The British Government and Colonial

Economic Policy, 1919-39'

BY DAVID MEREDITH

I N April 1939 Sir Bernard Bourdillon, Governor of Nigeria, wrote to the Secre-
tary of State for the Colonies:
. . . there are clear signs that a considerable section of the British public is rapidly
awakening from the complacence, indeed the apathy, with which it has been
accustomed to regard colonial problems, and is beginning to have an uneasy feel-
ing that all is not as it should be and, in particular, that certain powers have some
justification for suggesting that they would have succeeded in doing more than we
have done for the development of tropical Africa had they been in a position to
make the attempt.^
The rapid awakening was largely a result of the shock to informed British opinion
of the West Indian riots of 1938, combined with increasing international criticism
of Britain's colonial empire, especially from the **have-not" powers Germany and
Italy, but also from the United States.^ The purpose of this paper is to assess the
influence of government policy—local and metropolitan—on the lack of success
noted by Bourdillon, not only in tropical Africa but in most other colonies as well.
This will be attempted firstly by a consideration of the connexion between
domestic British economic problems and the promotion of colonial economic
development; secondly by an analysis of the work of the Colonial Development
Advisory Committee—a body set up in 1929 to spend up to £\ million a year on
colonial economic development; and thirdly by a discussion of the long-term
economic policies of the local governments and the Colonial Office.
The period 1919-39 has been neglected in the history of the colonial empire:
until recently historians concentrated on the ^'scramble for Africa" and the causes
of British imperialism up to 1900, whilst economists have tended to focus their
attention on the economic problems of the post-1945 years and of independence.
The inter-war period, however, is the only one in the fairly short history of the
colonial empire when the colonial system as such worked without the pressures of
1 This article is based on research undertaken for a Ph.D. thesis on colonial cconomie development in
the inter-war years with particular reference to British West Africa, financed by the Social Science
Research Council. I should like to thank my supervisor Mr M. A. Havinden for his many helpful sug-
gestions, Mr John Lyons and Mr Peter Shergold for theirs, and also those who criticized slightly different
versions read at stafT seminars at the University of Exeter and the University of New South Wales.
2 P.R.O. 00859/48/12901/1 {1939)-
^ See The Times, 25, 26, and 27 May and 11 June 1938; Grover Clark, The Balance Sheets of Imperialism
(New York, 1936), Lionel Birch, The Demandfor Colonies (1936), Norman Angell, This Hart and Have-not
Business (1936), and Granville Roberts, The Nazi Claims to Cotonies (1939); the publication of the/?<^ort on
Labour Conditions in the West Indies (Parl. Papers, 1938-9, xv), the Report of the Adiisory Council on Nutrition
in the Colonial Empire (P.P. 1938 9, x), and Lord Hailey, An African Survfy (1938), also had a considerable
impact on informed British opinion.

484
 COLONIAL POLICY

conquering and pacifying the new areas on the one hand, or of preparing for
rapidly approaching independence on the other: between the wars the problems
of annexation and native resistance were over, and the question of independence
was one which most officials thought of as comfortably far in the future.^ At the
same time the 1930's at least were dominated by the world depression. It is
necessary, of course, to distinguish between the effects of this and the effects of
government policies, and it seems reasonable to suppose that whatever policies
had been followed by the British government her colonial possessions would not
have escaped the effects of the depression. However, the difficulties which the
depression caused highlight rather than mask the inadequacies of government
policies, the effect of which was to exacerbate the problem of falling prices and
contracting world trade by retarding export diversification and by relegating
colonial interests to a position of less importance than metropolitan ones.
British colonial policy had three aims. The first was to raise the living standards
of the people for whom the British government thought of itself as a trustee.
Secondly, policy embodied the idea that Britain not only held her colonies **in
trust*' for their inhabitants but also held them, as the League of Nations put it, as
a "sacred trust to civilization"—access to raw materials by the industrial nations
being the most important aspect of this. Thirdly, since much of the cost of admini-
stration and defence of the colonial empire fell on the British taxpayer (as did the
cost of funds provided for economic development after 1929), it was felt that the
colonies had a duty to extend the supply of raw materials to Britain and to provide
a market for British manufactured goods. These three aims were expressed by
Leo Amery in 1919 in the House of Commons:
. . . we must set up a new and more positive standard of our duty and obligations
towards the peoples to whom this House is in a position of a trustee and to those
territories whose boundless potentialities call urgently for development in the
interests of their own inhabitants, of the British Empire as a whole and of the
impoverished and wasted world.^
The three aims were not always compatible. In particular as time went on the aim
of increasing standards of living in the colonies conflicted with that of the main-
tenance of the colonial empire in a complementary position to Britain as supplier
of raw materials and consumer of British manufactures. Where these two clashed
it was British metropolitan interests which prevailed.

T
Up to 1929 colonial development by the British go\ernment proceeded in a
piecemeal fashion and was dominated by domestic problems. The extensive
economic controls of the First World War strengthened the idea of direct state
participation in colonial production and trade—the formation in Parliament of
the Empire Resources Development Committee in 1916 was the most striking
manifestation of this—although the idea did not sur\ ive for long into peace time.'
' Sec Colin Cross, The Fall of the British Empire (1968), p. 34.
* Hansard {Commons), 5th ser. cxviii, 2174. 30 July 1919.
• Sec The Royal Instilulc of International Aflain, Survey of British Commonwealth Affairs, n, W. K. Han-
cock, 'rrol>lrin.s of K( onomit Policv. IQIO 1939*, \ (»94o), p. xod passim.
486 DAVID MEREDITH

