Part 11

The inference that an immediate and heavy increase of taxation is to be made to meet the war debt obligations may possibly be gratuitous, and probabilities confirm this supposition, for it is at issue with the Government expert's special recommendations. From this point of view, Sir David Barbour's observations are worth reciting for their direct bearing. He says: "The sound policy for the Transvaal is to so frame its system of taxation as not to increase unnecessarily the initial capital expenditure, or enhance the cost of working. I shall take it for granted that it is not intended to impose excessive or crushing taxation on either of the Colonies, or to exact such a share of their revenue as would cripple or starve the Administration. Subject to these considerations, I shall assume that any surplus of revenue over expenditure, or any special assets that the Colonies may possess, can fairly be taken towards meeting a portion of the cost of the war." Further: "If the additional taxation which I recommend ... be imposed ... it may be anticipated that after two years from the conclusion of peace that Colony will be in a position to set aside a portion of its ordinary revenue towards meeting the cost of the war. I am unable at present to form an estimate of the amount which it may be possible to set aside in this way.... On the assumption that the contribution of the Orange River Colony and the Transvaal towards the cost of the war is to be limited to the amount which they can pay without imposing excessive taxation or starving the Administration, it will be obvious from what is said in the preceding portion of this report, and especially in paragraph 62, that it is impossible at the present time to specify any definite sum as that which ought to be paid. I suggest that the Imperial Government should fix the maximum sum which, under any circumstances, they would require to be paid. Such portions of the total amount of contribution, so fixed as it may be found from time to time that the Colonies can bear, should be made a charge against them. If, in the course of time, it is found that the Colonies are unable to pay the whole sum, under the conditions as to taxation and cost of administration which I have already specified, the balance should be written off." So far as the immediate incidence of war taxation is concerned, it is therefore highly probable that the Government, who have adopted their financial expert's views almost _in toto_ with regard to fiscal reform, will do the same with regard to the levy of the war contribution.

But another phase of the same subject is revealed in the extent of the contribution which the Transvaal should be called to bear compared with that of the other South African Colonies. In the thoughts of some, tinctured still perhaps with a touch of the recent bitterness of the war, the Transvaal should bear the heaviest share; but it is to be observed that this is not the opinion of the responsible heads of the mining industry, who, while admitting the justness of assuming their proper proportion of the proposed burdens, appropriately point out that both the Orange River Colony and the Cape Colony (for a part of the latter's population) were fellow-sharers in the beginnings and the conduct of the war, and should bear a due portion of the resultant financial burdens, while Natal, it is contended, cannot fairly be allowed to escape contribution to the extent at least of the valuable Transvaal territory which has been allotted to her. Pending formal announcements of the Government's intentions--and it is to be observed a contribution from the Orange River Colony is contemplated in Sir David Barbour's report--many huge lump sums have been mentioned, which it is proposed to levy on the Transvaal alone. Such reports naturally have not only alarmed the mining industry, but disturbed the confidence of international capitalists, upon whom the future development of the wealth of the goldfields in the first place rests. The extent of the alarm which is felt is shown by the Johannesburg Chamber of Mines as a body pleading in their recent communication to Lord Milner for a "reasonable sum" to be fixed, and by the rough estimates of this sum propounded by others, as, for instance, Mr. Freeman Cohen, chairman of the Potchefstroom Exploration and Gold Mining Company, who indicates £30,000,000 as the specific figure, while Mr. Bleloch adventures the sum of £35,000,000. This last gentleman's summing up of the situation is that the mines can pay, and are willing and forward to pay, provided the incidence at the first be made light, and that the burden of the £55,000,000 estimate of the Government's financial expert be shared by the other Colonies in the proportion, say, of £5,000,000 from each, to lessen the burden on the mining industry as much as possible, especially the low-grade section, and also as a matter of equity, and he advocates in addition--to augment the disposable revenue--the levy of a 5 per cent. tax on the profits of other industries (banks, &c.), the creation of death dues and of a land tax; also the beneficial reservation to the Government of portions of each new mining field to be opened.

