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e security of the other Europeans living in these countries, Her lajesty's Government should maintain a control over the sphere of fluence, while making all possible use of any Zanzibar surplus or edit for the further development of the whole region for the utual benefit of English commerce and of Zanzibar.

Whether the whole region should be officially declared to be an nglish Protectorate appears to me to be a question of minor mediate importance. There is, however, no doubt that King Iwanga will ask for a Treaty of Protection; in fact, he has already one so in the temporary Agreement made between him and myself n the 29th May,* and forwarded to your Lordship in my despatch f the same date. A declaration of Protectorate would probably rove to be the simplest course.

Before continuing the development of this idea, I venture to submit that the success or failure, and, indeed, the possibility, of any scheme on these lines for the general benefit of England, Uganda, and Zanzibar, must depend very largely upon the powers retained and the attitude adopted by the Imperial British East Africa Company on the whole question. Without entering into details, I may be allowed to point out that the political existence and powers of this Company in East Africa are based upon two separate documents. The first of these, which should be more accurately described as a series of documents, is a Concession from the Sultan of Zanzibar granting to the Company the lease of certain ports on the coast, and of a strip of land, 10 miles in depth, running parallel with the shores of the Indian Oceau. The Sultan gave to the Company at the same time administrative and judicial powers over his own subjects living in these ports or in this strip of land, and conceded to them all the revenue which the Company might be able to collect in this part of his dominions from customs duties or other sources, subject, of course, to the limitations imposed by international agreements. In return for these concessions the Company agreed, after much discussion and negotiation, and after most careful computations of the value of their newly-acquired rights and territories, to pay to the Sultans of Zanzibar an annual rental of 80,000 dollars, which was equivalent at the time to nearly 14,0007., but which is now worth rather less than 11,0007.

The powers thus acquired from the Sultan of Zanzibar were strictly limited to the boundary-line 10 miles from the sea, beyond. which the Sultan's possessions do not extend. The rights and duties of the Company in the interior, as soon as the 10-mile limit is passed, are therefore defined by and dependent on the Royal Charter granted to them on the 3rd September, 1888.† Without recapitulating the terms of this Charter, it may fairly be said that • Page 83. † Vol. LXXIX, page 641.

it was granted to the Company in order to enable them to establish organized systems of administration and government in the interior, to promote trade, and generally to "open up" the country. Under the powers conferred upon them by this Charter, the Company endeavoured to establish an Administration in Uganda and the neighbouring countries, and made Treaties promising their protection to many Chieftains of different tribes. The only other district outside the Sultan's territory, in which any attempt was made to establis any sort of Government, was in the English Protectorate of Witu.

It appears to me to be not only important, but even necessary. before any scheme can be entertained for dealing with Uganda and its neighbouring countries, whether by Her Majesty's Government or by the Sultan of Zanzibar, that a clear understanding should, in the first instance, be come to as to the present and future status of the Company, both under their Charter and their Concessions As regards the Charter, the Company have already withdrawn from Torn. Ankori, Uganda, Usoga, Kavirondo, &c., without notifying to the Kings or Chiefs of these countries any denunciation of the Treaties made with them, under which the Company promised protection in return for certain commercial advantages, and without giving to the Signatories of these Treaties any warning of their approaching retreat.

Similarly, the Company have now abandoned Witu; so that the only posts they now hold in virtue of their Charter are (1) the fort at Kikuyu, where constant difficulties with the natives have hitherto prevented the introduction of any real administration, and (2) the smaller station at Machakos, at which an English employé is reported to have succeeded in organizing some trade in corn and cattle with the local tribesmen, and in establishing a growing influence. But neither of these places are of any commercial or political value except as stations on the road to Uganda and the Lake districts. In fact, I have been given to understand, though with what justice I do not know, that the Company contemplate a retreat even from these, their last posts in the interior of Africa. But even assuming that they propose to retain their garrisons at these places, the question which now naturally arises is, whether the possession of these two small posts within 350 miles of the coast is a sufficient result for the five years which have elapsed since the Charter was granted to justify the Company in retaining that Charter any longer? So long as they do retain it, they prevent any one else from undertaking the work which they have thrown down. If the Uganda question is to be settled by a co-operation of any sort or kind between the Governments of Her Majesty and of the Sultan of Zanzibar, it is natural that the latter at least should ask for a tabula rasa before incurring any fresh responsibilities in East Africa.

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The case as regards the strip of coast-line held by the Company uder Concessions from the Sultan is somewhat different. So long the former continue to pay their rent with regularity, they have a undoubted right to retain their rights of administration; but I ave no hesitation in saying that while it is open to doubt whether ach retention will be to the advantage either of the Company or f the Sultan, there can be no question that it will be to the great isadvantage of the countries lying in the interior which form more articularly the subject of this Report. So long as the Company etain their Concession, it will be in no way to the interest of Zanzibar to contribute to the prosperity of its own coast-ports for the sole benefit of the Company; the efforts of the Sultan's Government would, therefore, in all probability, have to be directed to the somewhat clumsy expedient of opening a new road to the interior by the Tana River, which should pass outside the limits of the Company's Concession. In fact, the Sultan's Government, which is a factor of no little importance in the whole question, would be thrown into an anomalous position of opposition to its own ports; it would be a direct gainer by the development of a new port in Witu and by the transport of goods by the Tana River outside the Company's Concession, and it would also profit, though in a less degree, by the conveyance of the Uganda trade through German ports and the German sphere; but the increase of trade from Mombasa, while that town is under the Company's jurisdiction, would be looked upon by the Sultan and Arabs of Zanzibar, as well as, from a more practical point of view, by the fiscal authorities of the Zanzibar Government, as a misfortune rather than a benefit. If, therefore, the Company retain their Concession, it will be difficult to justify any demand being made upon Zanzibar for assistance in developing any scheme of improvement of the interior.