In the 1920's pubhc works in the colonies were seen as one px)ssible remedy for
Britain's high level of unemployment (after 1921) and for an alleged shortage of
raw cotton. Two measures directly related to this were the 1924 Kenya-Uganda
railway loan of £3 -5 millions which incorporated for the first time in a colonial
loan an interest-free period (offiveyears); and the 1926 Palestine and East.\frica
Guaranteed Loan Act which made up to £\o millions available for transport
development in Palestine and East Mrica.^ Both were strongly supported by
British engineering and cotton interests, though the latter measure at least was
ineffective, mainly because it did not include an interest-free period, unemploy-
ment being somewhat less in 1926 than in 1923-4. By 1929 only ^(^3 • 5 millions had
actually been spent under this Act.^ This did not surprise the Colonial Office, and
they never tired of pointing out to the Board of Trade and the Treasury that unless
the British government was prepared to give considerably more assistance little
real development could be expected to take place in the colonial Empire.^
The 1929 Colonial Development Act was also closely linked with the problem
of Britain's unemployment, as its aim was to **aid and develop agriculture and
industry in the Colonies, Protectorates and Alandated Territories, and thereby
promote commerce with or industry in the United Kingdom"."* But the proposal
for a development fund for the colonies went back at least as far as suggestions
made in 1922 by Amery, and was also taken up by both the 1925 East Africa
Commission and the 1928 one.^ By 1929 Amery was convinced that the 1926
Guaranteed Loan Act had failed and, despite considerable resistance to the idea
by Winston Churchill, Chancellor of the Exchequer, he managed to persuade the
Cabinet in April to include the proposal in the government's election pro-
gramme.® Neither the Labour Party nor the Liberals devoted much time to
colonial questions in the election: the Liberal Leader, David Lloyd George,
derided the Tories' proposals as being based on '*a consignment of push bicycles
for enterprising niggers. . ."" On the other hand, because of the Conservatives'
interest, the incoming Labour Minister with special responsibility for unemploy-
ment, J. H. Thomas, found a Bill already drawn up which very much suited his
long interest in colonial affairs, and it was speedily passed through both Houses
to become law in July 1929.
The Colonial Development Act was introduced in 1929 because the Conser-
vative government needed anti-unemployment measures to present to the elec-
torate and because it realized that the 1926 Act had failed and a greater degree of
1 P.R.O. CAB27/i9i/72/i,and//anjflr(/(Commons),5thser. ct-xx, 25Feb. n;^-!^. Report of the East Africa
Commission, 1934-36 (P.P. 1925, ix), p. 182; P.R.O. CAB 24/179/CP/129 (1924).
2 Memorandum by the Committee on Trade and Industry on Transport Development and Cotton Growing in East
Africa, 1924-35 (P.P. 1925, xxi); Report of the East Africa Guaranteed Loan Committee, 1936-39 (P.V. 1929-30.
VIII); P.R.O. GAB24/203/GP/110 (1929).
^ See Colonial Office memoranda in P.R.O. GO 323/864/52939 (1921); 875/53456 (1921); 894/39959
(1922); 906/4233 (1923); 938/6861(1925); 997/50330 (1928); 1016/51165 (1928).
* See First Interim Report of the Colonial Development Advisory Committee^ i August 1929 to 38 February 1930
(P.P. i930.vnO.P-5-
^ P.R.O. CAB 27/179/TP/13 and TP/43 (1922); Report of the East Africa Commission, T934-35, loe. cit.
pp. 189-92; Report of the Commission of the Closer Union of the Dependencies in Eastern and Central Africa, 1928-^39
(P.P. i'92a-9,v),p.75.
« P.R.O. CAB 203/CP/i 10 (1929); Cabinet conclusions, 11 April 1929, Cabinet 16 (29). 2, P.R.O. CAB
23/60 (1929)-
' The Times, 26 April 1929.
 COLONIAL POLICY 487

assistance was necessary if Britain was to benefit from the development of the
colonial empire. The Labour government was similarly faced with a need to do
something quickly and Thomas was not slow to seize this opportunity. There
seems no doubt that the Act was thought of by the Cabinet as a long-term measure
to tackle unemployment, but it was the relatively low 1929 levels rather than
those of 1930 onwards which it was designed to relieve.^ This partly explains its
total failure as an unemployment measure: according to Skidelsky, the Act was
directly providing work for 13,000 men by Januar\' 1931, whilst 2,671,000 were
out of work.2 Indeed, in the new circumstances colonial development as a solu-
tion for unemployment was irrelevant and the Cabinet Committee on Unemploy-
ment from 1931 no longer referred to it.

II
As a result of the 1929 Act the promotion of economic development in the colonies
by the British government was on more comprehensive lines in the 1930's. The
Act established a fund of up to £1 million a year to be spent on colonial develop-
ment and a committee, known as the Colonial Development Advisory Committee
(C.D.A.C.) was established to consider schemes submitted by local colonial
governments via the Colonial OfTice, for assistance. It was this committee which
was formally responsible in the 1930's for channelling imperial funds for economic
development in ihe colonies. In practice it often found that its role was a some-
what negative one. The work of the committee has been criticized in a recent
article by George C. Abbott, but a closer examination of the committee's work
suggests that two of Abbott's criticisms are incorrect. The first is that the com-
mittee adhered closely to the principle that the main function of their grants was
to reduce British unemployment levels, and the second, that the policies of the
committee greatly increased colonial indebtedness.^ Abbott sees the C.D.A.C. as
placing great emphasis on the potential contribution a scheme was likely to make
to the reduction of unemployment in Britain. In reality it placed very little weight
on this, which is surprising in view of the purpose of the Act, In support of his
argument Abbott cited the fact that in 1934 the committee undertook a survey
of the effects of the Act on unemployment in Britain, but did not consider it
important enough to undertake a study of the elfects of the Act on the colonies
themselves.* This is, however, incorrect, since in July 1935 the C.D.A.C. com-
missioned a survey from the Colonial Ofiice on the efiects of their assistance in the
colonies, and indeed received encouraging replies from some colonies.* The
C.D.A.C.'s policy on expenditure to be incurred in the United Kingdom went
through two phases. The first lasted from 1929 to mid-1932 and was summed up
by the committee as follows:
. . . the attitude of the Advisory Committee towards applicaii..i,^ t> nui g.jvcrned
by a narrow view of the unemployment problrm here The Committee is ready to
J For an alternative interpretation secj. M. Morgan. British Aid~3. Colonial Development (i^^), p. 15.
'^ R. Skidelsky, Politicians and Ihe Slump: t/u Labour Got^emmmt of tga^^i (1967), p. 304; Ministry of
Labour Gazette, ig3t (193O. the total on the live register, 26 Jan. 1931.
3 George C. Abbott, *A Rc-ncamination of the 1929 Colonial Development Act', Fxonorfiic History
Review, and ser. xxiv (i97i),68 ^ i .
< Ibid, 76. ^ P.R.O. CO 323/6003 (1935).
 DAVID MEREDITH
entertain applications which involve little actual purchase of material in this
country, or even none, if the object to which it is prop>osed to de\'ote the money is
one which may be expected to promote the development of the colony and thus
indirectly to add to its wealth and consequent purchasing power to the general
benefit of the trade of the Empire.^
The committee's policy entered its second phase in 1932 following the Report of
the Committee on National Expenditure (the May Committee) which stated
that the benefit to the United Kingdom from the committee's grants so far had
been "somewhat remote".^ After this, the proportion of the cost to be incurred in
Britain, shown in Table i, jumped from 25-8 per cent in 1932/3 to 49* 8 percent
in 1933/4. I^ ^934 there was a reversion to the original p)olicy, and insufficient
expenditure in the United Kingdom was not again given as a reason for rejection.

