British South Africa Company

British South Africa Company
Public company
IndustryMining, colonial enterprises
FateAcquired
PredecessorCentral Search Association and the Exploring Company Ltd.
SuccessorCharter Consolidated Ltd
FoundedLondon, United Kingdom (1889 (1889))
FounderCecil Rhodes
Defunct1965 (1965)
Headquarters
London
,
England
Area served
Southern Africa
South Africa
Botswana
Rhodesia
Zambia
and their predecessor entities
Key people
Cecil Rhodes (founder)

The British South Africa Company (BSAC or BSACo) was established following the amalgamation of Cecil Rhodes' Central Search Association and the London-based Exploring Company Ltd which had originally competed to exploit the expected mineral wealth of Mashonaland but united because of common economic interests and to secure British government backing. The company received a Royal Charter in 1889 modelled on that of the British East India Company. Its first directors included the Duke of Abercorn, Rhodes himself and the South African financier Alfred Beit. Rhodes hoped BSAC would promote colonisation and economic exploitation across much of south-central Africa, as part of the "Scramble for Africa". However, his main focus was south of the Zambezi, in Mashonaland and the coastal areas to its east, from which he believed the Portuguese could be removed by payment or force, and in the Transvaal, which he hoped would return to British control.[1]

It has been suggested that Rhodes' ambition was to create a zone of British commercial and political influence from "Cape to Cairo", but this was far beyond the resources of any commercial company to achieve and would not have given investors the financial returns they expected. The BSAC was created in the expectation that the gold fields of Mashonaland would provide funds for the development of other areas of Central Africa, including the mineral wealth of Katanga. When the expected wealth of Mashonaland did not materialise and Katanga was acquired by the Congo Free State, the company had little money left for significant development after building railways, particularly in areas north of the Zambezi. BSAC regarded its lands north of the Zambezi as territory to be held as cheaply as possible for future, rather than immediate, exploitation.[2]

As part of administering Southern Rhodesia until 1923 and Northern Rhodesia until 1924, the BSAC formed what were originally paramilitary forces, but which later included more normal police functions. In addition to the administration of Southern and Northern Rhodesia, the BSAC claimed extensive landholdings and mineral rights in both the Rhodesias and, although its land claims in Southern Rhodesia were nullified in 1918, its land rights in Northern Rhodesia and its mineral rights in Southern Rhodesia had to be bought out in 1924 and 1933 respectively, and its mineral rights in Northern Rhodesia lasted until 1964. The BSAC also created the Rhodesian railway system and owned the railways there until 1947.

Corporate History

Royal charter

The Royal Charter of the British South Africa Company (BSAC) came into effect on 20 December 1889. This was initially for a period of 25 years, later extended for a further 10 years, so it expired in 1924.[3]

The company had been incorporated in October 1888, and much of the time after Rhodes arrived in London in March 1889 and before its Charter was granted, was taken up in discussions on its terms. In these discussions, Rhodes led the BSAC negotiators. Although the British government broadly supported the scheme, it demanded that it and the High Commissioner for Southern Africa it appointed should have the ultimate responsibility for any territory BSAC might acquire and for approving or rejecting all BSAC actions. Although Clause 3 of the Charter appeared to grant BSAC powers to administer a wide (if unspecified) area of Central Africa on behalf of the British government, this was subject to it obtaining those powers through treaties with local rulers. Under Clauses 4 and 9, the British government also had to accept those treaties and agree to assume any powers to govern that the rulers had granted before authorising BSAC to exercise those powers in its behalf.[4]

Board divisions

The first board of directors of the British South Africa Company, 1889. Top Row: Horace Farquhar; Albert Grey; Alfred Beit. Middle Row: the Duke of Fife; C. J. Rhodes (Founder and managing director in South Africa); the Duke of Abercorn. Bottom Row: Lord Gifford, V.C.; Herbert Canning(Secretary); George Cawston.

The BSAC was an amalgamation of a London-based group headed by Lord Gifford and George Cawston and backed financially by Baron Nathan de Rothschild, and Rhodes and his South African associates including Alfred Beit with the resources of the De Beers Syndicate and Gold Fields of South Africa. These two groups had originally been in competition but united because of common economic interests. Gifford and Cawston's interests were represented by the Bechuanaland Exploration Company and its offshoot, the Exploring Company. Rhodes and his associates secured the Rudd Concession from the Ndebele king, Lobengula, which was transferred to the Central Search Association (later renamed United Concession Company), and the Exploring Company was given approximately one-quarter of the shares in it. The British South Africa Company leased mineral rights from the Central Search Association, paying it half the net profits from mineral exploitation.[2][5]

