The future prosperity of South Africa mainly depends upon the development of her vast and indisputable gold wealth, for, albeit she possesses other resources in undoubtedly lavish abundance, the means for the utilisation of these latter are dependent, in a large measure, upon the effective exploitation of her auriferous reserves. This fact was explicitly stated by Sir David Barbour, the financial expert appointed by the Imperial Government to report in 1901 on the resources of the Transvaal, and that this impartial official opinion is echoed by all competent observers prior to and since his investigations only confirms its correctness. As to the magnitude to which the mining industries in the Transvaal may ultimately attain opinions differ, but, says this authority, and this view is confirmed by experts, it is certain that the production of gold will continue to increase largely for some years at least; that there will be a corresponding growth in the production of coal, and it is possible, and perhaps probable, that valuable mines of other minerals, and especially of diamonds, may be opened. He therefore opines that, from an economic point of view, the prospects of the future for a considerable period are quite satisfactory, and it is unnecessary to speculate as to what may ultimately happen.
Public opinion on the Rand is unanimous that absolutely vital questions for the mines’ future are, for the moment, labour and taxation. A comprehensive and impartial view of the circumstances of the mines must force the conclusion that such contentions are perfectly sound. Naturally, however, the dimensions of the latter factor have less weight since the reduction of the customs tariff and the previous abolition of monopolies, and, with the pending solution of the question of dynamite, the mining industry is now not only in a vastly superior economic condition than it ever was, but has been placed in a position to sustain, not without some difficulty maybe at the outset, all the prospective burdens of projected Imperial taxation. In saying “not without difficulty,” the crux of the present economic situation, as looked at by the leading and responsible section of the mining industry and competent individuals at large, is touched. For the judiciousness or otherwise of the immediately heavy incidence of the share of the cost of the war, which it may be contemplated to place on the Transvaal, is what causes the present misgivings; and, with the operative capacity of 1898 still some ten to fifteen months ahead, the immediate call for heavy contributions can only act as a drag upon progress. It is with this consideration in view that the Chamber of Mines, in a recent letter to Lord Milner, asked for a delay of five years before making a first payment, in order to allow time for the industry to recover its former level, and that other authorities have also entered their protests.
Prospecting for Gold: Panning a Sample
The inference that an immediate and heavy increase of taxation is to be made to meet the war debt obligations may possibly be gratuitous, and probabilities confirm this supposition, for it is at issue with the Government expert’s special recommendations. From this point of view, Sir David Barbour’s observations are worth reciting for their direct bearing. He says: “The sound policy for the Transvaal is to so frame its system of taxation as not to increase unnecessarily the initial capital expenditure, or enhance the cost of working. I shall take it for granted that it is not intended to impose excessive or crushing taxation on either of the Colonies, or to exact such a share of their revenue as would cripple or starve the Administration. Subject to these considerations, I shall assume that any surplus of revenue over expenditure, or any special assets that the Colonies may possess, can fairly be taken towards meeting a portion of the cost of the war.” Further: “If the additional taxation which I recommend ... be imposed ... it may be anticipated that after two years from the conclusion of peace that Colony will be in a position to set aside a portion of its ordinary revenue towards meeting the cost of the war. I am unable at present to form an estimate of the amount which it may be possible to set aside in this way.... On the assumption that the contribution of the Orange River Colony and the Transvaal towards the cost of the war is to be limited to the amount which they can pay without imposing excessive taxation or starving the Administration, it will be obvious from what is said in the preceding portion of this report, and especially in paragraph 62, that it is impossible at the present time to specify any definite sum as that which ought to be paid. I suggest that the Imperial Government should fix the maximum sum which, under any circumstances, they would require to be paid. Such portions of the total amount of contribution, so fixed as it may be found from time to time that the Colonies can bear, should be made a charge against them. If, in the course of time, it is found that the Colonies are unable to pay the whole sum, under the conditions as to taxation and cost of administration which I have already specified, the balance should be written off.” So far as the immediate incidence of war taxation is concerned, it is therefore highly probable that the Government, who have adopted their financial expert’s views almost in toto with regard to fiscal reform, will do the same with regard to the levy of the war contribution.
WASHING PLANT OF DE BEERS DIAMOND MINES AT KIMBERLEY
Photo by Wilson, Aberdeen
But another phase of the same subject is revealed in the extent of the contribution which the Transvaal should be called to bear compared with that of the other South African Colonies. In the thoughts of some, tinctured still perhaps with a touch of the recent bitterness of the war, the Transvaal should bear the heaviest share; but it is to be observed that this is not the opinion of the responsible heads of the mining industry, who, while admitting the justness of assuming their proper proportion of the proposed burdens, appropriately point out that both the Orange River Colony and the Cape Colony (for a part of the latter’s population) were fellow-sharers in the beginnings and the conduct of the war, and should bear a due portion of the resultant financial burdens, while Natal, it is contended, cannot fairly be allowed to escape contribution to the extent at least of the valuable Transvaal territory which has been allotted to her. Pending formal announcements of the Government’s intentions—and it is to be observed a contribution from the Orange River Colony is contemplated in Sir David Barbour’s report—many huge lump sums have been mentioned, which it is proposed to levy on the Transvaal alone. Such reports naturally have not only alarmed the mining industry, but disturbed the confidence of international capitalists, upon whom the future development of the wealth of the goldfields in the first place rests. The extent of the alarm which is felt is shown by the Johannesburg Chamber of Mines as a body pleading in their recent communication to Lord Milner for a “reasonable sum” to be fixed, and by the rough estimates of this sum propounded by others, as, for instance, Mr. Freeman Cohen, chairman of the Potchefstroom Exploration and Gold Mining Company, who indicates £30,000,000 as the specific figure, while Mr. Bleloch adventures the sum of £35,000,000. This last gentleman’s summing up of the situation is that the mines can pay, and are willing and forward to pay, provided the incidence at the first be made light, and that the burden of the £55,000,000 estimate of the Government’s financial expert be shared by the other Colonies in the proportion, say, of £5,000,000 from each, to lessen the burden on the mining industry as much as possible, especially the low-grade section, and also as a matter of equity, and he advocates in addition—to augment the disposable revenue—the levy of a 5 per cent. tax on the profits of other industries (banks, &c.), the creation of death dues and of a land tax; also the beneficial reservation to the Government of portions of each new mining field to be opened.