Table i. Expenditures by the Colonial Development Advisory

Committee: percentage spent in U.K. 1929-39
Proportion of the cost of
Period all schemes being assisted
to be expended in the V.K
0'
/O
August 1929-February 1930 40-6
March 1930-MaTch 1931 41 0
April 1931- n '932 36 6
=, ' 9 3 2 - M 1933 258
j» ' 9 3 3 - .» >934 49 8
)> 1 9 3 4 - yy »935 21 8
» 1935- » 1936 21-5
„ 1936- » 1937 18 7
» 1937- ,> 1938 16 9
» 1938- » 1939 11-5
Source: Calculated from information given in the Annual
Interim Reports of the Colonial Development Advisory Committee,

Moreover, there is no evidence that schemes were being rejected on the grounds
of insufficient expenditure in the United Kingdom, but the committee refrained
from stating this in their letters to the Colonial Office. Up to March 1939 the
committee recommended assistance to schemes costing a total of ;{^i 7,275,238 of
which ;{^5,785,355 was to be or had been expended in the United Kingdom. This
was an overall rate of 33 -4 per cent.^ In the same period the committee rejected
applications for assistance to schemes which would have cost £,^'^2 million of
which 52 -3 per cent would have been spent in the L^nited Kingdom.*
Colonial indebtedness was a serious problem in the 1930's, tying up much of
a colony's revenues for servicing, especially on loan developments which had
never become profitable, such as most of the East i\frican railways.* According
1 P.R.O. CO 825/7 {'930)- ^ Report of the Committee on J^^ational Expenditure {P.P. i93i»xvT),p. 134.
^ These differ from the figures which Abbott gives on p. 73 of his article because his figures in fact refer
to the period 1929 to 1938 rather than to 1939. See Tenth Interim Report of the Colonial Development Advisory
Committee, 1938 39 (P.P. 1939, x), pp. 38-41.
* On the figures available: not all applications gave this information.
* The proportion of Public Expenditure in the colonies devoted to debt charges In 1933 varied from
2 6 6 per cent in British Guiana to nil in some 15 colonies. See Colonial Office, An Economic Survey ofthi
Colonial Empire, 1933 (1935).
 COLONIAL POLICY 489

to Abbott the major effect of the Colonial Development Act on what he refers to
as the 'larger and richer" colonies '*was to aggravate their financial and eco-
nomic problems and make the problem of indebtedness rather than the promotion
of economic development their primary occupation".^ Whilst it is clear that the
indebtedness problem was a growing one in the 1930's, and that often colonial
governments, for a variety of reasons, did not make economic development their
primary concern, it is difficult to accept that this resulted from the operation of
the Colonial Development Act.
In the first place, 60 per cent of the assistance given by the C.D.A.C. was in the
form of free grants, of which only 21 per cent was used to pay the interest on loans
raised elsewhere. Secondly, 80 per cent of the loans were on easy terms, usually
being free of interest for three or four years and at fairly low rates thereafter.^
Thirdly, in only eight colonies did Colonial Development Fund debt exceed
external pubhc debt. On the other hand, Jamaica's external public debt, for
instance, was 92 times as large as its C.D.F. debt, and Newfoundland's was 27
times.3 Finally, of the £11 -3 million of colonial debt written ofTin 1940, C.D.F.
debt accounted for only 11 percent. Much ofthe remainder was old railway stock
debt for East Africa, some of it dating from 1896. Ofthe ^(^i 3 million C.D.F. debt
remitted nearly half was for one colony alone—Newfoundland.*

Ill
There were, nevertheless, serious weaknesses in the promotion of development
by the Colonial Development Advisory Committee. Not least of these was the
fact that although the Act provided for up to ^{^i million per annum to be spent,
in no year was £1 million paid in by the Treasury and the total amount paid out
from the Fund over its life was ^^6,523,256, compared to a total amount of assis-
tance recommended of ^8,875,083.^ The difference was made up as schemes still
receiving funds in 1940 were continued under the Colonial Development and
Welfare Act, which replaced the 1929 Act; however, it is doubtful how much
could be achieved with £1 million per annum, let alone an annual average of
;(^593>ooo.^ Even so, it can be argued that a larger amount might not have been
spent proportionately to any greater effect.
The number of applications made to the C.D.A.C, the cost of schemes under-
taken, and the amount of assistance granted arc shown in Tables 2 and 3. From
Table 3 it is clear there was considerable variation between colonies as to the
number of applications and as to success rates. There seems little indication how-
ever that the number of applications and degree of success they achieved were
related to the relative size and wealth ofthe colony.
Rather, the major factor in determining the number of applications submitted
^ Abbott, loc. cit. 79.
* Calculated from the Annual Interim Reports of the Colonial Dnelnpmfnt Advisory Committee: 192^39.
Excludes schemes which were later abandoned.
8 Calculated from the Statistical Abstract for the Several British Overseas Dominions and Protectorates in each of
they^ars 1913 and 1938 to 1937, SixtY-seirnth Number (P.P. 1937-8, xxviii).
* Calculated from the Financiat and Explanatory Memorandum ofthe Cotoniat Development and Welfare Act
(P.P. 1939 4^.1).
* Abstract Accounts of the Colonial Dei^lopment Fund. 11^29-19
« Colonial Development and Welfare Act (P.P. 1910 40.
490 DAVID MEREDITH

