This was the beginning of many ills. The Transvaal Boers, knowing little of the world, thought they had defeated Britain; and under the lead of Paul Kruger, a shrewd old farmer who henceforth directed their policy with all but autocratic power, began to pursue the aim of creating a purely Dutch South Africa, and of driving the British into the sea. Kruger's policy was one of pure racial dominance, not of equality of rights. It was a natural aim, under all the conditions. But it was the source of grave evils. Inevitably it stimulated a parallel movement in Cape Colony, where Dutch and British were learning to live peaceably together. The Boer extremists also began to look about for allies, and were tempted to hope for aid from Germany, who had just established herself in South-West Africa. Full of pride, the Transvaalers, though they already held a great and rich country which was very thinly peopled, began to push outwards, and especially to threaten the native tribes in the barren region of Bechuanaland, which lay between the Transvaal and the German territory. To this Britain replied by establishing a protectorate over Bechuanaland (1884) at the request of native chiefs: the motive of this annexation was, not suspicion of Germany, for this suspicion did not yet exist, but the desire to protect the native population.

Kruger's vague project of a Dutch South Africa would probably have caused little anxiety so long as his resources were limited to the strength of the thinly scattered Boer farmers. But the situation was fundamentally altered by the discovery of immense deposits first of diamonds and then of gold in South Africa, and most richly of all in the Rand district of the Transvaal. These discoveries brought a rapid inrush of European miners, financiers, and their miscellaneous camp-followers, and in a few years a very rich and populous European community had established itself in the Transvaal, and had created as its centre the mushroom new city of Johannesburg (founded 1884). These immigrants, who came from many countries, but especially from Britain, changed the situation in the Transvaal; it seemed as though the majority among the white men in that state would soon be British.

A simple and primitive organisation of government, such as sufficed for the needs of Boer farmers, was manifestly inadequate for the needs of the new population, which included, in the nature of things, many undesirable elements; and it was natural that the mining population should desire to be brought under a more modern type of government, or to obtain an effective share in the control of their own affairs. But this was precisely what the Boers of Kruger's way of thinking were determined to refuse them. They were resolved that Boer ascendancy in the Transvaal should not be weakened. They therefore denied to the new immigrants all the rights of citizenship, and would not even permit them to manage the local affairs of Johannesburg. At the same time Kruger imposed heavy taxation upon the gold industry and the people who conducted it; and out of the proceeds he was able not only to pay the expenses of government without burdening the Boer farmers, but to build up the military power by means of which he hoped ultimately to carry out his great project. Thus the 'Uitlanders' found themselves treated as an inferior race in the land which their industry was enriching. They practically paid the cost of the government, but had no share in directing it.

The policy of racial ascendancy has seldom been pursued in a more mischievous or dangerous form. One cannot but feel a certain sympathy with the Boers' desire to maintain Boer ascendancy in the land which they had conquered. Yet it must be remembered that they were themselves very recent immigrants: the whole settlement of the Transvaal had taken place in Paul Kruger's lifetime.

The diamonds and the gold of the recent discoveries had produced in South Africa a new element of power: the power of great wealth, wielded by a small number of men. Some of these were, of course, mean and sordid souls, to whom wealth was an end in itself. But among them one emerged who was more than a millionaire, who was capable of dreaming great dreams, and had acquired his wealth chiefly in order that he might have the power to realise them. This was Cecil Rhodes, an almost unique combination of the financier and the idealist. If he was sometimes tempted to resort to the questionable devices that high finance seems to cultivate, and if his ideals took on sometimes a rather vulgar colour, reflected from his money-bags, nevertheless ideals were the real governing factors in his life.

He dreamed of a great united state of South Africa; it was to be a British South Africa; but it was to be British, not in the sense in which Kruger wished it to be Dutch, but in the sense that equality of treatment between the white races should exist within it, as in all the British lands. He dreamed also of a great brotherhood of British communities, or communities governed by British ideals, girdling the world, perhaps dominating it (for Rhodes was inclined to be a chauvinist), and leading it to peace and liberty. As a lad fresh from Oxford, in long journeyings over the African veldt, he had in a curious, childlike way thought out a theology, a system of politics, and a mode of life for himself; having reached the conclusion that the British race had on the whole more capacity for leading the world successfully than any other, he had resolved that it should be his life's business to forward and increase the influence of British ideas and of British modes of life; and he had systematically built up a colossal fortune in order that he might have the means to do this work. At the roots of this strange medley of poetry and chauvinism which filled his mind was an unchanging and deep veneration for the outstanding memory of his youth, Oxford, which in his mind stood for all the august venerable past of England, and was the expression of her moral essence. When he died, after a life of money-making and intrigue, in a remote and half-developed colony, it was found that most of his immense fortune had been left either to enrich the college where he had spent a short time as a lad, or to bring picked youths from all the British lands, and from what he regarded as the two great sister communities of America and Germany, so that they might drink in the spirit of England, at Oxford, its sanctuary.

