State building in the colonial era: Public revenue, expenditure and borrowing patterns in the Cape Colony, 1820-1910

Forskningsoutput: AvhandlingDoktorsavhandling (monografi)


title = "State building in the colonial era: Public revenue, expenditure and borrowing patterns in the Cape Colony, 1820-1910",
abstract = "We now know that state formation experiences outside Europe were not merely attenuated or failed versions of the European experiences (Herbst, 2000; Hoffman, 2015; Johnson and Koyama, 2016). The diverse paths taken towards the modern state imply that existing knowledge on state formation processes can be enhanced by integrating the experiences of Africa and other developing regions. This dissertation investigates colonial state formation in the British Cape Colony from 1820-1910, a period which saw the consolidation of British rule as well as the discovery of diamonds and gold in the region. The history of the Cape Colony adds a new dimension to accounts of colonial state formation in the 19th century, which are usually based on the experiences of New Zealand, Australia and Canada rather than those of Africa and other developing regions. The history of how the Cape Colony coped with the opportunities and challenges of mineral discoveries also has wide implications for debates on the interaction between mineral resources and institutions. The literature argues that the existing institutional structure shapes prospects for either prosperity or decline in the wake of discovering a resource. The discovery of diamonds in 1867 occurred during the early decades of self-governance at the Cape and the subsequent consolidation of political and economic institutions was heavily influenced by diamond mining as a major source of economic rents. Given that budgets are the ‘skeleton of the state stripped of all misleading ideologies’, as Goldscheid famously asserted, the study investigates the fledgling colonial state through the Cape Colony’s revenue policies, expenditure priorities and public borrowing patterns. The study contributes to the body of knowledge on the 19th century colonial state by presenting and analysing data on the revenue, expenditure and borrowing patterns of the Cape Colony (the data are contained in Appendices A, B and C). Further, it combines the quantitative data with archival records from the Cape Archives, South African Library, Stellenbosch Library and the British National Archives in Kew (United Kingdom). Budget speeches, debates, and other qualitative material help to contextualize trends in the quantitative data and make them intelligible. By combining these two types of discourse, this dissertation adds a new in-depth case study to research on South African economic history, African colonial states and imperial history in general. On the revenue side, the salience of customs revenue was established as a major form of indirect taxes. The second most important revenue item was railway earnings from the state-owned railway system. These two major sources of public revenue formed the backbone of the Cape Colony’s fiscal capacity development. The tax structure meant heavy burdens for the poor, mainly black Africans, while the available evidence suggests that private interest groups resisted taxes successfully. By the end of its existence, the Cape was in dire circumstances with high public debt and diminishing revenues. This was because the growing rivalry with neighbouring colonies meant that customs revenues and railway earnings dwindled in the Cape as trade was captured by other colonies. The expenditure side was dominated by the elite-driven railway construction that primarily served the mining interests at the expense of all other sectors. Education and other social spending remained at the periphery of public expenditure while debt-driven and railway-centred infrastructure development took centre stage from the late 1870s when the Cape had attained self-governance and responsible governance. The discovery of diamonds proved to be the major positive economic shock that pushed the Cape economy and therefore public finances to a higher equilibrium. The businessmen with mining interests steered the government towards policies or actions beneficial to their interests through legislation that prevented direct taxation on them. This group with mining interests steered the government’s public finance policies to revolve around mining promotion. This shaped what this study characterises as a minerals-railway-complex (MRC). The MRC encapsulates the nature of the state-business informal coalition that determined not only the public finance patterns but also the pattern of economic industrialisation during the Cape’s existence. The 19th century business environment, with weak state institutions, meant that public finance policies were distorted to serve the interests of the political and economic elite.",
author = "Abel Gwaindepi",
year = "2018",
month = "3",
day = "30",
language = "English",
publisher = "Stellenbosch University",
school = "Stellenbosch University",