Table 2. The number of applications submitted to the C.D.A.C.

and the cost of schemes accepted and rejected
(2) (3) i.4) (5) ifi)
Number Cost of
accepted Success rate: schemes Cost of
Colonies in Total Number of excluding column {2) shown in schemes
descending order of number of applications those later as % of colwrm {3) rejected
193 r populations applications accepted abandoned column {/) in£ in£
Nigeria 11 11 10 ioo-o 1.023,929 nU
Ceylon 3 a I 66 7 6.565 3.750
Tanganyika 55 48 46 87 3 2.012,413 78,689
Uganda 5 3 2 60-0 7,832 16,500
Malaya 4 2 2 50-0 20,345 878,640
Kenya 33 30 27 90 9 335'364 8,150
Gold Coast 9 8 8 88-9 265.203 53.000
Sierra Leone 10 8 8 880 M 15.380 a,ooo
Nyasaland 39 29 27 74-4 3.33" 1588 52,988
Northern Rhodesia 3> 26 26 83 9 1,070,998 i5»3oo
Straits Settlements 2 2 2 loo-o 17.250 nil
Jamaica 35 24 21 67-6 930,039 309,024
Palestine 6 6 6 1000 629,500 nil
Basutoland 9 6 5 66-7 170,243 ti.a.
Trinidad »4 10 10 71 4 1.057,521 878,350
Mauritius 8 5 5 62-5 16.275 503,000
Hong Kong I I I loo-o 10,000 nil
Cyprus 10 9 9 90 0 565.'50 75,000
Somaliland 13 »3 12 1000 62,642 nil
British Cuiana 62 43 40 69 4 332.><3 241,472
Trans-Jordan 14 11 II 78 6 145.600 67,878
Newfoundland 16 »3 13 8i-3 784.492 175.000
North Borneo 5 4 4 80-0 206.100 11,126
Malta 8 8 8 100 0 138.848 nil
Zanzibar 12 8 6 66-7 69.803 262,061
Bechuanaland 37 34 34 91 9 307.5*7 250,000
Cambia 7 6 6 85 7 94,698 436,000
Fiji 11 8 8 72 7 316,740 59»735
Barbados 9 6 6 66 7 99.528 151,200
Swaziland 37 33 33 89 2 162,309 n.a.
British Solomon Isles 3 I I 33-3 10,000 30,000
Cranada 35 23 22 65 7 220,591 22,215
Bahamas 2 2 3 100 0 35.535 nil
St Luria 16 »4 >4 87 5 81,916 M.»05
British Honduras 4» 33 33 80-5 578,089 329,220
Aden I I I 100-0 6,000 nU
St Vincent 18 12 12 66 7 66,773 32,877
Dominica 21 17 <7 810 119,100 76,000
St Kitts 30 17 17 56 7 43.»73 65.926
Gilbert and EUice Isles I I I 100 0 14,208 nil
Antigua 39 25 25 64- I 161,679 98.249
Bermuda 3 3 3 100-0 82,059 nil
Seychelles 25 22 31 88-0 59.63B 3.395
Gibraltar I nil nU nil nil 30.000
Montserrat 12 7 7 58 3 »5.595 18,595
Virgin Isles 5 3 3 600 7,4»3 1,500
St Helena 7 5 5 71 4 »3.793 9.970
Falkland Islands 4 3 a 75-0 5-845 25,000
Windward and Leeward
Islands General 6 5 5 83 3 15.483 32,185
East Africa General 12 12 13 loo-o 196,037 nil
General 24 18 >7 75 0 247,869 n.a.
Totals 822 641 617 78-0 17,286.781 5.318.130
Source: Retorts of the Colonial Development Advisory Committee; Minutes of theMeetings of thcC.D-A.C,
P.R.O. CO 970/1, 2, and 3.
 COLONIAL POLICY

Table 3. Assistance from the C.D.A.C. ig2g~jg, by way of grants and loans,
excluding schemes later abandoned
) (3) (5)
Total received in Grants Loans Grants pius
Colonies in grants including Totat per Loans as %
descending order of grants of received head head of cost of all
i93i populations interest in £ in loans in £ £ £ schemes*
Nigeria nil nil
325453 o 02 31 8
Ceylon nU
6*565 nil IOO O
Tanganyika 95*683 o-14
707,211 o 02 39 9
Uganda 5-832 nil nil 74 5
Malaya
'4.245 4.300 O 01 91 2
Kenya 150,762
Gold Coast
o 06 o 05 90 6
88,348 73,000 o 03 o 02 60 8
Sierra Leone 57,860
Nyasaland 504.920 o 03 o 26 50 5
756,101 nil o 46 nil 22*7
Northern Rhodesia 222,161 262.000 o 18 019
Straits Settlements
8,625 nil 001 nil 50 o
Jamaica
'52,329 53.000 o-14 o 04 22- I
Palestine
98,162 nil o 07 nil 15-6
Basiitoland
Trinidad '.750 168.493 o 30 IOO O
Mauritius 2,175 o 66 28 7
12,000 2,000 o 03 86 o
Hong Kong
Cyprus 10,000 nil 001 nil 100 o
2,000 o 41
Somaliland 27 5
61,892 nil 018 nil 98 8
British Guiana
128,291 * 96*447 o 38 o 58 97 8
Trans-Jordan
114,100 9.500 o 38 o 03
Newfoundland 84 9
North Borneo 18,000 735.230 o 06 a 52 96 o
Malta 106,100 nil o 35 nil 5' 5
Zanzibar 75^995 50,200 o 29 o-19 90 9
Bechuanaland 11,803 20,000 o 05 o 08 45 6
Gambia 239.073 o 24 o 90 98 7
Fiji 25.265 nil 013 nil 26- 7
34,280 nil O-I7 nil 10 8
Barbados 31-578 16,300 o 08 017 48 I
Swaziland 135.890 o-16 o 86 99 6
British Solomon Isles 5,000 nil o 05 nU 50 o
Grenada 36,011 o 70
61.325 o 49 44 '
Bahamas 17.500 o 20 o 26
St Lucia 85 9
52424 25.522 o 78 0 38 95-a
British Honduras 3»9.986 62,400 5 61 1 • !O 661
Aden 3,600 nil o 08 60 o
St Vincent nil
8.500 56,079 015
Dominica o 97 96 7
82.837 36.263 » 75
St Kitts o 74 IOO O
25.155 18,018 o 66
Gilbert and Ellice Islands 14,000 nil 0 48 IOO O
0 40 98 5
Antigua nil
96,266 52,688 a 75 92-1
Bermuda 1 50
63.059 nil 2 03 76 8
Seychelles nil
36,537 18,560 1 18 92 4
Gibraltar nil o 60
nil nil nil nil
Montserrat 3,120 0 23
Virgin Islands o 80 IOO O
7.4'3 nil 1 23 nil IOO O
St Helena 1.000
Falkland Islands a 95 0-25 92 7
3.345 nil I-11 nil 57 a
Windward and Leeward
Islands General »3.533 nil
East Africa General 150,066 1,000 874
General 108.824 nil 765
43*9
Totals 4.823,915 3.086,253
45-8
Source: Reports ofthe Cotoniat Dei^lopment Advisory Committee. The per capita figures are from the Tenth
Report of theC.D.A.C, pp. 43-5. Positive amounts of less than / : roi have been shown as —.
• Cost as shown in Table 2. Column (5).
492 DAVID MEREDITH

