Inside the South African Reserve Bank

Its Origins and Secrets Exposed

Stephen Goodson

• Publisher: Black House Publishing Ltd
• Year: 2019
• ISBN:
  9781912759576
• Edition: 1
• Topic: Economics
• Subtopic: Banks & Banking
• Index: Economics

Stephen Mitford Goodson’s Inside the South African Reserve Bank Its Origins and Secrets Exposed sweeps aside the usual dust of economic theory to provide a thoroughly engaging account on the origins and purposes of the Republic’s central banking institution. Goodson does so as an “outsider” on the “inside, ” a proponent of banking reform who became a non-executive director of the SA Reserve Bank. What Goodson found was ineptitude, corruption, careerism, ignorance and scandal. When Goodson became too troublesome for the status quo, he was removed, smeared, and attempts were made to legally silence him. Here Goodson not only gives an account of his time within the SA Reserve Bank, but places the bank within its historical context, having been established as part of a world-wide agenda orchestrated by Montagu Norman, governor of the Bank of England, to create “central banks” throughout the world as part of a global financial system controlled by international financiers. Those who figured prominently in imposing this fraudulent financial system on South Africa were Jan Smuts, and his friend and adviser Henry Strakosch, whose closeness to Winston Churchill is also shown to be of world historical significance. The only voices raised in opposition to this deceptively-named “central banking” were from the Labour Party. Those voices have long gone from anything still calling itself “Labour, ” in South Africa as elsewhere. However, there were alternatives, such as the use of state banking in Canada, Australia, New Zealand, Germany, Japan and Italy, and the enduring example of North Dakota. Goodson examines each of these. Moreover, he provides a series of appendices on draft legislation for exactly how a sound banking system could be implemented, creating for the first time genuine sovereignty, prosperity and justice.

Chapter I

The Foundation of the South African Reserve Bank

The issue which has swept down the centuries and which will have to be fought sooner or later, is the people versus the banks.

– Sir Alexander James Cockburn,
Lord Chief Justice of England, 1875.

The Union of South Africa was the first victim after World War I to be singled out for the establishment of a central bank. General Smuts became Prime Minister, after succeeding General Louis Botha who after having contracted Spanish influenza had committed suicide by slashing his wrists on August 27, 1919.1 Smuts had been appointed Minister of Finance in 1912, even though he “had never shown any financial ability…had no experience of business…his personal finances and his accounts were haphazard and usually neglected…he was useless in detail”,2 yet he was responsible for introducing the Income Tax Act in 1914. Income tax forms an integral part of the usury system and is first and foremost employed to defray the interest on government loans, which represent money which has been created out of nothing by private bankers.

Smuts was a supporter of what is today known as the New World Order and had been recruited during the time he was studying at Christ’s College, Cambridge University (1891-93). In 1895 he became legal secretary and acolyte3 of freemason4 Cecil John Rhodes, although he would temper this enthusiasm, albeit temporarily, after the Jameson Raid in January 1896.

Smuts was a friend of Sir Henry (born Heinrich) Strakosch, a Moravian Jew5 who later converted to High Anglicanism. Strakosch had previously worked for the Anglo-Austrian Bank of South Africa in the 1890s and in 1902 was appointed managing director of Union Corporation in London and later became chairman. Union Corporation was taken over by General Mining in 1980.

In 1919 Smuts consulted Strakosch about South Africa’s loss of gold reserves as a result of the 23.1% devaluation of the pound sterling from $4.76 to $3.66 on March 20, 1919. This devaluation had resulted in the gold price increasing from £4 5s. to £6 7s. per fine ounce. Gold purchased in South Africa could be sold at a premium in London and this led to £2.9 million in gold coins leaving the country between April 1, 1918 and March 31, 1920. Furthermore South African commercial banks were compelled to buy gold at the higher price in order to have sufficient cover for the bank notes they issued. At that time the statutory requirement was that bank notes had to have a minimum gold cover of 40%. In order to counter these unfavourable trends, it was deemed advisable to establish a central bank, which would hold all the country’s gold reserves.

