"Treasury control" and the South African War, 1899-c.1905

This thesis gives an account of the Treasury's role in preparing for, and conducting, the South African War, at a time when the orthodox Gladstonian principles of public finance were being challenged. It is a case study, in an exceptional instance, of the nature and effectiveness of Treasury control over expenditure on imperial expansion; of the Treasury's view of how a colonial war should be financed and who was to pay for it, of what cost-benefit analysis the Treasury applied to a colonial war, and of why it relied on recouping a substantial part of the war cost from an indemnity levied on a defeated Transvaal. The thesis is an attempt to define the vague concept of "Treasury control", not in constitutional theory, but as it worked in practice. It is argued that Treasury control and the rigidity of the annual peace time budget obstructed before the war the taking of any serious military precautions, left no reserve fund for war contingencies, and made any long-term strategic planning almost impossible. Rather than run the risk of asking money from Parliament for reinforcements to South Africa, which would be unpopular, as it might require increased taxation, and which might prove unnecessary, the Cabinet waited till the need to spend taxpayers' money had been demonstrated, although it could result in initial setbacks and in a longer and more expensive campaign. This, in conjunction with Milner's and Chamberlain's political strategy, dictated a military solution to the crisis. It is further argued that at first the Treasury estimated the cost of the war at £10 million, while assuring Parliament that a substantial part of it would be recouped by way of indemnity from the Transvaal. But the colonial expedition turned into a war on a European scale, the final charge to the British Exchequer was £217 million, and not a penny of indemnity was exacted from the Transvaal. The Treasury's view was restricted largely to the current year's budget and the following year's estimates, and how to secure their approval in Parliament. In this case, Treasury control was as ineffective during the war, as its estimates of the cost of the war and who would pay for it, were unrealistic.