That the whole weight of the taxation of the Transvaal should not be made to fall upon one industry is, of course, consonant with reason, policy, and equity. Pending the pronouncement of its actual intentions, and in view of the alarmist rumours which are spread about, it behoves the Government, to allay the very natural apprehensions entertained, to give an early and explicit outline of its proposals, and in this connection the projected visit of the Right Hon. J. Chamberlain to the Colonies is of the best augury. From his place in Parliament that statesman has already disclaimed, on several occasions, proposals anent the immediate imposition of heavy taxes attributed to the Imperial Government, and the probabilities are that those recently published in London are as baseless as they are vague.

The dependence, to a large extent, of the development of the mining industry on the fostering and assistance, or otherwise, accorded by the existing Government is a point too painfully brought home to the Rand mining industry by past experience to need demonstration; wherefore the sound common-sense statesmanship of those now responsible for the prosperity of the Empire is a valuable guarantee that the various problems now absorbing the attention of the industry will be treated in a fair, just, and liberal manner.

The Rand mining industry, at the moment, is undoubtedly in the throes of one of those periodic waves of depression incident to all great gold-mining fields, though to the Rand in a less degree than to the others, on account of the certain results which may be reckoned upon from the stable nature of its geological formation. Capital required for its development is in many cases being withheld, investors looking askance at its demands with obvious misgivings. This attitude is undoubtedly due to impatience, and disappointment that progress has not been more rapid since peace has been declared.

Apparently it was assumed that only a cessation of hostilities was needed for the mines to hurry up and resume their old-time rate of production and prosperity. Such an assumption ignores the real difficulties of reconstituting a country and its industries, devastated and disorganised for three years by war, and setting up an entirely new order of things. As a matter of fact, the progress actually achieved has been marvellous, and as much, or even more, than could have been expected in like cases. It has apparently been forgotten that civil government has only within a few weeks replaced the military in the main administrative channels. The railway network of the sub-continent has only been thrown open to the free transport of merchants' goods within the past month, and the limitation of transit to the Rand, and the interior generally, is a most serious matter, by reason of the fact that the trunk railways from the coast are only single lines. For the clearance at the ports of the accumulations of mining machinery, mining stores, building materials, foodstuffs, and general merchandise, months are required, and this clearance must take place ere the railway traffic can fall back into its normal grooves. Abundance of labour, too--always a crucial question with mining operations, whether they be on the Rand, in Rhodesia, or elsewhere in the sub-continent--is, for a variety of causes, not yet available, although measures have been taken by the Government and the mining industry, acting in concert, which have placed this subject on a more satisfactory footing than it ever enjoyed. Other advances have been made in the improvement of the status of the industry, such, for instance, as the reduction of the customs duties, which enormously improve the industry's chances of future remunerative working. Some desiderata are certainly unfulfilled, such as reduced railway rates; but the instalment of reforms made affords a fair basis on which working can be resumed with admirable chances of remuneration and profit. This being so, the unreasonableness of the show of impatience that progress has not been more rapid, and the undeservedness of the distrust with which the industry is professed to be regarded in some quarters, are obvious. A sober view of the situation of the Transvaal at the present moment must undoubtedly force the confession that the amount of solid work done in solving the many problems simultaneously surging up for solution in a new colony besides mining,--repatriation, resettlement, &c.--and in rebuilding generally the body politic, is of substantial volume, and that the progress hitherto made, in removing the difficulties which beset the mining industry, are sufficient augury that whatever remains unalleviated will receive its due and satisfactory attention in the near future.

In an old (1876) edition of "Chambers's Encyclopædia," under the heading of "Africa--Productions," is the statement that "It would be hazardous to assert that Africa is deficient in _mineral wealth_, though, judging from our present imperfect knowledge, it does not seem to be extremely rich." Little did the compilers of this well-known work think that, in the space of less than twenty-five years, a town of about 150,000 inhabitants would spring up as the centre of a mining country which now takes rank as the first gold-producer in the world. The gold production of the Rand to date is indeed stated to equal one-ninth of the coined gold in circulation throughout the world, while its potential reserves are probably fourfold this amount. In 1887 the United States occupied first rank among gold-producing countries, Australia being second, and Russia third, the total gold production of the world being only £18,000,000. In 1898, South Africa occupied the premier position with 28 per cent. of the aggregate world's production, and her contribution, moreover, represented only 3-1/2 millions less than the world's aggregate in the first-named year. In 1899, owing to the war, it just managed to fall short of the headship. Since its start, the Rand gold-fields have produced gold to the handsome aggregate amount of £81,000,000 sterling. On the fortunes of South Africa, the influence exerted by this stupendous accretion to its wealth is past question, for the output of £20,000,000 of gold in 1898 formed 80 per cent. of the subcontinent's aggregate exports in that year, while 68 per cent. of it was disbursed in labour, foodstuffs, mining stores, and material in the course of its winning. It is only needful to glance back at the modest proportions of South Africa's trade movement before the discovery, first of diamonds and then of gold, to recognise how much it owes to its mineral wealth, and more particularly to that of gold, for its present-day prosperity. Its populations, its cities and ports, its railway network, its multifarious industries from agriculture upwards, and its merchant firms and commercial activity have each and all been stimulated and enlarged enormously by it. As in the case of Australia and other older gold-producing countries, the output of gold, primarily from the Witwatersrand fields, has acted like a perennial stream, fructifying and rendering teemful the arid wastes, and making the very wilderness to blossom as the rose.

