property rights.
The contrast between the extractive institutions developed by the British in Sierra Leone and the inclusive institutions that developed in other colonies, such as Australia, is illustrated by the way mineral resources were managed. Diamonds were discovered in Kono in eastern Sierra Leone in January 1930. The diamonds were alluvial, that is, not in deep mines. So the primary method of mining them was by panning in rivers. Some social scientists call these“ democratic diamonds,” because they allow many people to become involved in mining, creating a potentially inclusive opportunity. Not so in Sierra Leone. Happily ignoring the intrinsically democratic nature of panning for diamonds, the British government set up a monopoly for the entire protectorate, called it the Sierra Leone Selection 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