement, and the extreme prices they have paid, I can only say that I shall be perfectly willing to inquire into any specific case brought to my notice. I have done that several times, and I have invariably found that the accusation made in each case was entirely without foundation.


said he only quoted from the Cape Times.


Does the hon. Gentleman consider the Cape Times an authority on the land question? I think the Cape Times knows very little about the land question in the Transvaal and Orange River Colonies. I would only like to say that in South Africa especially, and not only perhaps in South Africa, the gossip which goes on with regard to everything that takes place should be received with a great deal of suspicion. When the hon. Gentleman quotes from a newspaper that the Government of Lord Milner has done something which would not be approved by any reasonable person I think on the whole we are justified in not believing such a statement.


asked if the right hon. Gentleman would give the statement of the figures asked for by the hon. Member for King's Lynn.


I need scarcely say that I have not the slightest objection; but, as far as I can judge, it will be a statement which can be easily contained on half a sheet of notepaper. I think the figures will be found to have been very plainly put in my speech when hon. Members have the report, but if it is for the convenience of the House I will submit them in the form suggested.

Resolved "That it is expedient to authorise the Treasury to guarantee on the security of the Consolidated Fund the interest of a loan to be raised by the Transvaal Colony not exceeding in the aggregate an amount sufficient to raise thirty-five million pounds, and the principal of any such loan by means of the guarantee of Sinking Fund payments, and to provide for the application of any sums paid by the Transvaal or Orange River Colony in respect of expenses incurred in or incidental to the prosecution of the late war in South Africa."—(Mr. Secretary Chamberlain.)

Resolution to be reported to-morrow.