Why Did Colonizers Tax Africans?

If Banks Create Money, Why Is There Never Money for Hospitals?

Banks don't lend out your deposits — they create new money when they make loans. The Bank of England confirmed this in plain language in 2014. And once you know that, a question forms:

If Barclays can create £300,000 on a Thursday afternoon by approving a mortgage — if that money literally did not exist on Wednesday — then what exactly is meant when a government says there is “no money” for hospital buildings? Or nurses' pay? Or anything else?

The answer is not where you'd expect to find it. It's in a nineteenth-century colonial tax on African huts.

What Taxes Are Supposed to Do

The official story about taxes is simple. Governments have things they need to pay for — armies, roads, hospitals, schools. To fund these, they collect money from citizens and businesses. Taxes are revenue. Revenue enables spending. The logic runs: collect first, spend after.

This makes intuitive sense. It is how a household works. It is how every business works. You earn money, and then you spend it. Spending more than you earn is debt. Debt is bad. Governments should live within their means.

This analogy — government as household — is so deeply embedded in political language that it shapes almost every debate about public spending. We talk about “the national credit card,” about “maxing out,” about what we can and cannot “afford.” We talk as though the government is a family that earns a salary and has to make the numbers add up at the end of the month.

But here is the problem. The government is not a family. It is, among other things, the institution that issues the currency. And that changes everything about the logic.

The Baker Problem: If Governments Create Money, Why Collect It Back?

Think about it from first principles. The UK government spends pounds. Where do those pounds come from? They come from the government — from the Bank of England, from the Treasury, from the act of government spending itself. The pounds in your pocket were, at some point, created and spent by the state.

Then the government collects some of those pounds back, as taxes.

So the sequence is: government creates pounds by spending → pounds circulate in the economy → government collects some back as taxes. The pounds go out first. They come back second.

But if that is the sequence, in what sense are taxes “funding” the spending? You cannot fund spending with money that can only exist because you already spent it. It is like a baker claiming they need to collect bread from customers before they can bake more bread. The baker makes the bread. The bread doesn't fund the baking.

So what are taxes actually for?

The colonial record answers this with unusual honesty. Because colonial administrators were not trying to hide anything. They wrote down what they were doing and why. And what they were doing had nothing to do with funding public services.

Why Did Colonizers Tax Africans?

In the 1890s, British colonial administrators faced a practical problem across East and Southern Africa. They had mines to run, railways to build, plantations to maintain. They needed workers. But the people already living in these territories — the Kikuyu, the Zulu, the Shona, the Ndebele, dozens of other communities — had no particular reason to work for them.

These communities were not poor. They had land. They grew food. They had sophisticated economies, rich social lives, and no pressing need for British pounds. When British employers offered wages in exchange for labor, few accepted. Why would you leave your land and your family to dig in a mine for money you didn't need?

The British administrators understood the problem clearly: these people had an exit option. As long as they had access to land and subsistence, they could simply decline. And they did.

The Hut Tax: Manufacturing a Workforce

The solution was the hut tax. Beginning in the 1890s across British colonial Africa — Sierra Leone, Rhodesia, Kenya, Uganda, Nyasaland and elsewhere — colonial authorities imposed an annual levy on each household, denominated in British colonial currency. If you lived in a hut, you owed the colonial government money. Every year.

The crucial detail: these were people who had no British currency and no ordinary way to obtain it. The only reliable way to get British pounds was to work for a British employer.

Think about what this created. Previously, a Kikuyu farmer had everything they needed: land, food, community, tools. Now they had a debt — a monetary obligation — that could only be discharged by entering the very wage economy they had been declining to enter. The tax didn't collect revenue from an existing economy. It created a dependency that forced people into an economy they hadn't asked for.

Frederick Lugard, the architect of British indirect rule in Africa and one of the most influential colonial administrators of the era, wrote about this in The Dual Mandate in British Tropical Africa (1922) with a candor that is striking to read today. Taxation, he explained, was essential to stimulating the “habit of industry” among people who had the misfortune of not needing the things colonial employers were selling. The tax would teach them the value of money by making money obligatory.

This is enclosure by another mechanism. The English Enclosure Acts worked the same way: take away the commons, destroy the exit option, make people dependent on wages by making the alternative impossible. The hut tax did the same thing without needing to physically remove anyone from their land. It manufactured the dependency directly, through a monetary obligation that only wages could satisfy.

The Hut Tax War of 1898: When People Fought Back

The people who understood this most clearly were the ones it was being done to.

When the British imposed the hut tax in Sierra Leone in 1898, the Temne and Mende peoples rose in armed rebellion. The Hut Tax War — also called Bai Bureh's War after its most prominent leader — was one of the most significant armed uprisings in West African colonial history. Bai Bureh, a military leader of the Temne people, led guerrilla resistance against British forces for most of a year before being captured and exiled to the Gold Coast.

Why would people go to war over a tax? Not because they couldn't pay. Because they understood what the tax was: a mechanism to take their freedom. Not their money — the British didn't need their money. Their freedom. Their ability to say no.

The same resistance occurred, with varying degrees of organization, across the continent. In every case, colonial forces suppressed it. The tax stayed. And gradually, the dependency it manufactured was woven into economies that no longer had the commons, the land, or the subsistence networks that might have allowed people to exit again.

Chartalism Explained Simply: Taxes Drive Money

There is a name for what the colonial example reveals: chartalism. Money gets its value not from what it is made of, not from what backs it, but from the fact that the state demands it in payment of taxes.

