Empire and High Finance: South Africa and the International Gold Standard 1890–1914

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Abstract
Within twelve years of the discovery of gold on the Witwatersrand in 1886 the Transvaal was producing over one quarter of the world's annual output of gold. The Transvaal's emergence as a major gold producer took place at a time when global monetary relations were dominated by the operations of the gold standard. This article illustrates the impact of the Witwatersrand discoveries on the working of the international gold standard to 1914 and suggests that newly mined gold from South Africa eased international liquidity problems by facilitating an expansion of the gold base and money supplies without the dangers of inflation. Transvaal gold was shipped to London and sold in the City's bullion market. The establishment by South African mining companies of a complex London network of brokerage, insurance, refining and marketing facilities of gold is considered in detail. It is demonstrated that, when faced with a fixed price of gold and rising working costs on the Rand, the mining industry actively sought to minimize the marketing costs of gold in London to offset general cost inflation and to increase revenue. Finally, at the turn of the century, the Bank of England still occupied a hegemonic position in the international financial system, although, as this article shows, this hegemony was subject to periodic financial crises such as the collapse of Barings in 1890. The Bank‘s problems were thought to stem from a severe shortage of gold reserves. Recently, it has been argued that by the late 1890s British politicians and financiers encouraged the overthrow of the Kruger regime in the Transvaal in order to gain physical control over the Rand mines and thereby ease the Bank's shortages of gold. However, there are problems with this formulation and the article concludes with an alternative consideration of the complex relationship between the supplies of newly mined Transvaal gold, the international gold standard and the Bank of England's financial crises.

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