228
PUBLIC RECORD OFFICE
Reference !--
mudumimco
885/26
PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH—NOT TO
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26. The Magadi Railway is a 90 mile branch of the Uganda Railway, running moetly through infertile country to the Magadi Soda Lake. A lease of the lake was granted in 1911 to the Magadi Soda Co., and a railway agreement made at the same time that the company should construct and pay for the railway, but that the Uganda Railway administration should provide rolling stock and work the line, fixing all fares and rates except those specially agreed for the company's traffic Half the net profits were to be paid to the company. There was no land grant beyond the Inke and the land required for the railway itself. The property in the railway reverts to the Government on the expiration of the lease of the lake, or the Government could purchase it at any time before.
27. In Nyasaland the line from Port Herald to Blantyre (the main line of the Pro- tectorate) was constructed and paid for by the Shire Company under contracts of 1902 and 1908. The agreements provided that the railway should be the absolute property of the Company, and should be worked entirely by them, subject to inspection by a Government engineer for purposes of public safety, and subject to a covenant for continuous working which specified the minimum number and average speed of trains to be run daily. Rates and fares were to be subject to the approval of the Government so long as the net receipts exceeded 7 per cent, of the capital value of the railway. No competing line was to be constructed in the Protectorate for 25 years. Timber, earth, &c., from Government land were to be taken free, and plant and materials were to be imported free of duty. After 25 years the Government could purchase the railway on terms laid down. Land was to be granted at the rate of 5 square miles for each mile of line constructed; for 113 miles this amounted to 565 square miles.
28. In 1913 a further agreement with the British Central Africa Co. (which took over from the Shire Company) provided for extension southwarde (61 miles) to the Zambesi in Portuguese territory. Maximum rates and fares were fixed in a schedule, subject to periodic revision by the company and the Government. No preferential rates were to be given except to Government. The premise of land grants in the agreement of 1902 was revoked and com- muted to a subsidy of £180,800 (at the rate of 10s. an acre on 565 square miles). The Govern ment guaranteed to make up the net earnings of the new railway to 4 per cent. on capital cost not exceeding £500,000. The option of purchase by Government was extended to the new line. 29. In August, 1919, a contract was made for the construction, by a new company to be formed, of a line entirely in Portuguese territory from the terminus of the existing railway on the north bank of the Zamboni to Beira on the coast, The company was to be an English company with a nominal share capital of £600,000, and was to issue 6 per cent, debentures (redeemable by sinking fund within 45 years) up to £1,200,000, the estimated cost of the line. The Nyasaland Government guaranteed to make advances to bring up the net earnings for 25 years up to the amount required for interest on the debentures. No dividends were to be paid on share capital until all advances made by the Government under the guarantee had been repaid with interest at 5 per cent. The Government was to receive one quarter of the shares without payment.
30. In British Guiana there was in existence a railway along the coast, which belonged to the Demerara Railway Co. In 1896 it was decided to extend this line in both directions, and an agreement was made with the Company under which the Government guaranteed to make up the net earning of the new railways to 4 per cent, on £1,500,000, the estimated cost of their construction, for which debenture stock was to be issued. Half of the profite in any year were to be devoted to repayment of the advances previously made under the guarantee. These are the only railways constructed at present in British Guiana, development having hitherto been almost entirely confined to the coastal region.
31. As regards the proposed Uasin Gishu Railway, various proposals have been made for obtaining the funds required otherwise than by the direct issue of a Government loan. Baron Erlanger, who is associated with Messrs. Pauling's offer to carry out the construction of the line, has suggested in conversation:—
(1) that bearer bonds of the Protectorate Government should be handed, as the work progressed, to the contractors, who would arrange with Messrs. Erlanger for the bonds to be issued to the public at a suitable moment; or
(2) that a company should be formed, of which the Government might well be the sole shareholder, and should issue debentures under a guarantee of interest by the Government.
The first of these alternatives would involve the issue by the Government of a non-trustee security; the second is theoretically free from this objection, but it would be equally necessary, no doubt, to offer liberal terms to the debenture holders. Under either alternative the Government would retain full control of the railway.
