Off Gold!

Hating some Englishmen and fearing no man, stubborn, elderly Premier James Barry Munnik Hertzog of the Union of South Africa has battled mightily to keep his dominion on the gold standard. All other dominions and the Mother Country are off. Ever since sterling slipped, English economists have been favoring South Africa with advice and appeals to "link your pound with sterling." Because Premier Hertzog is Dutch-blooded, Englishmen started a limerick in London which has spread to Capetown:

Said Hertzog, "My viewpoint is suck That I really don't care very much If the land goes to Hell And the Empire as well, Provided that Hades is Dutch!" Nearly every week in 1932 Premier Hertzog stoutly restated his viewpoint, often" from public platforms: "While I remain Premier we shall remain on gold!" For a single dominion to take this stand was practical in South Africa's case because her digging blackamoors produce more than half the world's current supply of new gold. In 1931, latest year for which statistics are complete, the world mined $440,518,000 in gold of which South Africa, supplied $224,863,000. Last spring, when the Union had a budgetary deficit of $6,000,000, Finance Minister Nicolaas Christiaan, Havenga in effect snapped his Dutch fingers, confidently cried: "There is no doubt that, despite diminishing revenues, we have ample resources to keep our currency on the gold standard!" (TIME, April 4.)

Abruptly last week all South Africa was startled by the reentrance of huge, lumbering, bald-headed-Judge Tielman Johannes de Villiers Roos into Union politics on the issue of the gold standard. Like Governor Roosevelt, Judge Roos has triumphed over an affliction of the legs, dating in his case from a motorcycle accident. Recently he resigned from South Africa's Federal bench. Last week, supported by friends who helped him in & out of motor cars and up to platforms. Judge Roos began a campaign to split the Nationalist Party of himself and Premier Hertzog. Appealing to South African farmers he told them that to go off the gold standard would mean "higher prices" for their produce--which it would, in depreciated Union pounds. Appealing to South Africa's mining interests he offered them the prospect of paying their golddiggers in devaluated paper while continuing to sell their gold abroad for its unvariable, basic value which is the cornerstone of international finance. Finally Judge Roos appealed to the arch enemy of his own Nationalist Party which he was trying to split--to Jan Christiaan Smuts.

During the War it was General Smuts who lined up South Africans, whether English or Dutch blooded, to fight for the Empire. Recently the General, a persona] friend of King George and of potent Englishmen galore, has insisted that South Africa must patriotically join Mother Britain off the gold standard. Last week Judge Roos asked General Smuts to join him, proposed that they found a "Coalition Party" to overthrow the Hertzog Cabinet.

"I may say," boomed Judge Roos at Johannesburg, "that neither General Smuts nor Premier Hertzog is capable of founding a coalition to pull the country out of the muck! If they could I should not be in the arena. As things stand, here I am!"

General Smuts did not join Judge Roos last week, but mere talk that a Smuts-Roos coalition might be formed started a frantic rush on South Africa's Reserve Bank. In three days nearly $14,000,000 in Union pounds was either presented for exchange into Union gold sovereigns which the populace hoarded or transferred into accounts abroad. This catastrophic drain meant that the Reserve Bank's gold reserve of $55,000,000 would be exhausted in a few days. With urgence if not fear in his voice. Reserve Bank Governor Johannes Postmus told Premier Hertzog that something drastic must be done instanter.

Promptly the Premier issued a decree which South Africans did not at first understand to mean that they had gone off the gold standard. A day & night of hectic rumors passed before Finance Minister Havenga stated with crisp, Dutch lucidity exactly what the Cabinet had done and what its action means. "The only way to prevent a financial disaster of the first magnitude," said Minister Havenga. "was to release the Reserve Bank from liability to redeem its notes in gold. . . . The Government did so release the Reserve Bank and thereby it cut the link by which South African currency was a currency on the gold standard."

Cutting this link caused the South-African pound to slip from $4.71 to $3.63 on international exchange last week. In Washington, His Excellency Eric H. Louw, South African Minister Plenipotentiary, hastened to comment, "The situation in South Africa is most paradoxical, the result of an acute political situation. . . . There is some hope that South Africa will soon return to the gold standard. . . . Much will depend upon whether the Government is able to command a majority when Parliament meets." First test of strength was expected to come Jan. 14 at a caucus of the Transvaal Nationalist Party. If Judge Roos captures the caucus from Premier Hertzog, that may start a landslide sweeping the Judge into the Premiership.

Not only is Premier Hertzog a rock-ribbed gold standard man but he also hates credit inflation of every sort. "The purchase of a motor car on credit," said he in prosperous 1929, "has become the greatest danger to society. There is nothing today which so seriously threatens ruination to farmers as the motor car evil!"

As if going off the gold standard were not enough last week, South Africa shivered two days later from earth tremors in all her four provinces: Cape of Good Hope, seat of Cape Town at Africa's nether tip; Natal on the east coast; the inland Orange Free State; and the Northern Transvaal, seat of Pretoria, the. Union administrative capital, 850 mi. northeast of Cape Town. Severest shocks were felt in Natal where brick houses cracked open, some collapsing. In Johannesburg, largest South African city (pop. 288,000) 40 mi. south of Pretoria, doors and windows rattled, bric-a-brac fell off mantel pieces and fearless white correspondents cabled "the natives were terrified."

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