Why Nations Fail: The Origins of Power, Prosperity, and Poverty

Trust, and granted it to De Beers, the giant South African diamond mining company. In 1936 De Beers was also given the right to create the Diamond Protection Force, a private army that would become larger than that of the colonial government in Sierra Leone. Even so, the widespread availability of the alluvial diamonds made the situation difficult to police. By the 1950s, the Diamond Protection Force was overwhelmed by thousands of illegal diamond miners, a massive source of conflict and chaos. In 1955 the British government opened up some of the diamond fields to licensed diggers outside the Sierra Leone Selection Trust, though the company still kept the richest areas in Yengema and Koidu and Tongo Fields. Things only got worse after independence. In 1970 Siaka Stevens effectively nationalized the Sierra Leone Selection Trust, creating the National Diamond Mining Company (Sierra Leone) Limited, in which the government, effectively meaning Stevens, had a 51 percent stake. This was the opening phase of Stevens’s plan to take over diamond mining in the country.
    In nineteenth-century Australia it was gold, discovered in 1851 in New South Wales and the newly created state of Victoria, not diamonds, that attracted everyone’s attention. Like diamonds in Sierra Leone, the gold was alluvial, and a decision had to be made about how to exploit it. Some, such as James Macarthur, son of John Macarthur,the prominent leader of the Squatters we discussed earlier ( this page – this page ), proposed that fences be placed around the mining areas and the monopoly rights auctioned off. They wanted an Australian version of the Sierra Leone Selection Trust. Yet many in Australia wanted free access to the gold mining areas. The inclusive model won, and instead of setting up a monopoly, Australian authorities allowed anyone who paid an annual mining license fee to search and dig for gold. Soon the diggers, as these adventurers came to be known, were a powerful force in Australian politics, particularly in Victoria. They played an important role in pushing forward the agenda of universal suffrage and the secret ballot.
    We have already seen two pernicious effects of European expansion and colonial rule in Africa: the introduction of the transatlantic slave trade, which encouraged the development of African political and economic institutions in an extractive direction, and the use of colonial legislation and institutions to eliminate the development of African commercial agriculture that might have competed with Europeans. Slavery was certainly a force in Sierra Leone. At the time of colonization there was no strong centralized state in the interior, just many small, mutually antagonistic kingdoms continually raiding one another and capturing one another’s men and women. Slavery was endemic, with possibly 50 percent of the population working as slaves. The disease environment meant that large-scale white settlement was not possible in Sierra Leone, as it was in South Africa. Hence there were no whites competing with the Africans. Moreover, the lack of a mining economy on the scale of Johannesburg meant that, in addition to the lack of demand for African labor from white farms, there was no incentive to create the extractive labor market institutions so characteristic of Apartheid South Africa.
    But other mechanisms were also in play. Sierra Leone’s cocoa and coffee farmers did not compete with whites, though their incomes were still expropriated via a government monopoly, the marketing board. Sierra Leone also suffered from indirect rule. In many parts of Africa where the British authorities wished to use indirect rule, they found peoples who did not have a system of centralized authority who could be taken over. For example, in eastern Nigeria the Igbo peopleshad no chiefs when the British encountered them in the nineteenth century. The British then created chiefs, the warrant chiefs. In Sierra Leone, the British would base indirect rule on existing indigenous institutions and systems of authority.
    Nevertheless, regardless of the historical basis for the individuals recognized as paramount chiefs in 1896, indirect rule, and the powers that it invested in paramount chiefs, completely changed the existing politics of Sierra Leone. For one, it introduced a system of social stratification—the ruling houses—where none had existed previously. A hereditary aristocracy replaced a situation that had been much more fluid and where