GOLD STANDARD

Hokitika Guardian, 19 October 1932, Page 3

GOLD STANDARD

SOUTH AFRICA’S POSITION Devaluation of the South Afiiean £ to a low, r gold standard is expected to take place in the- near future, according to a London financial authority. Many millions of pounds of Smith African money are believed to have been transferred to London, in anticipation of this step. At the preer.p time? (Septemb-’r) it cost the South Africans only £72 7s fid to obtain L_tlo oi/ London. If the .gold value of the South Afri an £ were to be re-do.ce-d to the same level as sterl.ng the exchange would rise to par and the South Africans would get) back £IOO in their money for every £72 7s fid exploded. lc d-es not follow, however, that the South African £ would he devaluated to the same extent’ as ster-

Abar.donmcnt of the gold standard by Soutli Africa has been frequently m. oted since sterling went off gold la t’-year. The drtrness of South African £’s struck a blow at the exporttrade of the Union.

.Particularly hit by the retention of tl o' gold standarTl in' South Africa w,rd-.the wcol-gro.yers, who, notwithstanding the granting of a 10 per cent subsidy, suffered from inability to market their produce, except at ruinous prices.

At (the end of 1931 there were 211,421 bales of unfold wool at the coist, or more than 6C? per edit in r crease on the previous year. It required- an increase in'the subs : dy to, 25-per cent to liquidate the position. Business gem rally h'fls undoubLdß been seriously .depressed by .the retention. of the gold standard. The 1 Government railways have been adversely affected, and traffic with Rhodesia diverted from ports in the Union to .Portugese railways via Bt ira. Total earnings of the railways in the’four and a half months to July list amounted to £5,801,127, a_ainst fT <552,379 in the < om spending period of last year.

In -view <jf South Africa’s predominaiii interest in gold as a monetary standard, the desire to maintain the South African £ at full gold content can he understoed. But the Union will thereby forced to take up an unec pomic position. Bv far her large t customer' was Great Britain, but the maintenance of a dear cmrency in relat on to the £ was bound to affect South African trade with the United Kingdom.