was the energy of the local governments. Similarly, it would seem that the
C.D.A.C. usually accepted or rejected schemes on their merits rather than on
which colonies they came from.
Table 3 shows the assistance given by way of free grant and by way of loan.
Loans were rather less important than grants in assisting schemes: for all schemes
about 40 per cent of assistance was by loan. Overall nearly half the total cost of all
schemes was found from the fund, and nearly 30 per cent ofthe total cost by way
of grant.^ It is also clear that in most cases the smaller and poorer colonies
received a greater degree of assistance than the larger and less poor, especially if
iht per capita figures are used.
The kind of schemes assisted were not the large-scale schemes of transportation
which the Act's designers had envisaged; indeed as Table 2 shows, most were not
large-scale schemes at all. The average cost of all schemes was ;f 27,000, and for
the 15 smallest and poorest colonies listed in Table 2, ^(^7,920. Only eight schemes
cost between ^(^200,000 and ;(^5oo,ooo, two between ;(^5OO,ooo and jTi million
and three over ;(^i million.
There were several reasons for this low-average cost and relative shortage of
large schemes. It was not, however, caused by any marked bias in the C.D.A.C.'s
rejections: only six schemes to cost between ^(^200,000 and ^(^850,000 were turned
down, and the average cost of all rejected schemes was only slightly higher than
that ofthose accepted: ;C29538i compared to £2'jyOOO. The main reason was the
lack of scope for large-scale expensive projects. The kind of scheme which was
seen as needed in the 1930's was smaller scale projects such as town drainage, the
provision of electrical light and power, public health, secondary- roads, etc.,
*'filling-in" the framework created by earlier transport development.
The two most important ofBcial categories of schemes assisted were Internal
Transport and Communications and Public Health, together accounting for
some 46 per cent ofthe total assistance granted. This is shown in Table 4. Trans-
port tended to be most important in the earlier years ofthe committee's existence,
public health in the later ones, which reflected the change in emphasis which took
place in the 1930's towards colonial aid, '"social" investment in medical, health,
and sanitary facilities becoming more important and large-scale infrastructure
investment less so.
At the other end ofthe scale, the categories which received least assistance were
electricity schemes, forestry (i per cent of total assistance granted each) and
fisheries (2 per cent)—28 schemes altogether, which, in the case ofthe last two,
indicates a failure to develop the natural resources of the empire. Agricultural
development, the very backbone of nearly every colony's economy, received only
6 per cent of total assistance, and some 27 applications for assistance to agricul-
tural schemes (25-5 per cent ofthe total) were rejected.
In some ways, expenditure on public health was one of the most significant
aspects ofthe C.D.A.C.*s activities, for not only was it of growing importance but
also it was spread far more evenly throughout all the colonies than was transport
development expenditure. Between 1929 and 1940, 16 per cent ofthe assistance
given by the C.D.A.C. went to public-health schemes, and in two years the pro-
portion was over 40 per cent. Moreover, it is probable that the committee, despite
1 Calculated from the Annual Int/rim Reports ofthe C.D.A.C.
 COLONIAL POLICY 493

Table 4 Distribution of assistance from the Colonial

Development Fund, ig2g-40, in categories specified
in the Colonial Development Act
Percentage of total
Category under the Act assistance granted
Agricultural development 6
iDtcmal transport and communications 30
Harbours 5
Forestry 1
Fisheries 2
Surveys 3
Land reclamation and drainage 5
Water supply and water power 10
Electricity 2
Mineral resources 9
Scientific research 7
Public health 16
Miscellaneous 4

Total 100

Source: EUienth and Final Report of the Colonial Development

Advisory Committee.

