An Inquiry into the nature, causes and distribution of wealth in the Cape Colony, 1652-1795

Abstract

Three important questions about the Dutch Cape Colony are investigated in this dissertation: 1) how affluent were Cape settlers, 2) what were the causes of such wealth, and 3) how was the wealth distributed? Using a variety of statistical sources, most notably the detailed probate inventories and auction rolls kept and preserved by the Dutch East India Company and now digitised by Cape historians, and empirical techniques common in the field of economics, I find results that differ from the consensus view that the eighteenth century Cape was an economic backwater, a colony where pockets of wealth withered against a continuously expanding subsistence frontier region. The evidence instead points to an extremely wealthy settler society, with little evidence that these high levels deteriorated significantly even as the population increased rapidly. This dissertation’s first contribution is therefore to offer a significantly different view about the economic past of South Africa’s earliest European settler community. The second contribution of this dissertation is to offer new perspectives on the causes of growth within a settler society. Both demand and supply played important roles. The demand created by the ships travelling past Cape Town offered a captive market for Cape goods, akin to the Staples thesis proposed for Canadian exports by Harold Innes. On the supply side, I show that a colony’s development trajectory is influenced not only by the location-specific factors of its settlement, as suggested by existing comparative development theories, but also by the settlers’ regions of origin, which can influence the production function. Thirdly, I show that the unique mercantilist institutions imposed by the Dutch East India Company – notably its insistence on reducing costs to ensure farmer viability in the face of the low, non-market prices of the Company – resulted in a highly skewed distribution of settler wealth. Settlers’ investment incentives favoured slavery, which exacerbated the high levels of inequality in Cape society. The highly unequal distribution of wealth would have negative consequences for the Colony’s long-run growth prospects.