Nor can I imagine that the retention of the administration and fiscal powers conferred by the Concession will be of much advantage to the Company themselves. Now that they have renounced any connection with Uganda and the neighbouring countries, any trade with those countries passing through the Company's ports will presumably be treated as goods "in transit," and will be, therefore, free from any customs or transit duties at the coast. Article IV of the Act of Berlin (1885)* lays down that-

"Merchandize imported into these regions," i.e., a wide zone extending, roughly speaking, from 5° north latitude to 12° south latitude, "shall remain free from import and transit dues."

The Declaration annexed to the Act of Brussels of 1890† modifies this Article in so far as it provides for the imposition of import duties, but the exemption from taxation of any kind of all goods in Vol. LXXVI, page 4.

+ Vol. LXXXII, page 55.

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transit is carefully maintained. Article XCVI of the same Act provides against any evasion of its provisions by declaring that "the present General Act repeals all contrary stipulations of Conventions previously concluded between the Signatory Powers."

It appears from these Articles to be perfectly clear that goods destined for Uganda, or for any country in the interior not under the flag of the Sultan of Zanzibar, have an indisputable right to pass through the coast ports without the payment of any duty or tax whatsoever. But if, for any reason at present unknown to me. the principle of free transit, established by the General Acts of Berlin and Brussels, cannot be carried into effect, and if the right can be proved to levy taxes on goods declared to be in transit to countries beyond their jurisdiction, even then the English Company would scarcely be the gainers. If the taxes have to be paid, the route through the German sphere is, at present, the cheaper and quicker of the two; but all payment of such taxes would be avoided by the use of a port in the English Protectorate of Witu, outside the Company's Concession, and by the development of the route to Uganda by the Tana River.

If, however, it is finally decided that the Company retain either their Concession of the coast ports or their Charter, as the general feeling and attitude of native tribes all along the road to Uganda will now be of direct interest and importance to Her Majesty's Government, I would recommend that the appointment by Her Majesty's Government of a Commissioner with a suitable staff in Uganda should be supplemented by the appointment of other officers to watch and report on the dealings of the Company's officers with the native tribes, whether at Kikuyu, Machakos, or on the coast.

It is, however, scarcely necessary to point out that the situation established by any such system as that sketched above would be fraught with many difficulties. A kind of ill-defined and irregular partnership would have been established between Her Majesty's Government, the East Africa Company, and the Sultan of Zanzibar, each of whom, while theoretically working for the same objectthe development of East Africa-would, in reality, be working for their own hand, and in opposition, either open or secret, to the interests of the other partners. The position of Her Majesty's Government would perhaps be wanting in dignity; that of the Sultan of Zanzibar, who would be thrown into opposition to his own ports and his own tenants, would be anomalous and uncom fortable; while the Company, in their efforts to combine commerce and administration, and to make the exercise of their powers fiuaucially profitable, would probably find themselves in occasional oppo sition both to the Sultan of Zauzibar aud to the Representatives

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1 Her Majesty's Government in the interior. It is unnecessary o insist upon the complications which would inevitably ensue. senough to say that the situation thus created would, in all probaility, effectually prevent any real progress being made, and would ender almost futile all the expense which has been and may be ncurred in this district.

In view of these considerations, and of the urgency of now arriving at a settlement of the whole East African question on a basis which offers, at least, some prospect of being definite and permanent, I venture to express my strong opinion that it is now desirable, in the interests of British commerce and of the whole of East Africa, from the Indian Ocean to the Nile Basin, that some arrangement should be arrived at, without further delay, by which the Imperial British East Africa Company shall cease to exist as a political or administrative body, either in the interior or within the limits of the Sultan's territory.

Without wishing to criticise, and still less to blame, the Company's methods of government, the history of British East Africa for the last five years and its present condition show us clearly that the experiment of combining administration and trade in the same hands has proved a failure, so far as this part of Africa is concerned; and that the sooner this system is discontinued the better it will be for the native races, for British commerce, for Zanzibar, and, as I believe, for the Company itself. As pioneers, the Company's officers have done good work, and have greatly increased our knowledge of East Africa, and there can be no doubt that a great deal of money has been spent in the hope of opening up the country to civilization and, at the same time, of introducing a profitable trade. In fact, to the founders of the Company belongs the sole credit of the acquisition, for the benefit of British commerce, of this great potential market for British goods. It should, moreover, be remembered, in justice to them, that in the face of many initial difficulties they succeeded, in marked contrast to the neighbouring European colonies, in establishing their influence without bloodshed, and by their own unaided efforts. It does not come within the scope of this Report to examine the reasous for the non-realization of all these hopes.

Should the Imperial British East Africa Company be converted into a commercial, agricultural, or transport Company, or into a combination of Companies occupied with these and similar undertakings, they may still contribute in a very important degree, and, as I believe, to their own pecuniary advantage, to the development of East Africa; and in this work there can be no doubt that their experience of the country, and their command of capital, would be of the greatest service: but, without going further into

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