the doubts which some members had about public health, would have devoted
an even greater proportion of the assistance to it had not the Treasury—which
regarded the benefit to the United Kingdom of public health expenditure in the
colonies as limited—restrained them.^ The degree of importance attached to
public health reflected both the growing awareness of the appalling health prob-
lems of the dependent empire and the belief in the promotion of economic
development by indirect means.^ This view was expressed in 1939 when the com-
mittee recommended a free grant of ^(^240,000 for a hospital in Uganda. In their
letter to the Colonial Office, the C.D.A.C. wrote:
If the productivity of the East African territories is to be fully developed, and with
it, the potential capacity of those territories to absorb manufactured goods from
the United Kingdom, it is essential that the standard of life of the native should be
raised and to this end the eradication of disease is one of the most important
measures.3
This attitude and the proportion of the resources devoted to public health and
infra-structure may be contrasted with the C.D.A.C/s eflbrts in establishing new
or extending existing local industries in the colonies. Between 1929 and 1939 the
committee granted assistance to 23 schemes involving the setting up of new or the
extension of existing industries, the average cost of which was ^^3,499 compared
to ;(^29,ooo for all schemes. The kind of local industry assisted by the committee
was almost exclusively some form of food processing, including canning.
That more schemes involving local industry were not assisted was not the fault
of the C.D.A.C. for it only rejected five such between 1929 and 1939. The com-
mittee was not able to initiate schemes and so was dependent on what the local
1 See Memorandum by Sir John Campbell, i6 March 1934, P.R.O. CO 111/714/35031/1 (1934).
' See the Report on Autrition in the Colonial Empire . . . (P.P. 1938-9, x).
"P.R.O. CO 536/204/40251 (1939)-
494 DAVID MEREDITH

governments decided to submit, and it would seem that they were not very
enthusiastic about the establishment of processing or manufacturing workshops
or factories. To some extent this was the result ofthe clash between a **native
policy", whether based on "Indirect Rule" or not, which sought to preserve
indigenous political institutions, and the social effects of industrialization which
were seen as undesirable, such as urbanization, unemployment, etc. ''Developing
the African along his own lines", the catch-phrase of Indirect Rule in Africa,
tended to be interpreted solely in political terms, perhaps because it was often the
course of least resistance. The passivity ofthe C.D.A.C. and the Colonial Oflice,
whether voluntary or not, leaving the initiative with local government, was a
major weakness in the financing of development on an empire-wide scale, and
leads to the suspicion that perhaps a mere increase in the size ofthe fund would
not have solved the development problems ofthe colonies in the 1930's, though
it might have relieved hardship somewhat more.

IV
The C.D.A.C. could not initiate projects and the Colonial Office did little to
assist them in drawing up schemes. In 1938-9, when the whole question ofthe
future of colonial economic development was under discussion. Lord Dufferin,
Parliamentary Under Secretary of State, advocated the establishment of a "pere-
grinating inspectorate" which would spend six months of each year in the
colonies and the balance in Britain, and which would be responsible—working
with local officials—for development schemes. Colonial Governors, he pointed
out, started their term of office with great energy but after a few years, when the
problems ofthe colony became familiar, they "lapsed into lethargy".^ And Dr
A.J. R. O'Brien, Chief Medical Adviser to the Secretary of State, pointed out
that invariably the poorest colonies got the least effective Governors, or if
their Governor did turn out well he was quickly transferred to a bigger colony.^
The local governments and, more particularly, the local Governors, were,
however, influenced in their general economic policies by the Colonial Office,
and it was the British government's policy towards the related problems of
widening the export base, establishing secondary and processing industry and
import substitution which was the crucial one.
The major export commodities from British colonies were food-stuffs, raw
materials, and minerals, nearly all the foodstuffs being in their unprocessed state.
The prices of these commodities tended to fluctuate severely throughout the inter-
war period, generally in a downward direction. Moreover, not only were most
colonies dependent for export earnings on primary produce, but in many cases
the export base was narrower at the end ofthe 1930's than it was before the First
World War. Table 5 shows the proportion ofthe total value of exports accounted
for by the single most important export for each colony. In 21 colonies out ofthe
32 for which there are statistics the single most important export accounted for a
greater proportion ofthe total in 1934-8 than it had in 1909-11, and only 11
colonies had a wider export base. In 20 colonies the export base in terms ofthe
single most important narrowed between 1921-3 and 1934-8, whilst in 15 it was
1 P.R.O. CO 852/190/15606 (1938). 2 P.R.O. CO 852/250/15606/2 (1939).
 COLONIAL POLICY 495

broader. Thus, although there were areas in the colonial empire where the export
base widened—Nigeria for example—the trend was towards greater concentra-
tion on fewer types of primary- products. This indicates the extent to which most
colonies fulfilled the economic role of primary producers in a "complementary"
partnership with the industrialized nations, chiefly the United Kingdom.
The traditional attitude of the British government was that the metropoHtan
and the colonial economies were complementary not competitive. At the
Imperial Economic Conference of 1926 Leo Amery, Secretary of State for the
Colonies, said:
. . . one of the most striking features of modern industrial development is the
marriage of tropical production to the industrial production of the temperate zone.
They are essentially complementary regions, and owing to thrir character and the
character of their inhabitants they are likely to remain so.^
In the House of Commons in 1929 Amery referred again to the complementary
nature of colonial trade and pointed out that:
. . . the Colonies are essentially agricultural and producers of primary commodities.
It is not very probable, or indeed, very desirable in the interests of the populations
themselves, that industrial development should be unduly accelerated in their
case. 2
The situation changed however after 1931 with the abandonment of free trade
and the conclusion of the Ottawa Agreements. This raised a number of issues
which had not been foreseen at the time. The most important of these was the
danger of competitive manufacturing spreading in the colonial empire. Neville
Chamberlain, Chancellor of the Exchequer in 1934, stated that:
While it is improbable that West ..Africa would set up factori^ to compete with
those at home, there was a real and serious danger of such factories being estab-
lished in Malaya and possibly other parts of the Colonial Empire, and we might
well be faced with very serious developments of a problem of industrial competition
of which we had already had some experience in the case of India.^
The response to this was to set up an Inter-Departmental Committee in 1934 to
consider industrial development in the colonies. The committee recommended,
in the first place, that colonial industries should not be ^'artificially" encouraged;
and, secondly, that where local workshops and factories already existed the
government sliould seek to impose restrictions on conditions and working hours
to bring them more into line with those of the United Kingdom—the constant
complaint of the British manufacturer being that colonial producers benefited
from low costs through **swcated labour".*
Meanwhile, a second problem of protectionism had arisen: that of colonies
creating a differential between excise duty and import duties so as to favour
locally produced import substitutes, particularly in beer, matches, soap, edible
oils and fats, and cement. Among the most persistent complainants to the
1 Imperial Conference 1926. Appendices to the Summary (P.P. 1926, Xl).
" Hansard (Commons), 5th scr. ccvu, 1411, 30 April 1929.
* Cabinet conclusions, 3 Oct. 1934. Cabinet 33 (34) 5, P.R.O. CAB 23/80.
* 'Report of the Inter-Departmrntal Committee on the Industrial Development of the Empire",
P.R.O. CAB 24/249/CP/145, March 1934.
496 DAVID MEREDITH

