Molteno began his ministry by re-organising the state finances. One of his government's first acts was to abolish the controversial house tax (Act 11 of 1872). He used the new revenues from the diamond and ostrich feather industries to pay off the Cape's accumulated debts and to invest heavily in infrastructure, including a telegraph system and an ambitious railway building programme. He also oversaw a revival in the agricultural sector, and began the construction of a vast irrigation system across the country. The economy recovered, as new ports and shipping services helped the surge in exports, resulting in reasonable budget surpluses by the end of his tenure. He led the (now prosperous) Cape colony in the Ninth Frontier War when it broke out in 1877, and he strongly resisted regional factionalism – going to great lengths to heal the rifts between the eastern and western halves of the Cape and blocking attempts by his political opponents to racially segregate the armed forces.