Strakosch responded by writing a 34 page pamphlet divided into nine sections called The South African Currency and Exchange Problem6 dated February 5, 1920. About ten years ago the author examined a copy of this document at the South African Library in Cape Town. Aged to a brownish hue inside he found a large visiting card with Strakosch’s London address and telephone number in the bottom left hand corner. No doubt he had generously donated this copy to the library. On pages 32-33 the case for a central bank is postulated as follows:

“No one can study the experience of the great commercial nations without being impressed by the high efficiency of their credit organisations. The work of the great central banking institutions in piloting them through prosperity and adversity is especially noteworthy. The experience of these countries with their centuries of economic life, where every financial problem receives careful and intelligent consideration and where vast financial transactions are constantly taking place, should certainly be suggestive and valuable to us. If we are to profit by their experience, the question of establishing a Central Reserve Bank for the Union should receive the closest attention.”7

“The study the writer has been able to give to the subject has led him to the conclusion that the system which will probably be found to be best suited to this country is one which in its fundamental principles follows that of the Federal Reserve System of the United States of America.”8

“The Federal Reserve System of America has been modelled to a very considerable extent, on the lines of the old established systems of the principal continental countries of Europe, and has stood the test of adversity by successfully seeing the country through the difficult times of the great war. It is doubtful whether a better model can be found.”9

Strakosch’s tendentious praise of the “great central banking institutions”, which have “stood the test of adversity” and his recommendation that a central bank be modelled on the US Federal Reserve Bank is filled with hypocrisy and cant. His “study” of central banking had presumably not included the Bank of England, which failed to serve the interests of the English people since its inception in 1694 and more particularly after Nathan Rothschild seized control of it in 181510. On the basis of these few paragraphs of sciolism, South Africa would be condemned to permanent slavery.

A Select Committee, consisting of five members of the ruling South African Party, two from the National Party, two from the Union Party and one from the Labour Party, considered the Currency and Banking Bill, the Strakosch pamphlet, the minutes of the Gold Conference held in Pretoria in October 1919 and the minutes of the Committee on Currency and Banking.

This committee was criticised by John William Jagger of the Union Party, who wanted to know why “no one was appointed who had expert knowledge of a subject which was one of the most intricate and important ever brought before Parliament” and he wondered furthermore “if all committees were appointed on such a basis.”11 He was perturbed that “upon the advice of men who have no special knowledge and who before the inquiry took place had given no special attention to the matter”12 now expected Parliament to adopt a bill, which was “of the most vital importance to this country.”13

General Hertzog was Prime Minister (1924-1939) and during his term of office always put South Africa first. His proposal in 1920 that the Banking and Currency Bill be referred to a commission of enquiry for two years was rejected.

Great unease was expressed by members of all parties, which was typified by the comments of John X Merriman of the South African Party, who said that “he could not conceive anything more detrimental and more foolish than to try and force a bill like this through before the people of the country had had an opportunity of studying it, reading it or knowing anything about it.”14

Mr Jagger wished to know why it was necessary “to rush the bill through this session, as the measure was an extremely important one, and would affect every inhabitant of the Union.”15 He found that the report of Colonel Frederic Hugh Page Creswell of the Labour Party, which proposed a State Bank “showed a far better grip of their question, and was an abler document than the Committee report itself.”16 He also said that the proposal for a central reserve bank “had not been an entire success in the country of its origin – the United States.”17

Strakosch came under persistent criticism for being a foreigner, who had no knowledge of South African banking and economic conditions. Frederick William Beyers of the National Party observed that there was “no doubt that a number of members had placed Strakosch on a pedestal which, naturally, greatly detracted from the value of the Committee’s finding.”18 James Wellwood Mushet of the Union Party reached the heart of the matter when he said that “the man who had the last word with the committee was Mr Strakosch. His experience of experts was that no people in the world differed as they did. They had got Mr Strakosch with his six ...

Table of contents

• Inside the South African Reserve Bank
• Table of Contents
• Foreword
• Introduction
• Chapter I
• Chapter II
• Chapter III
• Chapter IV
• Chapter V
• Chapter VI
• Appendix I