Table 5. The Average Value of the Single Most Important Export of Each Colony^
as a Percentage of that Colony^s Total Exports,
Cohrty iSgg-igoi I go I-1r ig2t-23 '934-
Nigeria 5 ' 7* 49 2* 33-9 20 9
Ceylon 54-6 51-6 50 8 61'I
Malaya 25-it 34 9 32 6 49-7
Gold Coast 39-6 37-9 77 5 52 9
Kenya 59-2: 33-2§ 41 6§
Tanganyika .— — 22-1 43-2
Palestine — — 26 2 80-0
Jamaica 37-4T 38-9 47-7 56-1
Northern Rhodesia n.a. 43 6 57 8 87-3
Newfoundland 66-0 62-1 56-9 46-1
Mauritius 92-1 96-1 84-8 97 6
Sierra Leone 558 65-3 68-6 36-9
Nyasaland 76 9 32-4 71 8 47 8
Cyprus 29 5 31 7 25 5 19 8
Malta n.a. 36 8 40-0 53-7
British Guiana 72-9II 66-9 59-4 65-2
Fiji n.a. 64 4 75-2 73-9
North Borneo 6o-o| 50 6 35-6 53-8
Zanzibar 20*7 n.a. 67-6 73 9
Somaliland 47-611 68 0 44-5 53-0
Bahamas n.a. 55-3 46-7 54 9
Gambia 90 0 95 2 98 4 98-r
Grenada n.a. 88-2 66-6 46 5
British Honduras 34-1 39 2 54-6 51-8
St Lucia n.a. 50 9 54-5 47-3
St Vincent n.a. 36-3 42-6 51-3
British Solomon Isles n.a. 70 6 93-6 82-1
Gilbert and Ellice Isles n.a. 901 69-8 84-8
Seychelles n.a. 38 6 56-4 56 7
Falkland Isles n.a. 45 2 93-3 57-7
St Helena n.a. 44.1 90-3 74-7
Leeward Isles n.a. 51-2 58-1 73-2
Southern Rhodesia n.a. 90-0 55-6 25 0
Brunei n.a. 38 3 29-2 74-8
Sarawak 27-8 18 3 33-9 43-2
Source: Statistical Abstract of the British Empire, 1914-16, 1926, 1937-8, and 1946-7.
Motes:—not in the colonial Empire. n.a. not available. '.Southern Nigeria
and Lagos Colony only. t Straits Settlements only. * East Africa Protectorate.
§ Kenya and Uganda. TJ 1900-2. ] 1903-5-

Colonial Office were Ind-Coope & Allsopp Ltd, the brewers, and Unilever. Mr
Clement Da\ ies, Manapjing Director of Unile\er, for example, wrote personally
to Malcolm MacDonald, Secretary of State for the Colonies, in September 1935:
*'RealIy, I do not understand these Colonial Governments... I am coming to the
conclusion that, much like Ireland, they do not wish to trade with this country-
and, that being so, the sooner the British public are made aware of it the better."^
In November 1936 Ind-Coope wrote to MacDonald: *'Our country has the privi-
lege of paying for the Navy which holds the British Empire together, but if all the
Crown Colonies and other parts of the Empire are going to deprive us of our trade
it is only a question of time when [sic] we will no longer be able to pay for the
vy."2
Clement Davies to Malcolm MacDonald, ic) Sept. 1935; P.R.O. CO 852/17'" ,... .»,^ (»935).
Ind-Coope & Allsopp Ltd to Malcolm MacDonld, 3 Nov. 1936, P.R.O. CO 15212 (1936).
 COLONIAL POLICY 497

No doubt these and other such writers hoped to speed up the Colonial Office's
action by their provocative remarks. But, together with the passing of legislation
in some colonies enabling the local governments to grant monopolies for the pro-
duction of scheduled commodities, complaints from home-based manufacturers
led to a new Inter-Departmental Committee being set up in 1937, "To consider
and report how far it is desirable to frame and pursue a policy either to encourage
or discourage the establishment of industrial enterprises in the Colonial Empire."*
The problem proved so difficult that even by December 1938 only the second
draft ofthe committee's report had been written. The committee came to the
broad conclusion that industries in the colonies which could exist only with
government assistance, usually in the form of a differential between excise and
import duties would "place a permanent burden on the local community- and are
more likely to impoverish that community than enrich it".^ Correspondingly,
therefore, the committee was prepared to recommend that where the Colonial
Office had the power—and effectively it did not in colonies such as Malaya,
Malta, Ceylon, and Jamaica—local government should not be allowed to assist
local industries by means of licensing or tariff policy. This was as far as the com-
mittee reached by the end of 1938. Even so, its report was considered far '*too full
of explosive possibilities" to circulate to the colonies, and it was allowed to die.
The policy reached by the committee, however, was essentially the same as
that exercised by the Colonial Office in a piecemeal fashion in dealing with indi-
vidual cases. In nearly every case of a new industry being established some form
of protection was regarded by the promoter and/or the local government as
necessary, and if the colony was one over which the Colonial Office had sufficient
influence, the granting of protection was refused. One typical example may be
cited. In 1937 an owner of cotton ginneries in Uganda wished to expand into
cotton-weaving and requested tariff protection from the Ugandan government.
The local government was in favour—although it had discouraged similar
schemes in the past—but the Colonial Office refused to allow the scheme because
it would lead to a loss in government revenue, and it would be socially undesirable
''if the native population were to be turned into factory hands from agricultural-
ists". In addition one Assistant Secretary thought that the East African's finger
and thumb were too large and clumsy to work cotton machinery.^
The belief that industries established behind tariff protection were uneconomic
in the long run, that infant industries never grew up and that the colonies should
remain primary producers, was widely held in the Colonial Office. J. A. Calder,
Assistant Secretary at the Colonial Office, argued in June 1939 that the order of
priority for colonial development should be fimly agriculture for food and
export, secondly—"and a long way behind"—the development of mineral
resources and lastly, secondary industry. In his opinion ''. . . manufacturing
industry, which can be established in a colony only at the price of a monopoly
protected by a high tariff, ends in producing a locally manufactured article
which is too expensive for the primary agricultural producers to buy.'**
The Colonial Ofiice then was advocating strict free trade for the colonies at a
time when all other countries including Britain, had abandoned the principle.
1 P.R.O. CO 852/105/15252/6 (1937). » P.R.O. CO 852/164/15212/8 (1938).
» P.R.O. CO 852/15212/1 (1937). * P.R.O. CO 852/250/15606/11 (1939).
498 DAVID MEREDITH