His immediate task lay in South Africa, where, from the moment of his entry upon public life, he became the leader of the British cause as Kruger was the leader of the Dutch: millionaire-dreamer and shrewd, obstinate farmer, they form a strange contrast. The one stood for South African unity based upon equality of the white races: the other also for unity, but for unity based upon the ascendancy of one of the white races. In the politics of Cape Colony Rhodes achieved a remarkable success: he made friends with the Dutch party and its leader Hofmeyr, who for a long time gave steady support to his schemes and maintained him in the premiership. It was a good beginning for the policy of racial co-operation. But Rhodes's most remarkable achievement was the acquisition of the fertile upland regions of Mashonaland and Matabililand, now called Rhodesia in his honour. There were episodes which smelt of the shady practices of high finance in the events which led up to this acquisition. But in the result its settlement was well organised, after some initial difficulties, by the Chartered Company which Rhodes formed for the purpose. Now one important result of the acquisition of Rhodesia was that it hemmed in the Transvaal on the north; and, joined with the earlier annexation of Bechuanaland, isolated and insulated the two Dutch republics, which were now surrounded, everywhere except on the east, by British territory. From Cape Town up through Bechuanaland and through the new territories Rhodes drove a long railway line. It was a business enterprise, but for him it was also a great imaginative conception, a link of empire, and he dreamed of the day when it should be continued to join the line which was being pushed up the Nile from Cairo through the hot sands of the Soudan.

But Rhodes's final and most unhappy venture was the attempt to force, by violent means, a solution of the Transvaal problem. He hoped that the Uitlanders might be able, by a revolution, to overthrow Kruger's government, and, perhaps in conjunction with the more moderate Boers, to set up a system of equal treatment which would make co-operation with the other British colonies easy, and possibly bring about a federation of the whole group of South African States. He was too impatient to let the situation mature quietly. He forced the issue by encouraging the foolish Jameson Raid of 1895. This, like all wilful resorts to violence, only made things worse. It alienated and angered the more moderate Boers in the Transvaal, who were not without sympathy with the Uitlanders. It aroused the indignation of the Cape Colony Boers, and embittered racial feeling there. It put the British cause in the wrong in the eyes of the whole world, and made the Boers appear as a gallant little people struggling in the folds of a merciless python-empire. It increased immensely the difficulty of the British government in negotiating with the Transvaal for better treatment of the Uitlanders. It stiffened the backs of Kruger and his party. The German Kaiser telegraphed his congratulations on the defeat of the Raid 'without the aid of friendly powers,' and the implication that this aid would be forthcoming in case of necessity led the Boers to believe that they could count on German help in a struggle with Britain. So every concession to the Uitlanders was obstinately refused; and after three years more of fruitless negotiation, during which German munitions were pouring into the Transvaal, the South African War began. It may be that the war could have been avoided by the exercise of patience. It may be that the imperialist spirit, which was very strong in Britain at that period, led to the adoption of a needlessly high-handed tone. But it was neither greed nor tyranny on Britain's part which brought about the conflict, but simply the demand for equal rights.

The war was one in which all the appearances were against Britain, and the whole world condemned British greed and aggression. It was a case of Goliath fighting David, the biggest empire in the world attacking two tiny republics; yet the weaker side is not necessarily always in the right. It seemed to be a conflict for the possession of gold-mines; yet Britain has never made, and never hoped to make, a penny of profit out of these mines, which remained after the war in the same hands as before it. It was a case of the interests of financiers and gold-hunters against those of simple and honest farmers; yet even financiers have rights, and even farmers can be unjust. In reality the issue was a quite simple and straightforward one. It was the issue of racial ascendancy against racial equality, and as her traditions bade her, Britain strove for racial equality. It was the issue of self-government for the whole community as against the entrenched dominion of one section; and there was no question on which side the history of Britain must lead her to range herself. Whatever the rest of the world might say, the great self-governing colonies, which were free to help or not as they thought fit, had no doubts at all. They all sent contingents to take part in the war, because they knew it to be a war for principles fundamental to themselves.

The war dragged its weary course, and the Boers fought with such heroism, and often with such chivalry, as to win the cordial respect and admiration of their enemies. It is always a pity when men fight; but sometimes a fight lets bad blood escape, and makes friendship easier between foes who have learnt mutual respect. Four years after the peace which added the Transvaal and the Orange Free State as conquered dominions to the British Empire, the British government established in both of these provinces the full institutions of responsible self-government. As in Canada sixty years earlier, the two races were bidden to work together and make the best of one another; because now their destinies were freely under their own control. Yet this was even a bolder experiment than that of Canada, and showed a more venturesome confidence in the healing power of self-government. How has it turned out? Within five years more, the four divided provinces which had presented such vexed problems in 1878, were combined in the federal Union of South Africa, governed by institutions which reproduced those of Britain and her colonies.