[18] An argument often used in this connection is that the employment of Asiatic labourers, repatriated at the end of their contract, would mean that a very large sum of money annually left the country. But the same thing will happen if native African labour is brought from Central or Western Africa or Somaliland. It is happening at present with the natives from Portuguese territory, who form 90 per cent of the existing labour-supply.
[19] I have said elsewhere that there are few South African problems which are not long-descended. The first proposal to introduce Chinese labour was made by Jan van Riebeck, the first Governor of Cape Colony, about the year 1653. He urged the scheme with great persistence, but home opinion proved too strong for him.
[20] The cost of the acquisition of the present railway systems was roughly 14 millions. This does not, of course, represent an accurate statement of capital outlay, as in the Orange Free State considerable sums were spent out of State revenue. But even if we put the figure at the outside limit of 20 millions, the net profits are still more than 10 per cent of the capital value.
II.
The foregoing is a rough survey of the assets with which the new colonies start on their career. As in all beginnings, a multitude of questions protrude themselves. Every politician has his own nostrum, every interest its own pressing demands. But the main questions are simple, at least in their outlines, and it is permissible to disentangle from the web the chief threads of economic policy. Three postulates there must be before a solvent and progressive nation can be founded. In the first place, life must be made possible,—life on the various scales which a civilised society demands. In the second place, industries—the gold industry and the host of subsidiaries which must follow—should be given free scope for development by enlightened legislation, and the removal of burdens from the raw material of progress. Finally, a sufficient revenue must be secured to meet the vast reproductive expenditure which the country demands. To reconcile these three needs, which in practice often appear contradictory, is the task of the new Government.
Taking the three axioms as our guide, we have to consider the two questions in all administration—the raising of revenue and the apportionment of expenditure. Our inquiry into revenue must be chiefly concerned with the Transvaal. The Orange River Colony is for the present prosperous, and its future solvency seems assured. With a certain income of half a million, and an expenditure of a little less, its fiscal problem is simplicity itself. But the Transvaal presents the case of a country with great potential wealth, which must borrow heavily to elicit its prosperity. Certain revenue-producing charges must be cut down to make life on a proper scale possible, but revenue must also be raised to make this life possible. It is the old story of Egypt—taking out of one pocket to put into the other, with somewhere behind the transaction an economic Providence to enhance values in the exchange. Such a policy is based upon a faith in the land, which by its productive power provides a natural sinking fund to wipe off encumbrances. Loans can be raised at 4 per cent, because the country repays a hundredfold.
The main items, exclusive of railways, which in the financial year 1902-3 made up the revenue of the Transvaal, were customs revenue at upwards of two millions, mining revenue at half a million, stamp and transfer duties at £720,000, taxes on trades and professions and post and telegraphs at a quarter of a million each, and native revenue at a little over £300,000. The total revenue was about £4,700,000. The estimated revenue for 1903-4 has been put at £4,500,000, made up of customs at £1,800,000, mining revenue at £750,000, post and telegraphs at £360,000, taxes on trades and professions at £200,000, native revenue at £500,000, stamp and transfer duties at £700,000, and £200,000 for miscellaneous items. Since the object of the present inquiry is to estimate the financial position of the country, it is necessary in the first place to take the various sources of revenue one by one, and estimate their value and their defects. Several may at once be omitted. Post and telegraphs barely pay for their working expenses, and cannot be counted upon as a source of revenue. Stamp and transfer duties, stand licences and rent, and the bulk of the miscellaneous items, are for the present static figures, or vary within narrow limits, and it is improbable that they will be altered so as to greatly increase their present revenue during the next few years. Revenue questions for the Transvaal are concerned with two items which far excel all others in importance—mining revenue and customs. There is a third, and the largest of the three, railway profits; but, as will be explained later, this item has been excluded from the separate budgets of the two colonies.
The old mining revenue was mainly indirect. A tax on profits was indeed imposed by the late Government in February 1899, but war broke out before there was time to organise its collection. The real burden lay in the dynamite monopoly, which at its worst increased the price of explosives by £2 the case, and at its best by about 30s. The mines required an annual supply of 300,000 cases, which meant an annual charge, beyond the cost of material, of £450,000. The average net profits on the annual production of gold may be put at £6,000,000, which, with a 5 per cent profit tax, would return £300,000 a-year. Had the Boer régime continued, the mining industry would have contributed in the form of imposts something between £600,000 and £750,000 per annum (for a reduction of 10s. in the dynamite charge had been promised on the eve of the war). From the standpoint of the mines the whole sum was an impost, but only the yield from the profit tax would have found its way into the Exchequer.
The present charges on the mining industry consist of the prospectors’ and diggers’ licences, the 10 per cent tax on profits, imposed by Proclamation No. 34 of 1902, and the cost of native passes, which was formerly paid by the native himself, but is now borne by the employer. The mining industry will therefore on its present basis pay from half a million upwards in profit tax, about £120,000 for native passes, and about £50,000 in licences. It is difficult to see how this taxation could be fairly increased. To add, for example, a charge of 20s. per case to explosives would be to tax the means of production,—a fatal heresy,—to keep some of the smaller mines out of the profit-making class, and in the long-run to harm the Exchequer itself. The true policy is not to hamper the earning of profits by excessive charges, but to enlarge by judicious encouragement the area over which profits are made. It is of the first importance that European capital should be attracted to, and not scared away from, the country. Under the present system the Government receipts will advance pari passu with any increase in the prosperity of the mines, and to secure the ultimate gain one may well be satisfied to forego a larger immediate return.
There is a fourth source of revenue from mining enterprise which may be roughly described as windfalls. The Government has a moral right, which no one denies, to profit by new discoveries, and in any case, as a large landowner, it will be interested as an immediate participant. The provisions of the old Gold Law have been so often discussed in print that it is sufficient here to give the briefest sketch of them. Legislation by the late Government on precious minerals began as early as 1858, and continued in a long series of resolutions and counter-resolutions till the somewhat confused position of affairs was simplified and regulated by the famous law, No. 15 of 1898. The basis of this law is to be found in the principle that to the owner belonged the ownership of minerals found under his land, but to the State the right of regulating their disposal. It attempted to give to both owner and State a fair share of the proceeds, while at the same time the prospector and discoverer received a moderate reward for their enterprise. There can be no question about the validity of the three rights; the only dispute is concerned with their relative proportions. Besides the matter of share, there is one other question of great importance—how far it is permissible for an owner to refuse to allow the exploital of minerals under his land.