Moreover, it was not simply that the Colonial Office was opposed to the use of
tariff protection or differentials between import and export duties as means of
encouraging certain industries, but that they were not prepared to assist the pro-
motion of industry in any way—training facilities, industrial estates, improve-
ments in the credit and banking system, selective subsidies, and so forth. They
accepted new industries where they grew up without government interference,
but clearly interpreted the ban on "artificial encouragement" of industrialization
in wide terms.
At the same time there was a strong element of protecting the United Kingdom
manufacturer and exporter involved in the Colonial Office's policy towards
colonial industrial development. Sir Henry Moore, .\ssistant Secretary of State
at the Colonial Office in 1939 complained of the "unwritten rule" in the Colonial
Office
that any proposals, whether in thefieldof industry or tariffs, which give rise to any
conflict of economic interest, should be approached from the standpoint that the
United Kingdom trade interests must rank first, Dominions' trade interests
second, and those of the colonies last.^
Sir Henr>' Moore, unlike all the other administrative officials in the Colonial
Office, had been a Colonial Governor (of Sierra Leone); most of his colleagues had
never visited the colonies they dealt with. The Colonial Office was always anxious
to avoid giving the impression that they were holding a brief for the United King-
dom manufacturer, but the Board of Trade and the Treasury were quite clear
whose interests came first. And British businessmen were also in little doubt:
during the 1920's the Colonial Office was petitioned by cotton and engineering
manufacturers, not to mention the Board of Trade, for transport development to
open up East Africa; and in the 1930's footwear, margarine, and beer manu-
facturers wrote angry letters demanding protection from "unfair" colonial
competition.
V
In an explanation of the economic stagnation of much of the colonial empire
during the inter-war period, the policy of the British government and the Colonial
Office towards economic development in the colonies plays a major part. From
1896 to 1923 direct government assistance was extremely limited in extent and
scope, the principal form being loans for railway development in areas that
private enterprise was not willing to invest in. Transportation projects continued
to be the major example of government-assisted development in the colonies
through the 1920's but after the Ronaldshay Committee Report of 1924 the role
of government was seen as essential and tended to grow, and more positive assis-
tance was given. At the same time individual measures for projects in the colonial
empire were closely linked to domestic problems, especially unemployment and
fears of a cotton shortage. This was true also of the major Act of the period, the
Colonial Development Act of 1929: although the idea for such a fund had been
in existence for some time, it was not until the government was faced with fighting
a General Election with unemployment levels as the main issue that the measure
became acceptable to the Treasury.
1 P.R.O. 00852/250/15606/1 (1939).
 COLONIAL POLICY 499

The Colonial Development Fund was expected to finance large-scale projects,

particularly of transportation, by lending the interest on loans or by making
loans, but in fact most ofthe assistance from it was to small-scale transport and
public-health schemes, and 60 percent of total assistance was in the form ofgrants.
The real weakness of the Colonial Development Advisory Committee was its
passivity ''its inability to initiate schemes) and lack of long-term strategy'. The
lack of real power ofthe C.D.A.C. indicates that it was the colonial and imperial
governments rather than the committee itself which were responsible for the
failure to promote economic development in the 1930's. The local governments,
on whom the responsibility for initiating schemes rested, tended to be limited in
outlook, both through natural conser\'atism and the belief in a form of political
rule which depended upon an unchanging economic structure. Local govern-
ments, however, were very much influenced by the Colonial Office, which regard-
ed the establishment of secondary industry in the colonies as undesirable for social
and economic reasons, and by the British government, which saw in colonial
industrialization the spectre of "unfair competition", and indeed in the case of
Hong Kong felt that this had already arrived. Although Britain abandoned free
trade in 1931 and most industrialized countries had done so already, the colonies
were expected to maintain an "Open-door" policy.^
In the final analysis then it seems that the economic assistance ofthe British
government was closely linked to problems at home and tended at best to be a
piecemeal treatment of symptoms rather than causes, and at worst hurried re-
action to crises. The Colonial Office had no clear strategy for the long-term future
ofthe colonial empire, and could see no alternative for most colonies to a total
reliance on primary produce for export. And yet when it was suggested in 1938
that the new committee should have initiating powers this was rejected on the
grounds that it would undermine the authority ofthe Secretary of State.- The
fundamental economic problem of most colonies—an over-reliance on a narrow
range of primary exports—was not solved in the inter-war years and indeed often
became worse; and with the Colonial Office discouraging the establishment of
secondary industry wherever it had sufficient influence, and the British go\crn-
ment placing colonial interests below those ofthe United Kingdom producer and
exporter, government colonial policy could not be said to have made any contri-
bution towards a solution, and probably had exactly the opposite effect.
University of New South Wales

1 This was irrespective ofthe various treaties concluded in the i88o*s, which prevented some African
colonies from granting preferential larifTs. See F. V. Meyer, Britain's Colonies in World Trade (1948). For
an alternative interpretation—that the Colonial Office did not attempt to retard industrialization in the
colonies—sec Drummond, op. cit. p. 31.
2P.R.O. CO852/i73/'5279/9('938).