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By the hinterland doctrine, accepted both by Great Britain and Germany in the diplomatic correspondence of July 1887, Uganda would fall within Great Britain's "sphere of influence"; but German public opinion did not so regard the matter. German maps assigned the territory to Germany, while in England public opinion as strongly expected British influence to be paramount. In 1889 Karl Peters, a German official, led what was practically a raiding expedition into that country, after running a blockade of the ports. An expedition under F.J. Jackson had been sent by the company in the same year to Victoria Nyanza, but with instructions to avoid Uganda. In consequence of representations from Uganda, and of tidings he received of Peters's doings, Jackson, however, determined to go to that country. Peters retired at Jackson's approach, claiming, nevertheless, to have made certain treaties which constituted "effective occupation." Peters's treaty was dated the 1st of March 1890: Jackson concluded another in April. Meantime negotiations were proceeding in Europe; and by the Anglo-German agreement of the 1st of July 1890 Uganda was assigned to the British sphere. To consolidate their position in Uganda?the French missionaries there were hostile to Great Britain?the company sent thither Captain F.D. Lugard, who reached Mengo, the capital, in December 1890 and established the authority of the company despite French intrigues. In July 1890 representatives of the powers assembled at Brussels had agreed on common efforts for the suppression of the slave trade. The interference of the company in Uganda had been a material step towards that object, which they sought to further and at the same time to open up the country by the construction of a railway from Mombasa to Victoria Nyanza. But their resources being inadequate for such an undertaking they sought imperial aid. Although Lord Salisbury, then prime minister, paid the highest tribute to the company's labours, and a preliminary grant for the survey had been practically agreed upon, the scheme was wrecked in parliament. At a later date, however, the railway was built entirely at government cost (supra, § Communications). Owing to the financial strain imposed upon it the company decided to withdraw Captain Lugard and his forces in August 1891; and eventually the British government assumed a protectorate over the country (see Uganda).
Further difficulties now arose which led finally to the extinction of the company. Its pecuniary interests sustained a severe The company and the crown. blow owing to the British government?which had taken Zanzibar under its protection in November 1890?declaring (June 1892) the dominions of the sultan within the free trade zone. This act extinguished the treaties regulating all tariffs and duties with foreign powers, and gave free trade all along the coast. The result for the company was that dues were now swept away without compensation, and the company was left saddled with the payment of the rent, and with the cost, in addition, of administration, the necessary revenue for which had been derived from the dues thus abolished. Moreover, a scheme of taxation which it drew up failed to gain the approval of the foreign office.
