1921 to 1926 Gold Certificate Set Union of South Africa PMG Grades

ref:2021 02 19
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CELEBRATING
 !!!100 YEARS !!!
OF THE SOUTH AFRICAN RESERVE BANK'S EXISTANCE

A SOUGHT-AFTER TREASURE OF NOTES

A SIGNIFICANT AND HISTORIC SET OF SOUTH AFRICAN NOTES

ISSUED AT THE TIME OF THE CREATION OF THE SOUTH AFRICAN RESERVE BANK

THE SOUTH AFRICAN RESERVE BANK
WAS OPENED ON THE

30TH JUNE 1921
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1921 - 1926

GOLD CERTIFICATE COLLECTION
UNION OF SOUTH AFRICA NOTES 

PAPER MONEY GUARANTY (PMG)
 GRADED GOLD CERTIFICATE NOTES
 GRADES AS FOLLOWS:

£1 GOLD CERTIFICATE - 30 VERY FINE
£5 GOLD CERTIFICATE - 64 CHOICE UNCIRCULATED
£100 GOLD CERTIFICATE - 53 ALMOST UNCIRCULATED
£1 000 GOLD CERTIFICATE - 64 CHOICE UNCIRCULATED
£10 000 GOLD CERTIFICATE - 64 CHOICE UNCIRCULATED

PRICE FOR THIS PREMIUM COLLECTION  
ONLY THIS ONE SET IS AVAILABLE
 NOW BEING OFFERED FOR 

R 95 000INCLUSIVE

RARELY OFFERED IN THE MARKETPLACE

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Details: 

GOLD CERTIFICATES COLLECTION
UNION OF SOUTH AFRICA NOTES 

£1 GOLD CERTIFICATE - SIZE IN MM: 153 X 88
£5 GOLD CERTIFICATE - SIZE IN MM: 163 X 90
£100 GOLD CERTIFICATE - SIZE IN MM: 173 X 96
£1 000 GOLD CERTIFICATE - SIZE IN MM: 180 X 96
£10 000 GOLD CERTIFICATE - SIZE IN MM: 177 X 96

Description:

A FASCINATING HISTORY OF THE ORIGINS OF THE SOUTH AFRICAN RESERVE BANK BORN OUT OF THE CURRENCY CONFERENCE OF 1920

REGARDED AS THE FIRST CENTRAL BANK ESTABLISHED OUTSIDE OF EUROPE AND AMERICA BY THE BRITISH

EXTRACT FROM A PAPER  BY STEPHEN GELB  AT THE AFRICAN STUDIES INSTITUTE, PRESENTED BY HIM AT A SEMINAR HELD ON SEPTEMBER 1984 TITLED  THE ORIGINS OF THE SOUTH AFRICAN RESERVE BANK

The gold certificates scheme supported by Strakosch was perfectly suited to this purpose of representing the specie. This scheme involved the withdrawal of sovereigns from circulation, to be replaced by 'gold certificates in a one-for-one basis. The Certificates would be legal tender, but there would be no incentive to smuggle or hoard them, as they had no intrinsic value. They would be used as long as the premium existed. Moving the responsibility for the national currency from the government to the banks, the gold certificates completely eliminated the problems involved in maintaining the relation between private bank money and the national currency, by the simple expedient of changing the state-issued money. The problem for the private banks, so far as this relation was concerned, now was no longer to maintain a rate of exchange between the S.A.£. and the weight of gold in a sovereign, but merely to prevent inflation by avoiding overextension of credit.

The gold certificates themselves had no direct impact on either the exchange rate or the inflation rate - they did not contribute to any sudden deflation. Neither could they lead to inflation via their over-issue, since they had to be fully backed by gold, which, while the premium lasted and the certificates were necessary, cost more than the latter's nominal value. In explaining this to the Select Committee, Strakosch at the same time indicated that English financial capital identified the banks' immediate interests and the general interest: The gold certificates will neither depreciate nor appreciate our money? - No, they will simply lock up your gold, q 2 699. And thereby save the banks? - and the country. The gold certificates scheme was seen to be merely adequate, in that it dealt with the immediate problem. More fundamental monetary restructuring was required, to defend the situation for the longer term:  We have to look further than the certificates.

There is bound to be a crisis. Commodity prices are bound to come down, and falling prices always mean crisis? Today the banks are not, even with their reserves secured in the shape of gold certificates. Even if they imported a further 1 million in gold, that would only give them a reserve of something like 8%, which is entirely inadequate to back their huge liabilities to depositors. 

A central bank was therefore required to deal with the imminent and subsequent crises. The key feature it would provide, a feature heavily emphasised by Strakosch, was the centralisation of banking reserves. With reserves decentralised they could not be properly used when most urgently required - during a run on a bank - since all banks had then to hold on to their own reserves at all costs. The first bank, able to use only its own reserves for protection, might soon collapse, spreading the panic. In contrast, the 'reserves centralised in one institution could, when an emergency arises, be used to the full in order to stop the fire [at its source] and thus avoid a conflagration'.

The other essential element of the monetary system including a central bank was the creation of a second tier of liquid assets - discountable bills - which the banks could convert into additional reserves in case of emergency. When necessary, the commercial banks could rediscount their bills of exchange with the central bank, to improve their reserve ratios. 'The banks most legitimate investment - discounts - become its quickest asset. At the same time, the central bank would receive a signal to raise its discount rate, thereby leading to a general contraction, stabilising the economy

This understanding is reinforced by the argument made by Farrer, the Secretary for Finance, in his own testimony to the Select Committee, which endorsed Strakosch's views in every respect. Farrer pointed out that without a central bank, there is a limit to legitimate and desirable expansion of credit by the banks, as S.A. will have to look largely to itself in the future, it is almost essential to make a change in order to provide capital necessary to carry out the development of the country.

Strakosch rejected the criticism that S.A.'s level of development was too low to justify a central bank, pointing instead to the boost which a reorganisation of the credit system could give to capital accumulation. The pre-war gold standard system had revolved around trade, so that the role of the Bank of England in credit control was linked to the predominance of foreign trade in S.A. Since the intention and hope of English financial capital was to restore eventually the pre-war system, Strakosch's advocacy of a central bank suggests also a recognition that foreign trade, if still dominant, was no longer the only important feature of the S.A. economy. It was a recognition, in other words, of the beginnings of the shift to industry and the associated growing importance of national capital.

The Bank of England's direct hand is discernible, in Strakosch's intervention. As already noted, Strakosch and Montagu Norman had a very close connection from the early 1920s and so quite possibly at this time too. Furthermore, a close advisor to Norman in the 1930s, involved in establishing central banks in the other Dominions, suggested that it was 'thanks to his, that is Norman's prompting, that South Africa  had established a central bank 'By this means, [Norman] hoped to maintain British influence without visible "strings". His ability to do so was certainly enhanced by the appointment later in 1920 of W. Clegg, the South African-born Chief Accountant of the Bank of England,to be the Reserve Bank's first Governor. English financial capital's influence over S.A. monetary regulation could thus be maintained, despite the establishment of the Reserve Bank.

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