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The Economy in the British Era
Merchant Class Companies and Banks Mining
The Cape Merchant Class
Merchants, many of whom had worked for the East India Company, established themselves at Cape Town and developed a strong import/ export industry.

Utilising the global reach of British commerce, they prospered by exporting Cape produce - particularly wine in the 1820s and wool later in the century. They also imported goods such as coffee, horses, wood and coal to sell locally and for re-export. As wheat, wine and dried fruit exports grew, so shipping greatly increased, eclipsing the volumes seen under the VOC, and Cape Town became the home port for many new companies, no longer just a 'stopping off place'.

A society in London - the Cape of Good Hope Trading Society - helped the merchants develop their markets, and represented their interests in London. The merchants also enjoyed trade networks throughout the empire, and access to capital in London. In this way British traders at the Cape became a wealthy class and stimulated commerce by lifting the smothering blanket of monopoly control imposed by the VOC.

By the 1820s the merchants had become the backbone of a powerful middle class in the Cape, fewer in number than the Dutch but more active and energetic. They campaigned for better infrastructure at the Cape, particularly a harbour. They demanded the relaxation of controls to allow private banks to operate and also opposed slavery, partly for moral reasons but also to create a much larger and more fluid pool of labour.


Companies and Banks
The aspirations of the Cape middle class for the liberalisation of commerce found expression in the foundation of the Cape of Good Hope Bank by John Bardwell Ebden in 1837, the first private bank in the Cape and still active today. An investment company called 'The Board of Executors' began a year later and remains a significant Cape Town company.

By this time there was a proliferation of joint-stock companies, mainly based on local capital. Compensation paid for the emancipation of slaves created capital among the urban middle class. They financed building programmes for the liberated slaves. The growth in the wage-earning labour market helped to produce economic growth, upon which the middle class were able to capitalise.

While individuals in the town prospered by property and business development, joint stock companies were mainly associated with agriculture, particularly the growth of the Merino wool industry in the Eastern Cape.

In 1845 Mutual Life was founded as an insurance company (now the very large company, Old Mutual). The first major external (London) investment was in 1855 for the Cape Town Railway and Docks Company. By 1860 there were five local banks and several insurance based institutions. In 1861 the London and South African Bank was formed.
Mining and the Economic Boom
The development of financial and political structures during the eighteenth century suddenly bore fruit with the discovery of diamonds in 1867. The Alfred basin of the harbour had been completed and soon it was the entry point for an unprecedented traffic of men and supplies ready to take the railway up to Kimberley and try their luck on the farm of 'de Beer'.

By 1872 there were 50,000 miners living in Kimberley. The economy of the Cape grew fivefold in five years, 1870 - 1875. For the first time significant amounts of capital were invested in the Cape by London based banks and companies, leading to a dramatic increase in local joint-stock companies.

By the 1890s they were building grand colonial headquarters along Adderley Street, such as the Standard Bank, which is still in use and a prominent Cape Town building.


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