mutually agreed upon by them and the railway company, and they were to receive as remuneration 11 per cent. upon the amount of the specification. But should they exceed the contract price then the 11 per cent. was to be proportionately decreased by an arranged sliding scale, provided, however, that Van Hattum and Co. did not exceed the specification by more than 100 per cent., in which latter case the Company would have the right to cancel the contract. By this provision Messrs. Van Hattum and Co. could increase the cost by 100 per cent, provided they were willing to lose the 11 per cent. profit, leaving them a net gain of 89 per cent. They did not neglect the opportunity. Whole sections of earthworks cost £23,500 per mile, which should not have cost £8,000. Close upon a thousand Hollanders were brought out from Holland to work for a few months in each year on the line and then be sent back to Holland again at the expense of the Republic. In a country which abounded in stone the Komati Bridge was built of dressed stone which had been quarried and worked in Holland and exported some 7,000 miles by ship and rail.
These are a few instances out of many. The loss to the country through the financing was of course far greater than any manipulation of the construction could bring about. In the creating of overdrafts and the raising of loans very large sums indeed were handled. Three-quarters of a million in one case and a million in another offered opportunities which the Hollander-German gentlemen who were doing business for the country out of love for it (as was frequently urged on their behalf in the Volksraad) were quick to perceive. The 5 per cent. debentures issued to raise the latter sum were sold at £95 15s.; but the financiers deducted £5 commission from even this, so that the State has only benefited to the extent of £90 15s. This transaction was effected at a time when the State loan known as the Transvaal Fives—raised on exactly the same interest and precisely the same guarantee—was quoted at over par. What, however, was felt to be worse than any detail of finance was that this corporation of foreigners had gradually obtained complete control of the finances of the State, and through the railway system it practically dictated the relations with the other Governments in South Africa, by such measures for instance as the imposition of a charge of 8–½d. per ton per mile on goods travelling over their lines coming from the Cape Colony, whilst the other lines are favoured by a charge of less than half that. The burdens placed upon the mining industry by the excessive charges imposed for political purposes were, in the case of the poorer mines, ruinous. The right which the Company had to collect the Customs dues for account of the State, to retain them as security for the payment of interest on their shares and debentures, and to impose a charge for collection quite disproportionate to the cost, was another serious grievance. It was hopeless, however, to deal with the whole question. The Government had set its face against any reform in this quarter. It was not possible to obtain even ordinary working facilities such as any business corporation unprotected by an absolute monopoly would be bound to concede of its own accord, in order to catch a measure of trade.
The Government have the right, under the agreement with the Company, to take over the railway on certain conditions, of which the following are the most important:
(a) The Company shall receive one year's notice of the intention to take over.
(b) The Company shall receive twenty times the amount of the average of the last three years' dividends.
(c) The Company shall receive as a solatium for the unexpired period of the concession an amount equal to one per cent. of its nominal capital for each year up to the year of expiring (1915).
The Government can take over the Krugersdorp-Johannesburg-Boksburg Tramway against payment of the cost of construction.
If the Volksraad should not during this Session{08} decide to nationalize the railway no change can take place before 1898, so that the three years 1895 to 1897 would have to be taken as a basis and therefore the 6 per cent. for 1894, the only low dividend, would not come into the calculation. This would of course considerably increase the purchase price—e.g.,
1895 9 per cent.
1896 14 " (estimate),
1897 14 " "
--
Total 37 "
That is to say an average distribution of 12.33 per cent. for the three years. The purchase price would thus be:
12.33 X 20 = 246.66 per cent.
17 years' premium 17 "
------
Total 263.66 "
This has been clearly explained to the Volksraad but without avail, the President's influence on the other side being too strong. During the Session of 1895 it was made clear that agitation against the Company was as futile as beating the air. When the Hollander clique found that they could no longer convince the Boers as a whole of the soundness of their business and the genuineness of their aims, and when they failed to combat the arguments and exposures of their critics, they resorted to other tactics, and promulgated voluminous reports and statements of explanations which left the unfortunate Volksraad members absolutely stupefied where they had formerly only been confused.{09}
The following is taken from an article in the Johannesburg Mining Journal, dealing with the burdens imposed by the railway company upon the industry:
RAILWAY MONOPOLY.
This is another carefully designed burden upon the mines and country. The issued capital and loans of the Netherlands Company now total about £7,000,000, upon which an average interest of about 5–⅓ per cent.—guaranteed by the State—is paid, equal to £370,000 per annum. Naturally the bonds are at a high premium. The Company and its liabilities can be taken over by the State at a year's notice, and the necessary funds for this purpose can be raised at 3 per cent. An offer was recently made to the Government to consolidate this and other liabilities, but the National Bank, which is another concession, has the monopoly of all State loan business, and this circumstance effectually disposed of the proposal. At 3 per cent. a saving of £160,000 per annum would be made in this monopoly in interest alone. The value represented by the Custom dues on the Portuguese border we are not in a position to estimate, but roughly these collections and the 15 per cent. of the profits paid to the management and shareholders must, with other leakages, represent at least another £100,000 per annum, which should be saved the country. As the revenue of the corporation now exceeds £2,000,000 a year, of which only half is expended in working costs, the estimate we have taken does not err upon the side of extravagance. By its neglect of its duties towards the commercial and mining community enormous losses are involved. Thus, in the coal traffic, the rate—which is now to be somewhat reduced—has been 3d. per ton per mile. According to the returns of the Chamber of Mines, the coal production of the Transvaal for 1895 was 1,045,121 tons. This is carried an average distance of nearly thirty miles, but taking the distance at twenty-four miles the charges are 6s. per ton. At 1–½d. per ton per mile—three times as much as the Cape railways charge—a saving upon the coal rates of 3s. per ton would follow, equal to £150,000 per annum. Again, by the 'bagging' system, an additional cost of 2s. 3d. per ton is incurred—details of this item have been recently published in this paper—and if this monopoly were run upon ordinary business lines, a further saving of £110,000 would be made by carrying coal in bulk. The interest upon the amount required to construct the necessary sidings for handling the coal, and the tram-lines required to transport it to the mines, would be a mere fraction upon this amount; and as the coal trade in the course of a short time is likely to see a 50 per cent. increase, the estimate may be allowed to stand at this figure without deduction. No data are available to fix the amount of the tax laid upon the people generally by the vexatious delays and losses following upon inefficient railway administration, but the monthly meetings of the local Chamber of Commerce throw some light upon these phases of a monopolistic management. The savings to be made in dealing with the coal traffic must not
