Review Article: Mining and Imperialism (review of Robert V. Kubicek, Economic Imperialism in Theory and Practice, 1979)¶
Van-Helten, Jean Jacques (1980). Review Article: Mining and Imperialism (review of Robert V. Kubicek, Economic Imperialism in Theory and Practice, 1979). Journal of Southern African Studies, Vol. 6, No. 2. Taylor & Francis.
| Type | journal article |
| Scope | Economics and economic history of apartheid |
| Method | synthesis review |
| Period studied | 1886–1914 |
| Regions | Witwatersrand, Transvaal, Britain, France, Germany |
| Themes | origins segregation, mining migrant labour, business and state, macro fiscal finance debt, comparative theory |
| Citation key | vanhelten1980 |
Argument¶
Van-Helten reviews Kubicek's study of Witwatersrand gold-mining finance and economic imperialism, 1886-1914. He argues that Kubicek's explanations for the post-1902 fall in investment are contradictory and miss the real cause, which was a structural crisis. The mines moved from high-grade, shallow ore to low-grade, deep-level ore, and returns fell sharply. The industry therefore leaned on the state and on cheaper labour, notably Chinese indentured workers, to cut working costs. The reviewer also criticises Kubicek for ignoring gold's role in the international gold standard and Britain's financial position, and for misreading mining finance practice. He concludes that Kubicek has taken the debate down a cul-de-sac, though capital formation is a promising approach.
Evidence and method¶
Frankel's statistics on returns and ore grade, Paish's estimates of British overseas returns, Eckstein/Wernher-Beit correspondence from the Barlow Rand archive, German Foreign Ministry papers, Fraser and Jeeves's Phillips correspondence, Richardson's work on Chinese labour, and de Cecco on the gold standard.
Place in the debates¶
- Economic imperialism and the origins of the Anglo-Boer War (monocausal vs multicausal explanations) (see Pre-Union colonial economy, the mineral revolution and the South African War). Rejects Kubicek's view that the Rand was shaped by 'clashing priorities' among Afrikaner nationalism, British imperialism and international capitalism. Argues the mining-imperialism relationship is more complex and must include gold in the international economy and French and German bank investment.
- Why mining investment declined after 1902 (see Pre-Union colonial economy, the mineral revolution and the South African War). Rejects Kubicek's explanations (political climate, self-defeating competition, Randlord notoriety). Attributes the decline to low returns and a structural crisis of falling ore grades.
- Relationship between mining capital and the state (see The state and capital: instrumentalism, autonomy and fractions of capital). Holds that the mines were confident, assertive lobbyists who needed state support for labour supply and cost reduction. He rejects Kubicek's picture of an industry vulnerable or unsure in dealing with government.
Findings¶
-
Returns on Rand mining investment fell well below the British overseas average and reached a low by 1914. (p. 4)
in 1908 the average rate of return on investment in the main Rand mines for the period 1887-1908 had declined to a mere 2.6 per cent. By 1914 average profits on investment had reached an all-time low of 2.1 per cent.
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Ore grade fell sharply as the industry shifted to low-grade, deep-level mining. (p. 4)
The grade of ore milled declined from a ten year annual average of 11.748 dwts per ton between 1890 and 1899 to an average of 6.752 dwts per ton in 1910.
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The fixed gold price and capital charges in working costs limited the mines' options, so cost minimisation concentrated on labour. (p. 4)
the fixed price of gold and the inclusion of capital charges in the working costs of producing mines emphasized the companies' inability and reluctance to pass increased working costs on to consumers
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Most Transvaal mining capital was speculative and controlled by a small circle in the City and European stock markets. (p. 3)
The majority of capital raised for the Transvaal mines was speculative and was controlled by a limited number of individuals within the City and, later, the European stockmarkets.
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The mines themselves acknowledged that the Chinese labour experiment depended on state assistance. (p. 5)
the mines acknowledged that the Chinese labour experiment could not have succeeded without the assistance of either the imperial government or the colonial administration.
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Secure, cheap African labour supply required coercive and legal state support, which came only after the South African War. (p. 5)
cost-effective control of the supply of cheap, African labour remained elusive until such time when, after the Anglo-Boer conflict, the state provided the mining companies with suitably coercive and legal support.
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The Rand's output was already very large within a decade of its discovery. (p. 5)
By 1898, within 12 years of the discovery of the fields the Witwatersrand was already producing a quarter of the world's annual output of gold
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Britain's gold reserve anxieties are relevant context for the origins of the war, though not a sole cause. (p. 6)
This is not to suggest that fears about Britain's diminishing gold reserves pushed the country into a war with the Transvaal, but it is certainly a factor
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The reviewer judges that Kubicek has not advanced the imperialism debate. (p. 7)
Dr Kubicek appears to have directed the debate on imperialism and the gold mining industry down a cul-de-sac.
