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PUBLIC RECORD OFFICE

Reference

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PUBLIC RECORD OFFICE, LONDON |

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC-

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He also refers in this paragraph to the possibility that local wheat and maise may be able to compete in the world's markets. At present the only outlet for produce from the plateau is by means of oxen along a road 60 miles long from Eldoret to Londiani on the Uganda Railway, which is impassable for several months in the year because of the heavy rains, while towards the end of the dry season there is risk of the grazing being insufficient for the oxen, apart from the risk of outbreaks of disease among them. At the meeting of the Acting Governor with the settlers on March 25th (paragraph 11):—

"The various speakers laid stress on the disabilities from which they were suffering "in the matter of transport. It was stated that while such products as sisal, flax and "coffee could perhaps be exploited at a profit even under existing conditions, the heavy "cost of waggon transport severely handicapped the plateau in competition with more "fortunately situated districts. Also that the economic production of the commodities " mentioned necessitated the investment of large amounts of capital in machinery, super "vision, &c. The production of wheat and maize, as well as the dairying industry, "and in fact all farming open to the small man, was made impossible because of the "lack of facilities for bringing the produce to the market. Attention was drawn to "the enormous number of oxen required to move the produce, which oxen could be more "economically employed in ploughing the land.”

(Paragraph 12).

"The speakers expressed the willingness of the plateau settlers to be specially taxed so as to provide interest and sinking fund on the loan, and suggested a land tax at "the rate of 30 cents per acre, which they considered would be sufficient. It was, how-

46

ever, clear that the question of finance had not been gone into in any detail, even from "the point of view of the plateau alone."

After leaving Eldoret, Sir C. Bowring made a three days' tour of the plateau, and says (paragraph 17):—

"I was greatly impressed by the productivity of the area visited, and by the "development which was being undertaken by the more wealthy settlers. The possi- bilities of sisal and flax production appeared limited only by the availability of "machinery. There were no labour difficulties. Coffee and citrus also flourished, and Great "there appeared to be great possibilities for the future of the stock industry.

"

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things are expected of wheat growing, but the cost of transport militates against this product being placed on the world's markets, while as regards maize only sufficient for local requirements on the plateau can be produced economically. I was unable to spare the time to visit the Trans-Nzoia District or the Western Uasin Gishu in the "vicinity of the Nandi border, but I believe that these areas are no less fertile than "that between the Sergoit and Nzoia Rivers. What can be seen of the plateau proper "from the main road south of the Sergoit River is not so alluring. But little develop- "ment has taken place, and, though much of it is doubtless suitable for the production "of maize, the cost of transport makes it impossible for it to compete with other settled "areas or with the native reserves, and until this cost can be very materially decreased "it will be impossible for the land to be developed to its fullest extent.'

16. The Eldama Forest (commencing about mile 45 on the line) appears, from official reports received in 1907, to be of very great value.

16.

The Northern Kavirondo district to be tapped by the line beyond the Uasin Gishu plateau is very fertile, and is occupied by a very large, intelligent and industrious native popu- lation which has taken up agriculture with great energy, and even with present communications (ie., a road to Kisumu at the lake terminus of the Uganda Railway) has produced much sim-sim, &c., for export.

17. The new line will undoubtedly, as already stated, become in due course part of the main line to Uganda, and will carry the cotton and other produce of that Protectorate.

18. The results of the working of the Uganda Railway (with branches and steamer services) since it was opened for public traffic are given as follows in the Administration Report for 1917-18 :-

Your

Percentage of Earnings

Net Earnings.

on Total Outlay.

63

19. In making any inference from these figures as to the prospects of the new line, it should be remembered that the main line was not a purely economic line, and was constructed in advance of settlement; that it runs for a good portion of its length through poor country; and that in the case of a Government-owned line account should be laken of indirect profits in the shape of increased general revenue resulting from the development of the country. On the other hand, while the cost of the main line was just under £10,000 a mile, the new line is estimated to cost at least £12,000-£13,000 a mile, and the rate of interest to be paid now on borrowed capital is much higher.

