GOLD STANDARD

Evening Post, Volume CXIV, Issue 92, 15 October 1932, Page 16

GOLD STANDARD

EFFECT ON EXPORT TRADE

SOUTH AFRICA'S POSITION

"Evening Post," 15th October

Devaluation of the South African £ to a lower gold value is expected to take place in the near future, according to a London financial authority. Many millions of pounds of South African money are believed to have been transferred to London in anticipation of this step. At the present time (September) it cost the South Africans only £72 7s 6d to obtain £100 on London. If the gold value of the South African £ •were to be reduced to the same level as sterling the exchange would rise to par and the South Africans would get back £100 in their money for every £72 7s 6d expended. It does not follow, however, that the South African £ would be devaluated to* the same extent as sterling. Abandonment of the gold standard by South Africa has bten frequently mooted since sterling went off gold last year. The dearness of South African £'s struck a blow at the export, trade of the Union.

Particularly hit by the retention of the gold standard in South Africa were the woolgrowers, who, nothwithstanding the granting of a 10 per cent, subsiay, suffered from inability to market their produce except at ruinous prices. . \ At the end of 1931 there were 211,421 bales of unsold wool at the coast, or more than 60 per cent, increase on the previous year. It required an increase in the subsidy to 25 per cent, to liquidate the position.- Business generally has undoubtedly been seriously depressed by the retention of the gold-standard.

The Government railways have been adversely affected, and traffic with Rhodesia diverted from ports in the Union to Portuguese railways via Beira. Total earnings of the railways in the four and a half months to July last amounted to £5,801,127, against £0,652,379 in the corresponding period of last year. In view of South Africa's predominant interest in gold as a monetary standard, the desire to maintain the South African £ at full gold content can be understood. But the Union was.thereby forced to take up;ari uneconomic position. By far her largest customer was' Greafr Britain, but the..'maintenance of a. dear currency in relation to',-the- £ was bound to affect ' South African trade with the United Kingdom: ' .