Evidence ledger¶
Sources used¶
| Source | Kind | Period | How used |
|---|---|---|---|
| Barlow Rand Ltd, Herman Eckstein and Company Archives (HE 145 F; HE 267 File 190 P): Eckstein to Phillips 17 Oct. 1907; J. Wernher to Comte de Camondo 6 Aug. 1908 | company records or reports | 1907-1908 | Shows post-war involvement of Rothschilds and German banks in Rand mining finance, countering Kubicek's claim that they lost interest. |
| Herman Eckstein Archives HE 69 p. 276, Wernher, Beit and Co to H. Eckstein Co, 6 Dec. 1901 | company records or reports | 1901 | Evidence on French comments and reaction to British intervention in the Transvaal. |
| Herman Eckstein Archives HE 59, Wernher, Beit and Co to H. Eckstein Co, 4 Aug. 1893 | company records or reports | 1893 | Shows Corner House's awareness of gold scarcity under the gold standard. |
| A. Goerz to Auswartiges Amt, 17 Dec. 1897, in Handels- und Schiffartsverhandlungen (Berlin, 1890-1900) IX | commission or official report | 1897 | Shows German mining magnate Goerz regarded British rule in the Transvaal as not unwelcome to German interests. |
| G. Paish, 'Great Britain's Capital Investments in Other Lands', Journal of the Royal Statistical Society, 72 (Sept. 1909) | official statistical series | 1907 | Benchmark average 4 per cent return on British overseas portfolios in 1907, compared with Rand mines' return. |
| S. H. Frankel, Investment and Return to Equity Capital in the South African Gold Mining Industry (Oxford, 1967), Tables 5 and 6 | secondary literature compilation | 1887-1914 | Supplies rates of return on investment in main Rand mines (2.6% to 2.1%) and ore grades milled (11.748 to 6.263 dwts/ton). |
| P. Richardson, unpublished PhD thesis, 'The Provision of Chinese Indentured Labour for the Transvaal Gold Mines 1903-1908' (London 1978); and Richardson, Journal of African History 1977 | secondary literature compilation | 1903-1908 | Supports the claim that Chinese labour was the most effective cost reduction enabling the shift to low-grade mining. |
| M. Fraser and A. Jeeves (eds), All that Glittered: Selected Correspondence of Lionel Phillips, 1890-1924 (Cape Town 1977) | secondary literature compilation | 1907 | Phillips's letter to Wernher during the 1907 strike shows mining magnates' engagement with government. |
| Marcello de Cecco, Money and Empire: The International Gold Standard, 1890-1914 (Oxford, 1974) | secondary literature compilation | 1890-1914 | Used for the Bank of England's gold reserve position and the gold standard context of 1898-9. |
| Robert V. Kubicek, Economic Imperialism in Theory and Practice (the book under review) | secondary literature compilation | 1886-1914 | The reviewed text whose statistics and claims on mining finance are criticized. |
| J. J. Van-Helten, 'British Capital, the British State and Economic Investment in South Africa 1886-1914', ICS Seminar Paper SSA/77/13 | secondary literature compilation | 1886-1914 | Cited for the relationship between the British economy, imperialism and the international gold standard. |
Inference¶
Quantification: Illustrative figures.
Review essay: critiques Kubicek's book by juxtaposing selected archival correspondence (Corner House papers) and secondary statistics (Paish, Frankel) against his claims, supplemented by theoretical argument about capital structure and the gold standard.
Key claims¶
| Claim | Basis | Strength |
|---|---|---|
| Post-war decline in investment in the Rand reflected a structural crisis (low returns, falling ore grade) rather than the factors Kubicek cites. (p. 232) | Paish and Frankel return and ore-grade figures. | Partial data |
| Ore grade milled fell sharply between 1890-99 and 1914 as the industry shifted from high-grade shallow to low-grade deep-level mining. (p. 232) | Frankel, Table 6. | Systematic data |
| Rothschilds and German banks did not lose interest in the Rand after the war. (p. 231) | Eckstein archive letters of 1907 and 1908. | Illustrative or anecdotal |
| Mining companies were not engaged in self-defeating competition; they consolidated through syndicates and corporations, centralizing control and acting in unison on labour. (p. 231) | Corner House institutional developments, asserted with citations to Richardson and Davies. | Asserted |
| Chinese labour succeeded only with imperial and colonial state assistance, and the mines were not indifferent in dealing with government. (p. 233) | Richardson thesis; Phillips-Wernher correspondence on the 1907 strike. | Illustrative or anecdotal |
| Gold's role in the international gold standard and the Bank of England's reserve position is relevant context for Anglo-Boer War imperialism, which Kubicek neglects. (p. 234) | de Cecco; Corner House 1893 letter; Van-Helten seminar paper. | Illustrative or anecdotal |
| Kubicek misreads Corner House's investment in gilt-edged securities, which reflected sinking-fund accounting practice rather than capital withdrawal. (p. 235) | Reviewer's knowledge of contemporary accounting practice; no source cited. | Asserted |
Gaps in the evidence¶
The reviewer's rebuttals rest on a handful of archive letters and two secondary statistical tables, with no systematic series on share issues, investor nationality, or dividends by group. Company ledgers, share registers and Stock Exchange records, which existed then and survive in archives, would test claims about post-war investor behaviour and continental bank involvement. The gold-reserve and war-causation argument lacks Bank of England or Treasury records.
Replicability: Data poorly documented.