The return of Pretorius was the signal for temporary peace. During his second Presidency, however, the little rift within the lute--the rift of insolvency, which eventually wrecked South African independence--began to be observable.
Mr. Nixon, who took great pains to acquaint himself with the true state of the country, says "that the intestine disturbances and the incessant Kaffir wars had well-nigh exhausted the finances of the Republic. The exchequer was only tardily replenished under a loose system of taxation. The Boers have never been good taxpayers, and no Government has been able to enforce the proper payment of taxes due to the State. A decade after its establishment the Republic was practically insolvent. Even as early as 1857 the Government was compelled to issue _mandaten_, or bills, wherewith to raise money to buy ammunition, and to pay its servants. In 1866 a regular issue of paper money was sanctioned by the Volksraad. This was followed by further issues, until, in 1867, a Finance Commission found that there were more notes in circulation than had been authorised by the Volksraad. Nevertheless, the financial requirements of the State became so pressing that still more issues had to be made, and in 1870 there were over £73,000 worth of notes in circulation. The notes were declared a legal tender, but the Government were unable to keep up their value by artificial methods. They fell to a low ebb, and passed from hand to hand at a discount of about 75 per cent, from their nominal value."
In 1867 occurred two events which served to change the whole political and financial outlook of the Transvaal. Diamonds were discovered in the district of Kimberley. Gold was unearthed in Lydenburg. From that hour a procession of European miners began slowly to march north from the Cape. A highway was opened up between the two promising districts, and diggers of every race, pioneers bent on the propagation of modern ideas, teachers, missionaries, and traders of all kinds, attracted by the promise of wealth, flocked to the scene and settled themselves among the trekkers.
After this period, when, as stated before, small but promising quantities of gold had been unearthed, it was no longer possible to prevent parties of miners and speculators from trickling into the Transvaal, to the annoyance of its inhabitants. Outside, too, there were troubles, disputes, and skirmishes with the Zulus, and further north was waged a fierce fight between the Boers and the chief of the Bapedi, one Sekukuni, whose father had signed away his independence to the Boers, and who refused in his turn to abide by the conditions of the compact. In this fight Sekukuni was successful, and the Boers, worsted and discontented, and believing that the Almighty was displeased with them and with their President, Mr. Burgers, retired from the campaign. At the same time, in the south, Cetchwayo was itching to be on the warpath, and the general state of affairs suggested a possible annihilation of the Transvaal by an uncontrollable horde of natives. Things went from bad to worse, and in October 1876 Lord Carnarvon remonstrated with the President of the South African Republic regarding the unprovoked barbarity of the Sekukuni war, which had again been renewed. The reason for the interference of Lord Carnarvon is to be found in the following despatch, forwarded by Sir Henry Barkly, the then Governor of the Cape:--