Here is why that matters. If you must pay taxes in pounds — and you will be fined, then imprisoned, if you don't — then you must obtain pounds. This creates a guaranteed, compulsory demand for the currency. That demand is what gives it value. Not gold. Not GDP. Not the trust of markets. The obligation.

The colonial hut tax is the clearest possible demonstration of this in action. British pounds had no inherent value in the Kenyan highlands. They had value there because the colonial state said: you owe us pounds, and if you don't pay, we will take your property and your freedom. That threat created the demand. The demand created the value.

The King's Coin: The Same Trick, Older Than Colonialism

The colonial hut tax was not an invention. It was an application of a very old technology.

Medieval European kings used it. Stamp your face on a coin. Declare it the only valid form of tax payment across your kingdom. Suddenly, everyone in the kingdom — farmers, craftspeople, merchants — needed the king's coin. Because without it, they couldn't discharge their tax obligation. The king didn't need to force them to trade in his currency. The tax obligation did it for him.

Ancient Rome did it across a conquered empire of extraordinary diversity — peoples who had previously used dozens of different exchange systems, barter arrangements, and local currencies. Roman tax obligations, payable in Roman denarii, created an empire-wide demand for Roman coins that made Roman trade and Roman payment possible. The empire didn't earn its currency through trade first and then spend it. It spent it — into the hands of soldiers, administrators, and contractors — and then taxed it back.

This is almost certainly how coinage appeared in history. Coins were not invented to make barter more convenient. They were invented as a form of tax obligation, stamped with the image of the sovereign who demanded them. (Graeber, Debt: The First 5,000 Years, 2011) The markets that subsequently developed around coin-based exchange were a consequence of the tax obligation — not its cause.

The barter story has it precisely backward: no barter economy has ever been documented in the archaeological or anthropological record. Money did not emerge from trade. Tax obligations created the demand for money, and markets emerged in the space that demand created.

What This Means Today

If taxes drive money rather than fund government, and if the government that issues the currency cannot run out of it in the way a household can run out of money, then a number of things we are told with great confidence turn out to be either wrong or deliberately misleading.

“We Can't Afford It” Is Almost Never True

In March 2020, the UK government announced roughly £400 billion in COVID support — the furlough scheme, loans, grants, NHS equipment. The money was created and deployed within days.

Where was this money on the first of March 2020? It wasn't anywhere. The UK government didn't have a reserve fund of £400 billion sitting in an account waiting to be released. The money was created — through the Bank of England, through government spending — in response to a decision that the spending was necessary.

Now ask a different question. In the decade before 2020, the UK government repeatedly said it could not afford: adequate mental health services, school building repairs, social care for the elderly, nurses' pay that kept pace with inflation, a functioning homelessness response.

What changed in March 2020? Not the UK's monetary capacity. Not some sudden windfall. The political decision about what to fund. The monetary constraint that had blocked investment in public services for a decade turned out not to be binding when the political will existed. It had never been binding in the way the household-budget framing implied. It had been a choice, dressed as a fact.

What “Tax the Rich” Actually Does

If governments don't need your money to spend — if they create it first and tax it back later — then “tax the rich to pay for schools” is wrong at both ends. The government doesn't need the money. And the rich aren't really paying anyway — not in any way that hurts them. Tax the rich makes no sense. Full stop.

Notice what the British did in Africa. They didn't tax themselves. The idea never came up. What they did was tax the people who had an exit — the people who could grow their own food, raise their own animals, refuse the wage, walk away. The hut tax closed that door. It said: you no longer have the option of saying no.

That's what taxes actually do. Not fund things. Remove escape routes. Make sure you have to show up.

The rich do the same thing today — not by taxing themselves, but by eliminating the alternatives. The commons are gone. The land is priced out of reach. The jobs that don't exist anymore have been replaced by gig work with no floor. The social safety net has been cut every decade since the 1980s. You can't grow your own food on land you don't own. You can't refuse the wage when there's rent due on the first of the month. The mechanism is the same as the hut tax. The uniform is different.

And if taxes don't build schools — if schools get built because we decide to build them, because there is political will to build them — then there is no reason for anyone to be paying taxes in the first place. The rich are largely exempt already. Maybe that exemption should just extend to everyone. Schools don't come from tax receipts. They come from deciding that children deserve to be educated. That decision has nothing to do with how much was collected in April.

How the IMF Uses This Against Poor Countries

Here is where the colonial hut tax and the modern global economy connect in the most direct way.

When a country borrows in its own currency — as the UK, US, or Japan does — it has the chartalist protection: it can always create more of its own money to service the debt. It may not always be wise to do so. But it cannot, in a technical sense, be forced to default on debt denominated in its own currency.

But when a country borrows in dollars — as most poor countries have been compelled to do, because international commodity markets and debt markets run on dollars — it faces a completely different situation. It must earn dollars. It cannot create them. If it runs short of dollars, it defaults.

The IMF's structural adjustment programs — which conditioned loans to indebted countries on requirements to cut public spending, privatize public assets, reduce wages, and open markets — exploited this asymmetry. The countries that needed IMF loans needed them in dollars. The IMF had dollars. The conditionality was the price.

The dollar dependency was not a natural feature of global finance. It was a designed outcome — embedded in the Bretton Woods agreements and maintained through the dominance of dollar-denominated commodity markets. The result was a system in which former colonies remained dependent on a currency they couldn't issue — just as their grandparents had been dependent on pounds they couldn't issue — with predictable consequences for who benefited and who paid.

The hut tax forced Africans into a dependency on colonial currency. Dollar-denominated debt forces postcolonial states into a dependency on American monetary policy. The mechanism is the same. The colonial administrator has been replaced by the IMF conditions officer. The hut has been replaced by the national budget.

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