The British Empire Library

Managing British Colonial And Post-Colonial Development: The Crown Agents, 1914-1974

by Dr David Sunderland

Courtesy of OSPA

Dr Larry Butler (School of History, University of East Anglia)
As Dr David Sunderland rightly states in his latest book, although numerous accounts exist of the evolution of colonial development policy, the mechanisms by which ideas were translated into action 'on the ground' have previously escaped historians' detailed attention. This absorbing study of the twentieth-century role of the Crown Agents is an important attempt to make amends. Following his well-received examination of the Agents' earlier history Managing the British Empire - The Crown Agents, 1833-1914, Dr Sunderland now addresses the crowded decades during which overseas administration became an increasingly complex and technically demanding task, and which witnessed the transformation of the British Empire into the Commonwealth. Like his earlier work, this book is based on extensive and painstaking research, employing the records of the Crown Agents and of numerous government departments.

During the period he considers, the work of the Crown Agents - procuring goods and services for overseas administrations, recruiting specialist personnel, and performing a range of financial services for the colonies - would grow in importance, particularly after 1945 when 'development' was the cornerstone of British colonial policy. Altogether, Dr Sunderland strives for an even-handed assessment of the Agents' record, while acknowledging the difficulties in gauging this, and emphasising that the Agents and their staff were not always well-equipped for the difficult functions entrusted to them. On their procurement role, his verdict is generally positive. He accepts that their activities may have retarded overseas economic development, by depriving colonial merchants of lucrative government orders. Yet the #1.19 billion worth of goods the Agents bought from British manufacturers between 1920 and 1965 benefited the domestic economy, and created employment for many thousands. In the same period, the Agents recruited over 33,000 staff for overseas service, and the author argues that no other institution could have done this, or provided engineering and other services, more effectively or more cheaply. On the Agents' financial role, their management of colonial loan stock, and the investment of colonial funds in Britain, allowed colonial administrations to meet their financial requirements relatively cheaply and to earn relatively high returns. Moreover, the Agents' financial activities helped bolster London's reputation as an international financial centre, while colonial investments helped to support sterling, and British public expenditure, through colonial purchases of British government securities. Although this may have postponed long-overdue reorganisation within the British economy, the author denies that colonial loans deprived British industry of capital. Finally, the Agents' significant role in overseas development in turn fostered wider commercial development in the colonies, creating opportunities for British firms.

Dr Sunderland concludes that the Crown Agents generally served their clients' interests well, partly because Agency staff identified strongly with the overseas territories, but also because by doing so they enhanced the Agency's own prospects for expansion: successfully discharging their obligations enabled the Agents to attract fresh work. Various means evolved to enable the Agency to protect colonial interests. As sources of supply, it used only a few trusted, often small, firms, which had a strong incentive to deal fairly with the Agency if they were to retain its business. These firms often enjoyed long relationships with the Agency (fifty years not being exceptional). Moreover, the author argues, the Agency proved adept at avoiding extortionate price demands from suppliers, for example by buying from firms outside cartels. In its outlook, the Agency was an anomaly since, not being a government department, it was not bound by public sector conventions but modelled itself on the norms applying in business. Equally, the author believes, the Agency's very existence prevented colonial administrations from buying expensive and poor quality goods from local suppliers, and from coming under the 'influence' of local firms, and succumbing to financial temptation. Its supervision of development projects, too, reduced the risk of infrastructure being over-priced. However, by generally avoiding open competition, and preferring instead its favoured suppliers, the Agency paid relatively high prices for the goods it purchased.

Early in the 1960s, as former colonies gained independence, the Agency's fortunes began to decline, and diversification into new activities seemed necessary. Facing the loss of traditional business, the Agents entered the secondary banking sector. This involved borrowing heavily from various British banks and from the Agents' own clients. These loans were sometimes then re-lent to other financial institutions at an interest rate slightly higher than that obtained by the Agents themselves. Alternatively, the borrowed money might be invested in gilts, equities and property, or used to finance currency and commodity dealings, or to purchase substantial equity holdings in companies. This enabled the Agents to accumulate a sizeable contingency reserve, and to subsidise traditional services to clients. Unfortunately for the Agents, the secondary banking crisis of 1974 triggered the failure of many of the firms in which they had invested, and the Agency itself soon faced bankruptcy, with debts approaching #200 billion. Yet the services of the Agency were too valuable for it to be allowed to collapse. It provided advice to Whitehall departments, and cost-effective services to the dependencies, while reinforcing Britain's links with these and with the Commonwealth more widely, while ensuring that aid was spent on British goods. The Agency therefore survived, albeit with a new constitution.

A particularly important contribution made by this book is to refute the findings of two later government enquiries into the events of 1974, which accused the Agency of self-interested behaviour, incompetence, lax internal controls, recklessness and even personal corruption. The author argues strongly that the secondary banking initiative was intended to benefit the Agency's clients, since it was expected to help subsidise and improve its more conventional services, earn attractive returns for those governments which lent money to the Agency, and allow the latter to draw upon the expertise of the various companies in which the Agency invested in its clients' interests. Equally, he defends the Agency's internal control mechanisms, and regards the Agents' risk-taking and ethical standards as being comparable to those of other secondary banks. In identifying the true cause of the misfortunes of 1974, Dr Sunderland stresses the Agency's failure to call in loans and its continued lending to firms which subsequently collapsed. Believing that the market could ride the storm, the Agents were proved wrong. Yet here, blame should attach equally to the Bank of England which, keen to maintain confidence, induced the Agents to use their own and their clients' funds to support failing concerns, even when it had become clear that the Agency itself was struggling. As the author wryly notes, had the secondary banking initiative succeeded, the Crown Agents might ultimately have played an even greater role in overseas development.

With this major work, we are now better placed to appreciate the complexities of Britain's relations with its overseas territories, and of the vital, yet little known, years after independence. David Sunderland is to be congratulated for the breadth of his scholarship, his stamina as a researcher, and the intriguing conclusions he has reached.

British Empire Book
Dr David Sunderland
The Boydell Press/Royal Historical Society
978 1 84383 301


Armed Forces | Art and Culture | Articles | Biographies | Colonies | Discussion | Glossary | Home | Library | Links | Map Room | Sources and Media | Science and Technology | Search | Student Zone | Timelines | TV & Film | Wargames

by Stephen Luscombe