The gold-bearing quartz-pebble conglomerate beds, called by the Boers "banket"--the discovery of gold in the outcrops of which in 1883 started the Witwatersrand mining industry--form a series of strata going down at an angle of about 30 degrees to hitherto unknown depths--over 8000 feet have already been plumbed--and extending over a tested lateral distance of more than 50 miles.

These beds lie in series, that particular one which contains most of the gold being called the Main Reef series, comprising the Main Reef proper and a number of subordinate reefs or bands. The thickness of the Main Reef is from 3 to 12 feet, that of the Main Reef Leader 3 feet on the average, and the South Reef thinner than the latter, but having a richer gold contents than either. These are the beds chiefly worked, the gold being disseminated throughout the matrix mainly in crystals, visible gold being only occasionally seen, but in fairly regular quantities, so that the results of working, whether in the richer or poorer reefs, are capable of being accurately forecasted. The knowledge of the nature and extent of the beds has only gradually been brought together, and is still incomplete in parts even for the 15 miles section of the Rand which has been longest under working, and discoveries are of almost daily occurrence extending the sum of information regarding their composition and incidence. In the section situated between the Langlaagte Estate Mine in the west and the New Comet in the east, one profitable mine after another follows almost without a break. The eastern and western extensions are, for the main part, still _terra incognita_; but the several mines scattered along their stretch have confirmed the identity and value of the formation, which is held by experts to warrant the belief in the existence of wealth even exceeding the Rand proper.

Knowledge as to the depth to which the reefs descend has been slowest in accumulating. When the outcrops were first worked in the central section, it was believed that there was little or no gold in the lower levels. Since 1898, however, deep and yet deeper depths have been explored, especially in following the richer reefs, and always with the similar result of meeting with the same, or a superior, grade of ore contents peculiar to the higher sections of the particular reef, so that the inference is strengthened to certainty that profitable exploitation is only limited to the ultimate depth at which modern mining can be carried on. The problem, therefore, is one for the engineers; for, apart from the increased temperature in the lower levels, which can be met by roomier shafts, and the occurrence of water, which is likewise capable of being dealt with, the only difficulty to be met with is that concerned with the hoisting appliances for such enormous depths. So recently as May last the London Chamber of Mines, and more recently the Johannesburg Association of Mining Engineers, were engaged on the solution of this question. It is needless to anticipate the results of their deliberations, the point turning upon the choice betwixt two systems, only so far as to state that means for solving the difficulties of the task are considered to be available, at least, to such depths as 5565 feet on the slope, and that the results of mining at these great depths can be made to show a substantial profit. It may be added, however, that in consequence of the increased cost to reach the ore, the need for the utmost reduction of working costs becomes paramount.

The circumstances of gold-mining on the Rand have, therefore, features quite distinct from those of quartz-reef, alluvial, or other kinds of mining, and approximate to those of coal winning, especially in the matter of the depth and regularity of the conglomerate formation. Its peculiarities have created a method of mining, the outcome of costly experiment, experience, and skill, which will remain a lasting asset to future ages.