32. Sir J. Norton Griffiths has also suggested in a letter dated the 22nd December two alternatives, the latter of which is rather similar to Baron Erlanger's second alternative, but is worked out in considerable detail. A copy of the whole letter (Appendix II) is therefore attached. It may be noted here that Sir J. Norton Griffiths's scheme bears some resemblance to that proposed by the Hon. Gideon Murray in regard to British Guiana,*
33. A third course from which a suggestion is available (though hardly perhaps applicable or intended to be applied to the construction of a railway) is the report, dated March, 1919, of an "Economic Commission" appointed by the late Governor of the East Africa Protectorate in 1917 to consider, inter alia, the means by which the resources of the Protectorate should be
*No. 19, page 93.
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developed, and consisting partly of official and partly of unofficial members.
recommend
They
(a) the setting up in the Protectorate of a standing "Board of Economic Development,'
comprising, on the one hand, all the Heads of Government Departments on whose activities economic development depends, and on the other, representatives of the producing interests, industries and trades-this Board to have no executive power, except as regards the management of its own affairs and any specific matters in which the Legislative Council might assign to it a limited initiative; and
"
(b) the incorporation by Royal Charter of a "Chartered Bank of East Africa," with a directorate consisting of the Treasurer as Chairman, four other official and five unofficial members of the Board of Economic Development and up to five additional co-opted members. This institution would be financed either privately, or prefer- ably, by Government, with a capital of, say, £2,000,000. Its principal function would be to apply its capital to the working of schemes holding promise of "economic advantage to the commonwealth, as, for instance, any scheme for "settling soldiers on the land: and in particular, schemes involving initial "investigation and research (eg, schemes for establishing fisheries, manufacture "of industrial alcohol). It would not, of course, concern itself with the schemes not offering a direct cash return, however desirable in themselves (e.... "geological and hydrographical surveys). It would work in conjunction with the "Board of Economic Development. Proposals approved after preliminary investigation would be forwarded for further investigation by the Board to the "Bank. The services of the scientific officers of the Government would be at the disposal of the Bank for the conduct of all necessary enquiries. Where the result "of investigation was satisfactory, the Bank would float a company, call for sub- "scribers and take up shares itself. It would reserve to itself a number of seats on the Board of the new company. The knowledge that the prospects of the company were favourably regarded and in part controlled by a powerful public "institution would, of course, have a strong effect in securing the confidence of "the investing public." The outstanding principle of this scheme, viz., "The undertaking of responsibility by the Bank for Industrial issues," is derived from the German system, but it is not proposed that the Bank, which is to be a Develop- ment Bank, should, as in Germany, interfere or compete with the existing deposit system.
(
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34. One of the Commissioners qualifies the above recommendations with the opinion thar any large sums of capital which may be available for public purposes in the Protectorate appear to be required for communications, and that, until sufficient capital is forthcoming to satisfy this need up to the extent of the existing development, it is premature for the Government to look for capital for such undertakings as that of a Development Bank.
30th December, 1919.
APPENDIX I.
STATISTICS OF TUR UABIN PLATEAU AND TRANS-NZOIA.
Acreage under cultivation :
Maizu
Coffee
Flax...
Sinal
Corn ...
Various
Total
***
P. H. E.
Land is in great demand, and a great deal of it has changed or is changing hands. The Turbo Flax Syndicate has now been sold, and is in course reconstruction with a large increase of capital.
of
8,816 acres.
Adult Males. Females. Children.
2,296 "
4,800* 11
3,500 t
2,048† 690
White population:-
Laat Census
At the Front
372 200
292
438
22,150 acres.
District Commissioner,
This is being largely increased. Includes wheat, oats and barley.
Average yield per acre:
Wheat
Maize
Numbers of cattle...
16 busbols.
One ton.
25,000 (approx).
Transport oxen
10,000
Breeding stock
5,000
Native stock
18,000
SIR,
Cattle dipa number
40
Flax mills
14
Binal mills
1
Saw mills
41
Coffee mill ...
1
The capacity of whose output is 16 tons per diem.
I consider that the increase of acreage on the plateau will range this year from 25 to 50 per cent.
26790
Eldoret.
APPENDIX II
Si J. NORTON GRIFFITHS to COLONIAL OFFICE.
22nd December, 1919.
UASIN GIMBU Railway.
On behalf of myself and the financial groups who are prepared to go into this business with me, I beg to submit the following proposals for the construction of the above railway.
There appear to be three main methods by which the proposed extensions to the Uganda Railway can be carried out.
E
No comments yet.
Private notes are available after approval.