Review of E. H. D. Arndt, Banking and Currency Development in South Africa, 1652-1927, with an Appendix on the Rise of Savings Banking in South Africa (Cape Town and Johannesburg: Juta & Company, 1928)¶
Ray B. Westerfield (1929). Review of E. H. D. Arndt, Banking and Currency Development in South Africa, 1652-1927, with an Appendix on the Rise of Savings Banking in South Africa (Cape Town and Johannesburg: Juta & Company, 1928). The American Economic Review, Vol. 19, No. 2 (Jun., 1929), Reviews and New Books. American Economic Association.
| Type | journal article |
| Scope | Economics and economic history of apartheid |
| Method | synthesis review |
| Period studied | 1652–1927 |
| Regions | Cape Colony, Natal, Orange Free State, South African Republic/Transvaal, Union of South Africa |
| Themes | macro fiscal finance debt, business and state, methods data sources |
| Citation key | westerfield1929 |
Argument¶
This is a short book review, not an original study, of Arndt's history of South African currency and banking. Westerfield judges the book a fundamental, painstaking and heavily documented contribution, best read as a source book rather than a popular narrative. He summarises its two parts: currency from Dutch East India Company settlement through the colonial and republican periods, and banking from the Lombard Bank of 1792 to the Reserve Bank and the legislation of 1914-1923. He frames South Africa as a comparative case to the United States, with similar frontier, capital scarcity, gold discoveries and colonial ties. His criticisms are minor: the system of footnote citations is over-complicated.
Evidence and method¶
The review relies on Arndt's book itself. According to Westerfield, Arndt used original sources in libraries and government offices in London, Amsterdam, New York and the South African capitals, plus an extensive bibliography. The review gives no independent data beyond banking counts taken from the book.
Findings¶
-
Westerfield praises the book as a foundational reference work and sets out Arndt's own aim of supplying reliable facts first, leaving popular versions to others. (p. 4)
In the absence of any authoritative literature on the subject as complete and reliable facts as possible are needed first
-
The reviewer's overall verdict is strongly favourable. (p. 4)
Dr. Arndt's book is a fundamental contribution to the history of currency and banking.
-
The book rests on extensive archival research across several countries. (p. 3)
he did his extensive researches in original sources in libraries and government offices in London, Amsterdam, New York, and the South African capitals.
-
South Africa's gold output and the post-war return to the gold standard made its monetary history of international interest after 1900. (p. 3)
South Africa has attracted the world-wide attention of financiers, economists and statesmen on account of her high rank as gold producer
-
The banking history is divided into distinct periods, with 1825 as a turning point marked by sterling's introduction and the start of the movement for private banking. (p. 4)
With the year 1825 South Africa entered upon a new period of development; that year marked the introduction of sterling, the decline of the Lombard Bank, and the beginning of the movement for the establishment of private banking.
-
Private banking expanded rapidly from 1837, reaching 28 local banks by 1862. (p. 4)
The pioneer private institution, the Cape of Good Hope Bank, founded in 1837, ushered in a period of rapid expansion of private banks, which by 1862 numbered 28 local banks with a combined paid-in capital of ?924,000.
-
After 1862 the imperial banks and amalgamations sharply consolidated Cape banking. (p. 4)
Between 1865 and 1890 the number of banks at the Cape was reduced from 28 with 43 branches to 7 with 66 branches
-
Branch networks peaked in 1883 even as the number of banks fell. (p. 4)
the number of branches was at a maximum in 1883 when the existing 11 banks had 99 branches
-
Twentieth-century banking legislation after Union is a key part of the book's closing chapters. (p. 4)
the Currency act of 1914, the Banks act of 1917, the Currency and Banking act of 1920 and its amendment in 1923
Evidence ledger¶
Sources used¶
| Source | Kind | Period | How used |
|---|---|---|---|
| Original sources in libraries and government offices in London, Amsterdam, New York and the South African capitals (as consulted by Arndt, per the reviewer) | state archives | 1652-1927 | Underpins the narrative history of South African currency and banking, which the reviewer calls elaborately documented in original sources. |
| South African currency and banking legislation: Currency Act 1914, Banks Act 1917, Currency and Banking Act 1920 and its 1923 amendment | legislation gazette | 1914-1923 | Used to trace new features in bank legislation after Union in 1910. |
| Report of the Kemmerer-Vissering commission of experts on resumption of gold payments | commission or official report | c. 1920s | Cited in the review as the source of the recommendation to found the South African Reserve Bank on the Federal Reserve model; the review does not say how Arndt uses it. |
Inference¶
Quantification: Illustrative figures.
Narrative institutional history based on chronological documentary reconstruction of currency and banking. The reviewer summarises it with a few counts of banks, branches and capital. Comparison with US experience is suggested but not tested.
Key claims¶
| Claim | Basis | Strength |
|---|---|---|
| The book is a fundamental, meticulously documented source book on South African currency and banking history, supplying the facts that were lacking. (p. 4) | The reviewer's judgement on Arndt's archival research in original sources and extensive bibliography; no sources are checked in the review. | Asserted |
| Banking developed in distinct periods: the Lombard Bank in 1792, the Government Discount Bank in 1808, a new period from 1825, and the first private bank in 1837. (p. 4) | Arndt's archival and documentary narrative, as summarised by the reviewer. | Partial data |
| By 1862 the Cape had 28 local banks with combined paid-in capital of £924,000. (p. 4) | Bank counts and capital figures reported from Arndt's book; the underlying bank returns are not named. | Partial data |
| Between 1865 and 1890 Cape banking consolidated sharply, from 28 banks with 43 branches to 7 banks with 66 branches, with branches peaking at 99 in 1883, and similar patterns held in the other colonies. (p. 4) | Counts of banks and branches reported from Arndt; the underlying series is not named. | Partial data |
| Government opposition maintained a state monopoly of banking until 1837 against private applicants. (p. 4) | Arndt's documentary history of petitions and government policy, summarised by the reviewer. | Illustrative or anecdotal |
| South Africa's currency experience serves as a laboratory in which monetary science was inductively tested, for example in the struggles over metallic currency, paper money and the gold standard. (p. 3) | The reviewer's interpretive reading of Arndt's narrative of currency experiments. | Asserted |
The author's caveats¶
Arndt, quoted by the reviewer, calls the book primarily a source book written in the absence of authoritative literature. The reviewer notes only that the citation system is unnecessarily complicated by abbreviations of abbreviated titles.
Gaps in the evidence¶
As a short review, it does not itemise the archives, files or statistical series behind the claims, so the evidentiary basis cannot be audited from this text. Testing the claims would need the underlying bank returns, ordinances and charters, and colonial treasury and banking records. These existed and are held in the Cape, London and Dutch archives.
Replicability: Not applicable.