The future gold production of the Rand mining industry is a subject which enchains the attention alike of the investor and the curious. In approaching the subject of the unexploited gold contents of the banket formation, figures are handled which simulate the fabulous, and almost excuse the disbelief with which all such estimates are received in some quarters. Confirmation of the approximate correctness of the computations may, however, be obtained in two ways: firstly, from the past yield of the gold-fields in the seventeen years since their start; and secondly, from the verification of former prognostications which subsequent outputs have furnished. So far as regards the former, the fact of the production of £81,000,000 of gold since the start of the industry up to now, under well-known circumstances is, in the first place, proof positive that the gold exists; and, in the second, affords inferential grounds for assuming that, given at all similar circumstances, mining operations will yield like results. This is, of course, taking the lowest ground, for it is indubitable that the circumstances will not be alike, but vastly improved, in which case the value of the results will be proportionately enhanced. As to the confirmation which results from the verification which later outputs have furnished, both of the trustworthiness of the bases on which former forecasts were made and of the prognostications themselves, there may be instanced the forecasts of such early computators as Mr. Hamilton Smith, Mr. C. D. Rudd, and others. The former, in 1892, in a report on the future production of the Rand fields, made by request of Messrs. Rothschild, adventured an opinion which is worth quoting textually. He said: "With the active and energetic men who have this industry in hand, and always supposing that the foregoing theories be correct, in _three or four years from now_ the producing power of the mines and their reducing works will, I think, be increased to an output of _five or six million tons of ore per annum_, worth a gross yield of over £10,000,000. At this rate the available supply of ore, as conjectured above, will last for more than thirty years."

As an actual fact, in four years from the time of his writing the above, the Rand gold yield from 69 companies working amounted to 5,325,355 ozs., the total production being of the gross value of £10,583,616; so that, far from his estimate being too sanguine or exaggerated, it was a literal forecast of the actuality. He subsequently expressed the opinion that the full producing power of the Rand would be reached by the end of the century, when the output might be expected to exceed £12,500,000 per annum. As a matter of fact the total value of gold produced in the Transvaal in 1898 was over £15,000,000, most of which came from the Rand, and, had mining operations in 1899 not been interrupted by the war, the output in that year would have reached to over £18,000,000. Mr. Smith based his estimate on a working depth of 5200 feet, and on an area of the reef only 11 miles in extent, but since his time deep mining has been successfully prosecuted to 7000 feet. Inference and analogy, therefore, both afford strong support to the correctness of estimates, based on the results of past working, of the future gold contents of the Witwatersrand reefs, which estimates, as appears, are more likely to be under-reckoned than otherwise, from the sheer immensity of the subject, and from the necessarily imperfect knowledge of the potentialities of so huge a problem.

The divergencies in the several estimates made from time to time in the past of the total gold available from the Rand banket beds have in part arisen from the sheer inability of those making the estimates to anticipate the striking developments which have successively been made. So far back as 1893, 325 millions, and subsequently 450 millions and 700 millions, have been adventured by various persons. The relative moderateness of these estimates, compared with more recent ones, is due, as in the case of that of Mr. Hamilton Smith, to the under-valuation of the potentialities of deep-level mining, which are only now becoming fully apparent. One of the more recent estimates--that of Mr. Bleloch--based on working depths of 3000 to 7000 feet, and taken over an area of fifty miles, embracing the district between Randfontein and Holfontein, computes an available gold yield of £2,871,000,000 sterling, or eight times as much as the estimate of 1893.

Although so enlarged, the total actually understates potentialities by being exclusive of possible discoveries beyond these limits, and also by the estimates being framed on the older ratios of gold recovery to ore tonnage, thus ignoring the application of the latest scientific methods to the treatment of the poorest ore, which would tend to enhance the results considerably. Apart from these limitations, this estimate of 2871 millions is made in the most systematic manner, from careful calculations, area by area, according to the thickness of the reefs, the tonnage per claim, and the value per ton as they have been shown from past working. The total tonnage of payable ore available is estimated at 1,378,000,000. The average gold value per ton of ore in the figures works out at 41s. 7d., but in the actuality this varies from 78s. in the richest mines down to actual loss in the least paying of low-grade ores. In these stupendous figures are included the contributions of the great deep-level mines, the growing proportions of whose contributions to the aggregate output is already becoming a noteworthy feature, while the extent of their development cannot be foreseen. Mining engineers are indeed already considering the specifications of equipments for negotiating depths deeper than 7000 feet, and even in 1899 the possibility of mining at 12,000 feet was considered. Certainly the mining of minerals in other parts of the world has shown the feasibility of operations at much greater depths than those mentioned.