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47. Another example is to be found in railway development, which is a highly political problem. Further railway lines and links are certain to be developed in Southern Africa and are badly needed. Where they are built will largely determine the balances of political influence. There is at this very moment a dispute between Southern Rhodesia and South Africa about a projected new railway link. South Africa wants to see built the link that would be most economical: but this route would put Southern Rhodesia at the mercy of South Africa and powerfully advance South African influence over Southern Rhodesia. (Incidentally, it would also largely ruin the Bechuanaland Protectorate-see above (paragraph 17). This is a case where we should, as we are doing, use our influence against the economically desirable and obvious solution.

48. We should also do what we can to help direct capital into Southern Rhodesia. Very considerable sums of private British capital are going into the development of the Union-particularly into gold mines and secondary industries, This is, of course, important: but, other things being equal, it would pay us to see a proper proportion of our capital going to Southern Rhodesia. It is not in our long-term interest to see South Africa's economic development altogether outstripping Southern Rhodesia's.

49. Into this general framework of policy must fit our intentions about th High Commission Territories. These cannot be indefinitely held unless there i behind them a solid block of British territory that is distinct from and independent of the Union. The three Territories can be indefinitely held as outposts or bastions of such a block. Their fate will be sealed if South Africa's influence and area spreads further North. As outposts or breakwaters the Territories, indeed, can play a coherent part in our policy. Otherwise we can at best hope for a hand-to-mouth policy of holding them as long as we can against great odds.

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50. I have returned very much more confident of indefinitely holding the Territories, on condition that our whole Southern and Central African policy is far-sighted, and on condition that we do not make any foolish mistakes. South Africa is very conscious of its need for British friendship and there are in South Africa powerful forces that positively desire to retain the British connexion (see above, paragraphs 23 to 25). This means that we should be able to keep South African internal opinion divided on the issue of the incorporation of the Territories. Every White South African, of course, wants to see the incorporation of the Territories, and will always declare himself to be in principle in favour of incorporation But a very large section of the population does not want to break with Britain on the issue and will always find that the moment is not opportune for pressing the demand. I was surprised to find how strong was the reaction in the British Press in the Union against Malan's Cape Town speech about incorporation. I was surprised, too, to find how fairly the whole Press (including the Afrikaans papers) reported my version of the meaning of the relevant Acts. There is a pretty widespread realisation that it would be unwise to take over wholly hostile popula- tions. Strauss, the leader of the United Party, said privately that he did not see how the Territories could ever be taken over by South Africa. The populations of the Territories were to a man against it, and even if the United Party got back to power and improved the lot of the African in the Union, the fear would be present that the Nationalists would once again get back to power.

51. I think we can therefore fairly confidently adopt a policy of indefinitely holding the Territories. But only if South African opinion continues to be divided. If anything happened that both united and inflamed South African opinion on this issue, we would be helpless. The influences that we can exercise over the Union because of her need for us and because of her material and political interests, would become quite feeble. In certain moods South Africa will do things that are pig- headedly doctrinaire and against all her best interests. (See above paragraph 26.) If the Union put the incorporation of the Territories above every other interest, we could not resist her economic and even perhaps military power. The Territories are not large enough even to be administered as wholly distinct units. The railways that run through them belong to the Union: the currency is South African: the customs are joint. The frontiers are unguarded and such things as control of cattle disease and anti-erosion work must be done in co-ordination. Nearly all the consumer goods28eeded by the Territories must come through the agnia189 alf 5187 Territories' exports must go out into or through the Union.

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