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In every direction the company's affairs had drifted into an impasse. Plantations had been taken over on the coast and worked at a loss, money had been advanced to native traders and lost, and expectations of trade had been disappointed. At this crisis Sir William Mackinnon, the guiding spirit of the company, died (June 1893). At a meeting of shareholders on the 8th of May 1894 an offer to surrender the charter to the government was approved, though not without strong protests. Negotiations dragged on for over two years, and ultimately the terms of settlement were that the government should purchase the property, rights and assets of the company in East Africa for £250,000. Although the company had proved unprofitable for the shareholders (when its accounts were wound up they disclosed a total deficit of £193,757) it had accomplished a great deal of good work and had brought under British sway not only the head waters of the upper Nile, but a rich and healthy upland region admirably adapted for European colonization. To the judgment, foresight and patriotism of Sir William Mackinnon British East Africa practically owes its foundation. Sir William and his colleagues of the company were largely animated by humanitarian motives?the desire to suppress slavery and to improve the condition of the natives. With this aim they prohibited the drink traffic, started industrial missions, built roads, and administered impartial justice. In the opinion of a later administrator (Sir C. Eliot), their work and that of their immediate successors was the greatest philanthropic achievement of the latter part of the 19th century.
On the 1st of July 1895 the formal transfer to the British crown of the territory administered by the company took place at Mombasa, the foreign office assuming responsibility for its administration. The territory, hitherto known as "Ibea," from the initials of the company, was now styled the East Africa protectorate. The small sultanate of Witu (q.v.) on the mainland opposite Lamu, from 1885 to 1890 a German protectorate, was included in the British protectorate. Coincident with the transfer of the administration to the imperial government a dispute as to the succession to a chieftainship in the Mazrui, the most important Arab family on the coast, led to a revolt which lasted ten months and involved much hard fighting. It ended in April 1896 in the flight of the rebel leaders to German territory, where they were interned. The rebellion marks an important epoch in the history of the protectorate as its suppression definitely substituted European for Arab influence. "Before the rebellion," says Sir C. Eliot, "the coast was a protected Arab state; since its suppression it has been growing into a British colony."
From 1896, when the building of the Mombasa-Victoria Nyanza railway was begun, until 1903, when the line was A white man's country. practically completed, the energies of the administration were largely absorbed in that great work, and in establishing effective control over the Masai, Somali, and other tribes. The coast lands apart, the protectorate was regarded as valuable chiefly as being the high road to Uganda. But as the railway reached the high plateaus the discovery was made that there were large areas of land?very sparsely peopled?where the climate was excellent and where the conditions were favourable to European colonization. The completion of the railway, by affording transport facilities, made it practicable to open the country to settlers. The first application for land was made in April 1902 by the East Africa Syndicate?a company in which financiers belonging to the Chartered Company of South Africa were interested?which sought a grant of 500 sq. m.; and this was followed by other applications for considerable areas, a scheme being also propounded for a large Jewish settlement.