From the start, Gifford disliked Rhodes, who he thought had acquired too much power in BSAC and had marginalised him. Cawston supported Rhodes only in those commercial activities likely to make a profit and not in any less commercial ventures. The four other directors were appointed to represent the other shareholders. The dukes of Abercorn and of Fife, respectively chairman and vice-chairman were appointed to give the company prestige but they took little part in running the company. Neither had previous interest in Africa and Fife had no business experience. Albert Grey, later Earl Grey had an active role as a liaison between Rhodes in South Africa and government officials in London. He and Horace Farquhar, a prominent London banker, completed the first Board.[6]

The Jameson Raid and after

Sir Henry Loch, the High Commissioner for Southern Africa, had planned the overthrow of the Transvaal Government in the event of a rising in Johannesburg by British subjects denied civil and political rights as early as 1893, and the Colonial Secretary, Lord Ripon, did nothing to discourage this. Loch's successor as High Commissioner from 1895, Sir Hercules Robinson inherited these plans, but none of Loch, Robinson or Ripon took any steps to promote such a rising. Joseph Chamberlain, who succeeded Ripon in 1895, was almost certainly aware that Rhodes was planning a rising, but not the details.[7] Rhodes and Jameson made plans to assist, and probably to promote, a Johannesburg rising. Earl Grey was the only London-based director to know about plans for the Jameson Raid, and he, like Rhodes and Beit, did not share this knowledge with the other BSAC directors. Grey communicated at least some of the plan to Joseph Chamberlain, who avoided specifically endorsing it.[8]

News of the Raid shocked the BSAC directors who, except for Beit and Grey, knew nothing of the plan. Rhodes at first denied responsibility for Jameson's actions but, in the face of further revelations, he assumed full responsibility for them. The BSAC Board recognised that the company would be attacked, and asked Rhodes to come to London to meet them. At a Board meeting of 5 February 1896, Rhodes claimed that he had given Jameson permission to assist an uprising only, not to start one, and that he believed had the support of the British government. He offered to resign as managing director, but a decision on this was deferred despite the demands of Cawston and Gifford for its acceptance. However, after the trial of the Jameson raiders implicated Rhodes further and following pressure from Chamberlain, Rhodes and Beit were removed as directors in June 1896.[9]

After his removal, Rhodes remained a major shareholder in the BSAC and he continued to be involved unofficially in its affairs. In 1898, the Duke of Fife and Lord Farquhar both resigned from the Board; Rhodes and Beit replaced them and another supporter of Rhodes also joined the Board. As Rhodes had recaptured full control over the company, Cawston decided to resign. Lord Gifford, however, remained on the Board, which Rhodes dominated until his death.[10]

After Rhodes

Rhodes retained effective control of the BSAC until his death in 1902, but after the Jameson Raid the company's relations with the Colonial Office over Rhodesia were difficult, as the Colonial Office was unwilling to recognise the company had to give priority to its commercial interests rather than administration. After Rhodes' death, the BSAC directors attempted to make the company commercially profitable, but until 1924 it was deeply unprofitable because its administrative costs outweighed its commercial income, and it never paid a dividend in that period. After a financial crisis in Britain in 1908, the value of its shares declined sharply: its share capital had to be increased from £6 million to £12 million between 1908 and 1912, and it needed large loans to stay in business.[11]

From around 1920, the company favoured a union of Southern and Northern Rhodesia, followed by their inclusion in the Union of South Africa, and it was in discussion with South African leaders about this. South Africa offered favourable terms for buying out the BSAC’s interests, and the company would be relieved of any future administrative costs. The BSAC did not want to be left with responsibility for the administration of Northern Rhodesia when Southern Rhodesia gained responsible government, but did want to preserve its commercial interests there, in particular its mining and land rights. To do this, it had to negotiate a settlement with the British government for both parts of Rhodesia. The two parties began negotiations in an atmosphere of mutual suspicion at the end of 1922, but nevertheless reached an agreement of 29 September 1923 to settle all the outstanding questions on Southern and Northern Rhodesia.[12]

From 1925 until his death in 1937 Sir Henry Birchenough, a former Director of the company, served as President.

After 1924 the BSAC's rights allowed it to collect vast sums in royalties, particularly from the development of the Northern Rhodesian Copperbelt, from the late 1920s until its mineral rights were liquidated just before Zambian independence in 1964. In the 1930s, the BSAC was able to collect royalties on all copper mined and was a large shareholder in the main mining companies. By 1937 its annual mining revenue was £311,000.[13]

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