Agents and principals : the Crown agents for the colonies 1880-1914
The Office of the Crown agents acted as the UK commercial and financial agent of the Crown colonies, supplying all non-locally manufactured stores, organising the provision of external finance, supervising the construction of infrastructure, and performing various personnel services. Although under the supervision of the colonial Secretary, who appointed the Agents and fixed their salaries, the Office, through a system of charges for work done, was financially and administratively independent of the government. The thesis examines the Office from the perspective of principal-agent theory. It is argued that the Agents at the start of the period maximised their self-interest through the provision of a quality, but costly service, which reduced the likelihood of colonial criticism and the reorganisation/closure of the Agency, and increased its commission income. As they had difficulty monitoring costs and the loss suffered was relatively small when compared to the potential cost of the supply of poor quality goods/public works, both the Colonial Office and colonies tolerated the Agents' behaviour. In the late 1890s, however, the situation changed. A fall in the Office's receipts led the Agents to become more concerned with the maximisation of income. They thus began to use their advice to the Colonial Office to influence policy for their own benefit. As a result, costly and uneconomic railways were constructed, the price of purchases rose still further, and high cost loans were issued. The colonies, whose interests were threatened by the Agents' behaviour, increasingly lobbied the Colonial Office to take action, and in 1908 the Secretary of State set up an enquiry that led to widescale reorganisation of the Agency.