Protests from the Company regarding contributions to the Banaban Fund were overruled by the Secretary of State, who told the P.P.C.
23 R.C. to H.C., no. 214/35A/1911, 15 Sept. 1911 - ibid. 24 Assistant H.C. to H.C., 11 Sept. 1911, and subsequent
correspondence - ibid., 1567/1911.
25 Copy of agreement signed on 12 Nov. 1913, enclosed in R.C. to D.C., O.I.D., 24 April 1963 - GEIC, Secretariat, 3rd series, F167/3/1; see also correspondence in WPHC, Inwards
that the initial 6d. per ton royalty (payable, at that time, to imperial funds) had been assessed at five per cent of the value of Ocean Island phosphate as declared by the Company. The value of phosphates from Christmas Island (Indian Ocean), Harcourt said, had ranged from 28s. to 36s. per ton during the previous three years and stated that, in the absence of proof to the contrary, he had assessed the Ocean Island product at 20s. a ton. The combined royalty of Is. per ton, therefore, remained at five per cent of the assessed value.^
The Government intended that, when Ocean Island became
uninhabitable for the Banabans, the Fund should be used to purchase an island for their resettlement. The proposal to remove the Banabans had first been put forward by Mahaffy, in 1909, when he suggested that
27
Kuria in the Gilbert group might be suitable. The Company reacted predictably. The P.P.C. admitted that mined lands were left
virtually uninhabitable but maintained that any financial provision for the long-term future of the Banabans was premature. The Board expressed to the Secretary of State a common view concerning the future of Pacific peoples:
At the present rate of progress - and it is not likely to be materially accelerated in the near future - about twelve acres are annually worked out. It would therefore take more than a century to work out the whole 1292
acres. All over the Pacific the population of the islands is diminishing, and a hundred years hence the native inhabitants of Ocean Island - already few [about 450] - may not improbably have wholly disappeared.28
26 C.O. to P.P.C., 1 July 1912 - C.O. Confidential Print, Australian no. 206. It was also suggested in the House of Commons that the P.P.C. had obtained its licence under false pretences by understating the value of Ocean Island phosphate. See, for example, questions asked by Pointer, 24 and 31 July, 11 and 18 Dec., 1912 - G.B.P.D., XLI, 1147-8, 2025-7; XLV, 443-4, 1477.
27 Assistant to H.C. to H.C., Confidential, 14 April 1909 - WPHC, Inwards Correspondence, General, 491/1909.
28 P.P.C. to C.O., 9 Nov. 1909, enclosed in S. of S. to H.C., Confidential, 25 Nov. 1909 - WPHC, Confidential Despatches
63
Nor was Harcourt prepared to consider the removal of the Banabans. Such a proposal could not be entertained, he cabled, and was not to
29
be discussed with either the Banabans or the Company. Within a year, however, Colonial Office thinking had changed, and the Banaban Fund had been established for the purpose.
The placing of 250 acres in the hands of the Company was
designed to allow uninterrupted mining for a period of twenty years. As a consequence, therefore, apart from a few minor land disputes, and complaints over the Company's prices and profits at its store on Ocean Island, the Administration replaced the Banabans as the Company's chief combatant. Eliot, in particular, believed that the Company
should be taxed, directly or indirectly, at a higher rate than the 6d. per ton royalty. The Company, on the other hand, fought a losing battle for the principle that it should contribute only to the cost of administration at Ocean Island.
In 1916 Lord Balfour of Burleigh, Chairman of the P.P.C., approached the Secretary of State for relief from taxation at Ocean Island. Balfour argued that in 1908, Crewe, as Secretary of State, had suggested that the Protectorate should aim at a total annual revenue of £9,000 but that between 1911 and 1915 revenue had averaged more than three times that amount, of which the P.P.C. had
contributed in the region of £6,000 per year. Balfour further argued that the capitation tax, repealed in 1908 and re-imposed in
1913, combined with royalties payable to both Banabans and Government, and a tax on fuel oil of 6d. per gallon was 'unduly burdensome and unfair to the Company'. The Board also asked for 'representation of the Company in the Government of the Gilbert and Ellice Islands Colony' on the grounds that it contributed substantially to the
30
revenue of the territory. Neither officials of the Colonial Office nor Bonar Law, the Secretary of State, were sympathetic to the Company's case. Bonar Law informed the Company that he considered it 'essential that provision should be made for the
29 S. of S. to H.C., Telegram, 29 Nov. 1911 - WPHC, Inwards Correspondence, General, 491/1909.
30 Balfour of Burleigh to Bonar Law, 14 Sept. 1916, enclosed in S. of S. to H.C., no. 228, 16 Nov. 1916 - ibid., 15/1917.
necessary taxation to enable administration to be carried on 31
efficiently under existing conditions .
From 1920 the exploitation of the phosphates was placed in the hands of the British Phosphate Commissioners [B.P.C.], a non-profit making organisation formed by 'the Governments of the United Kingdom, Australia and New Zealand. Negotiations commenced at the
Versailles Peace Conference over the future of Nauru resulted in agreement among the three Governments to purchase the rights and assets of the P.P.C. at both Ocean Island and Nauru. The agreed price was £3,500,000 (paid up capital of the Company amounted to
less than £1,000,000) with the Governments contributing forty-two per cent, forty-two per cent and sixteen per cent
32