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FINANCE CAPITAL AND THE CREATION OF THE COLONIAL ECONOMY

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FINANCE CAPITAL AND THE CREATION OF THE COLONIAL ECONOMY

Post by sol_drethedon on Fri Nov 15, 2013 10:24 pm

3. Finance Capital and the Creation of the Colonial Economy

1. General
Having completed the creation of the state machine, the problems of creating a colonial enclave economy had to be faced as a problem of the whole country. Already efforts had been made in many areas and a crop economy had arisen. But before we examine all this, let us look at the strategy that British finance capital had in mind for Uganda.

We have already analyzed why raw materials and food capital are vital to capitalist production and their impact on the rate of profit. Monopoly capitalism ids an accentuated manifestation of this problem of maintaining profitability, and the problem is partially solved by colonization. Colonies assure the monopoly outlets for the application of their capital, and this capital is inevitably directed increasingly in the production and transportation of raw materials and food products. The real purpose of the investment is to obtain these products as cheaply as possible for the industrial monopolies in the metropolitan country. Profit margins of colonial monopolies which need not be the monopoly enterprises themselves, are not the real purpose of such capital exports, although they too are important since the enterprises are the necessary link in the production process, and for this reason capital is made available to them through monopolistic banks, so as to assure them a reasonable return. But the profitability of the colonial enterprises will depend entirely on the demand by the monopolies for their products, a demand very much determined by competition among the monopolies in general.

The Uganda crop economists Ehrlich and Wrigley, in arguments which are intended to obscure the real forces behind colonization in Uganda have claimed that the introduction of a market economy was in the interest of the natives. Wrigley is a liberal in his arguments and more sophisticated in his presentation than Erlich, who is naively conservative and extremely reactionary. But the real intentions of finance capital cannot be obscured. The Marquis of Salisbury, in a debate in the British parliament , was clear about the aims of the colonization of Uganda. Reprimanding the Earl of Kimberly for his views on the matter, he stated:

"The noble Earl [Kimberly] treated the matter [of Uganda] as it was purely a question of administration. Of course the question of administration interests us very much and we hope that great advantage may be conferred upon the native by the introduction of English government, and the enforcement of peace which accompanies English rule: but administration of the country is not the sole or not the main object that should interest us. It is our business in all these new countries to make smooth the paths for British commerce, British enterprise, the application of British capital, at a time when other paths, other outlets for the commercial energies of our race are gradually closed by commercial principles . . .
The moral of that consideration is that it is the duty of the government to spare no opportunity of opening fresh outlets for the energies of British commerce and enterprise,and I confess that not wholly but in a great measure, this great undertaking of England with respect to Uganda has been taken, to my mind, and I believe to the mind of a vast number in this country, for the reason that it is a country of enormous fertility and has what many countries of fertility have not." [emphasis added]

Lord Salisbury was Conservative prime minister of Her Majesty's government of Great Britain and Ireland in 1885, 1886-92 and 1895-1902 a period as we have seen in which Uganda was being brought under the colonial empire of Britain. He was well qualified as a member of the financial oligarchy and leader of their government, to state explicitly the position of the British financial oligarchy.

Knowing fully well the value of Uganda as a fertile country capable of producing crops, Mackinnon of the IBEAC had looked around to raise finance for the construction of the Uganda railway. This was not only to provide reliable transport from the hinterland to the coast , but it also meant business for his shipping lines and those of his associates. Thus on 17th December 1890, Mackinnon wrote to Lord Salisbury, asking for a treasury guarantee of interest on the capital required to build the railway. THe treasury, with the consent of Lord Salisbury, agreed to guarantee the interest on a paid-up capital of 1,250,000British Pounds, with an additional sum outside the guarantee, to build and equip a meter-guage line from  Mombasa to Victoria Nyanza.The profits after payment of interest were to be shared equally between the share holders of the company and the government, until all payments under the guarantee were recovered with simple interest at 3%. Later this amount turned out to be 5.5million British Pounds.

The construction began in earnest after prolonged negotiations, and with a large force of Indian Coolies. The line finally reached the shores of Victoria Nyanza in 1902. Later it was to be extended to Busoga, Teso and Kampala and feeder roads built to join to the railway. But with the completion of the main railway line to Kisumu, from where a ferry system to Port Bell near Kampala and Entebbe established contact with Uganda, a basic infrastructure had been erected for the creation of a colonial economy, guaranteeing the general technical conditions of production in the country. The colonial governments efforts were now to be focused on agriculture.

Although it had been claimed that the purpose of the railway construction was not economic but strategic, and for the fight against slave trade, it requires no argument beyond simple facts to counter this. Curzon, the under-secretary of state for foreign affairs, had in 1895, in a parliamentary committee clearly put the reasons in favor of the construction of the Uganda railway:

"The name Uganda railway suggests the truth as to the principal object of the railway, viz that it is to bring down to the coast the resources not only of the Uganda Protectorate, but of all those countries in the upper water of the Nile and of the Congo, which surround at no very great distance the Victoria Nyanza, resources for which the railway will be a natural outlet."
The events that followed proved these intentions to be well founded.

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