to set up an independent colony, the Cape government asserted its authority and converted the territory into the dependency of Natal; whereupon the Boers in dudgeon retired beyond the Vaal. In the fifties, the Home government, which then had a passion for emancipating its colonies and washing its own hands of responsibility, insisted on recognising the independence of the two Dutch governments as the Orange Free State and the Transvaal Republic; though with certain not too definite reservations as to its own authority as paramount power in South Africa. At a later stage the British authorities, under the impression that the Transvaal could not hold its own against the aggressive military force of the Zulu kingdom, annexed it; and having done so, broke up the Zulu power itself. Then the Transvaal revolted; the burghers routed a column of British troops, and the British government caused a good deal of surprise by restoring the independence of the Transvaal.

War and

ment.

The discovery of diamond-mines on the borders of the Free State; anticipations of gold to be discovered in the interior, which were whetted by the actual discovery of Transvaal goldfields; imperial visions of a ReconcileBritish dominion in Africa extending from the Cape to Cairo since an avowedly temporary occupation of Egypt began in 1882 ;—all these combined to develop a policy of extension from the Cape which would have effectively prevented any otherwise possible expansion of the Boer republics. Rival ambitions and resentment at the treatment accorded to the Uitlanders or immigrants to the Transvaal goldfields by the Transvaal administration, led to the South African War, which broke out in the autumn of 1899, and was brought to a close in 1902 by the submission of the Boer republics. After a brief period, during which they were governed as Crown colonies, they were admitted to the full freedom of British colonies with responsible government; and finally, the whole South African group followed the example of Australia and Canada, and formed a federation as United South Africa in 1909. As with the other colonies,

complete fiscal freedom was an essential part of the South African system.

India.

India stands on a different plane from the whole colonial system. Englishmen had gone to India not as settlers but as traders. As traders they had fought the rival traders from France, and beaten them; and in the course of the rivalry they had been brought into collision with the native powers. In the result the trading company had become the territorial sovereign of one of the richest provinces of India, where it exercised a paramount influence amounting to a practical control in two more provinces, and was regarded with fear and jealousy by every other native power. The trading functions of the company had become secondary to its political functions, and its history presents a perpetual contest between political necessities as recognised by governors-general and the commercial ideals of the directors in England. But the immediate power of action was vested in the actual government in India, which was ultimately responsible to the parliamentary Board of Control rather than to the directors; and commercial demands were always in fact subordinated to political exigencies.

It was the business of the Indian government to provide the best administration it could achieve within its own British dominions, and to maintain its footing against Expansion. Oriental States, each one of which desired the destruction of a rival so formidable, and the establishment of its own supremacy. The result was that very nearly every governor-general found himself forced, usually, though not always, with reluctance, into wars with one or more of the great native powers; and every war involved some annexation of territory until the Suleiman Mountains on the northwest were reached. In the governor-generalship of Lord Dalhousie, who left India in 1856, the British dominion was carried to its completion. Approximately one half of the Peninsula was under direct British administration, while the rest was ruled by princes subject to varying degrees of British control, but technically administering their own

principalities. The last annexation, that of Oudh, was not actually carried out by Dalhousie himself.

But the year after his departure a great mutiny of the native troops, supported by armed followers of many among the native nobility, threatened the British dominion. The revolt was crushed; the East India Company was brought to an end, and from 1858 onwards the great Indian dependency was administered by the Crown.

Europe.

After 1815 Great Britain took no direct part in any of the European convulsions of the century, with the exception of the Crimean War. Her wars, big or small, have been fought in Asia, in Africa, and in America, but never in Europe, and that fact alone ensured to her a persistent industrial and commercial progress without violent disturbance. Italy, through storm and stress, emerged into a united nation. Germany acquired imperial unity through two great wars. The United States were rent by a terrific civil war. France suffered her terrible duel with Germany, as well as other contests into which she was plunged in the interests of the Second Empire, besides undergoing three revolutions and a coup d'état. Hungary, Italy, and Prussia gave Austria more than something to think about. Until the war of 1870 enabled the German Empire to dominate the European system, it can hardly be said that any European nation had the chance of attempting to go steadily forward on the path of industrial expansion. The one exception to the otherwise universal rule was the British Empire. Accordingly, it was only the closing years of the nineteenth century that witnessed a movement towards colonial expansion on the part of the European powers; a movement limited in the nature of the case to the African continent, and to that Far East where the sudden upspringing of Japan introduced a new factor extremely antagonistic to the exploitation of China by any of the races of the West.

CHAPTER XVII

THE NEW CONDITIONS

WE have outlined the political events of the last century and a half as bearing upon the commercial and industrial history of the period. We have now to summarise the new economic conditions and conceptions which differentiate this era from the past.

The Past.

In the Middle Ages England was an agricultural country, which incidentally traded its superfluous raw material chiefly for foreign goods which were not, or could not be, produced at home. Her production and her trade were not regulated upon any economic theory, but in accordance with accepted ethical standards. But towards the close of the era a commercial expansion began which was given an increased impetus and a new direction by the maritime discoveries at the end of the fifteenth century. Commerce assumed a new importance as a source of national power, and it became the business of the State to direct it on those lines which were regarded as most conducing to the national power. A definite policy required a theoretical formula. The conditions of a trade which should advance national power were marked out as maritime expansion, the acquisition of treasure, and the development of domestic industries; this last having in view the double object of rendering the country independent of foreign supplies, and of maintaining a vigorous population in active employment. For the achievement of both these objects, the maintenance of agriculture was a primary necessity. But from first to last throughout the medieval and mercantile eras, no sweeping change in the methods of production had been introduced.

Now, however, in the second half of the eighteenth century, there came a revolution both in the methods of production and in economic theory. The tools of the work- The World's men began to be replaced by machinery driven Workshop. by water-power; and in a very few years water-power gave place to steam-power. Production became possible on a scale hitherto unimaginable, and the new conditions of production demanded the aggregation of workers in factories. Two natural English products, coal and iron, acquired a sudden and tremendous importance. Great Britain was not only the cradle of the inventors, so as to be first in the field in the application of their discoveries; she was also the one country which had the practical opportunity of applying them. While year by year all Europe echoed to the tramp of armed legions, British fleets secured the shores of Great Britain from invasion, and, comparatively speaking, a mere handful of her sons were called away from the workshops, while tens and hundreds of thousands of her continental neighbours were absorbed in the fighting line. Within her own borders she had coal and iron in abundance, and she alone was enabled by her fleets to procure raw material practically unchecked from every quarter of the globe. Before 1780 there was no country in the world which could be described as an industrial State. In 1815 there was one industrial State which had already made itself the world's one workshop.

This was the dominant material fact of the nineteenth century. Apart from all other considerations, it was a fact irreconcilable with one at least of the objects Dependence which the mercantile system had kept in view. on Imports. It was no longer possible to dream that Great Britain could in the last resort be self-sufficing, independent of foreign supplies so far as actual necessities were concerned. For a time, indeed, men could still struggle to persuade themselves that the island was capable of producing its own food supply. But the limit of its capacity had already been practically reached in 1815. The population was increasing rapidly, and by the middle of the century it was sufficiently mani