20. The export traffic to be carried by the new line will have to bear the charges of trans- port along 450 miles of the main line. Its ultimate development depends upon the improve- ment of the port facilities at Kilindini, but the completion of the harbour works scheme, when money can be found for it, will probably take a longer time than the construction of the Usain Gishu railway. The Acting Governor, in the despatch already quoted, has expressed the opinion that until the deep-water scheme can be taken in hand the financial aspect of the construction of the line must be approached from the point of view of the ability of the local markets to absorb the bulk of the produce from the area it will serve.

IV. POSSIBLE METHODS OF OBTAINING CAPITAL REQUIRED.

21. The ordinary course taken by the Government of a Colony desiring to construct a new railway or other large capital work is to issue a public loan, usually in London through the Crown agents, on the security of its general revenues. These loans are trustee. securities under the Colonial Stock Act, 1900, and stamp duties on transfer can be compounded by an initial payment. Whatever may be the moral obligation of the Imperial Government to back

up a Colony in financial difficulties, it is necessary to state in the prospectus of every loan issued under the Colonial Stock Act that the Treasury is in no way liable in respect of it. Nevertheless, it is probable that the investing public recognises the obligation. Nigeria has just issued in this way a £6,200,000 inscribed stock 6 per cent. loan at par, which was fully subscribed by the public.

22.

In considering the question of issuing a loan of this kind for the East Africa Pro- tectorate it is necessary to remember (1) that the Colonial Stock Act, 1900, does not apply to a Protectorate; that a Protectorate loan would therefore not be a trustee security, and that this could only be remedied either by procuring the necessary amendment of the Act to cover a Protectorate, or by annexing a portion (however small) of the territory; and (2) that the financial position and prospects of the East Africa Protectorate are not nearty so assured as those of Nigeria, and that the existing Treasury loans would form a prior charge.

23. To remove this prior charge it would be necessary to repay to the Treasury the amounts already advanced from the Exchequer, and to issue a loan covering the whole of the public debt. The advances already paid amount to £687,840, mostly at 3 per cent. (with an addition of 1 or 1 per cent. per annum for repayment of principal); future advances, including a sum of £585,000 already applied for, will be at 6 per cent. interest. The total cost of the loan works already carried out with this money and of those projected for the future, including the Uasin Gishu Railway, would be about £6,000,000. It would, however, be disadvantageous to repay the advances made at a low rate of interest.

24. The following is a statement of the total revenue and expenditure of the East Africa Protectorate (including railways) during the last nine years:-

Year,

1911-12

1912-13

1913-14

1914-15

1915-16

1916-17

1917-18

H+

1918-19 (estimate) 1919-20 (estimate)

Bevenue.

Expenditure.

1£ 729,078

£

744,425

952,525

889,914

1,102,633

1,051,375

964,141

1,129,174

1,188,682

1,045,681

1,601,698

1,169,528

1,338,191

1,470,418

1,542,051

1,642,051

1,605,049°

1,732,549

2-821 Military traffic

during

war included.

• Includes £120,000 railway revenue from surcharges which it is desirable to remove as soon as possible.

25. Where a Colonial Government is not prepared itself to pay for the construction of a new railway, an alternative is to grant a "railway concession" to capitalists willing to under- take it; and questions then arise as to the rights of expropriation to be reserved, the degree to which control of working should be retained by the Government, and also as to land grants, guarantees of interest, subsidies, and the grant of privileges of one kind or another, such as the remission of taxation. In considering these questions much might depend on whether the new railway was to be a main artery of the territory, a branch line required for general develop. ment, or a line required for the service of the property of a single company or a group of companies, though possibly capable of contributing sooner or later to general development. A few instances of recent "railway concessions" in the Colonies may be useful.

£

1905-04 ...

Loss 60,101

1904-06 ...

2,639

1905-06 ...

56,678

1906-07

76,763

1907--08

64,713

1908-09

64,838

1909-10

GE,867

1910-11

98,519

1911-12

191,371

1912-13

209,046

1913-14

213,483

3.39

1914-15

180,600

1915-16

287,300

4-130

1916-17

361,826

5.41

1917-18

208,986

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