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GOLD STANDARD.
South Africa's Decision.
Return in Six Months.
CAPETOWN, January 15.
As already cabled, the Government*
of South Afriea received from Dr.
Kemmerer and Dr. Vissering the
report of the result of their enquiry
into the subject of the resumption of
gold payments.
The'Government has decided that South
Africa shall return to the gold standard
on July 1. It is pointed out in the report
that the South African £ has been for
some time close to gold parity, and,
presently will be above it. A decision
must be made immediately and adhered
to, whatever happens to the sterling in
the next six months. The commissioners
conclude:—There is a need of further de
flation in South Africa, whose gold posi
tion is very strong. They point out that
gold is more stable than "managed paper
money," and. therefore believe that it
would be wise for a conservative section
of South Africa presently to clinch the
gold parity while it is here definitely,
and return to the gold standard on July
1. The following advantages arc
claimed:—
(1) Greater stability of the purchasing
powers, internal and external.
(2) Greater stability of interest rates
and a lower level of real interest rates.
(3) The stability of exchange with gold
standard countries, which are continually
increasing in number.
. (4) Greater confidence in South Africa
abroad.
(5) The greater confidence of labour.
(6) A more convenient and saner cur
rency.
(7) Benefit to the gold industry by en
couraging other couutries to return to
i the gold standard.
The commissioners declare that they
were not blind to the disadvantages of
South Africa breaking entirely with ster-1
ling, but advocate, in that respect, thati
forward exchange, in practice, meant
avoiding the risks accidental to fluctuat
ing exchange, with a bank of reserve,!
and the Government rendering valuable
assistance.
A further disadvantage of breaking with
sterling would affect public borrowings
in the market with a different monetary
standard. The commissioners urge the
riskiness of borrowing heavily in a coun
try with a "managed paper currency."
South Africa should reduce her public
borrowings; and, as far as possible, bor
| row on a gold basis. . Reasons are set
I! forth for South Africa having no diffi
I culty in maintaining the gold standard'
hereafter. The commissioners are not
anxious in that regard. The establish
ment at Pretoria of a branch of the Royal
Mint would enable South Africa to mint
sovereigns to meet specie needs promptly.
Finally, the commissioners urge that the
gold market in South Africa should be
made absolutely free.
-Reuter.
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