Academic journal article African Economic History

British Sterling Imperialism, Settler Colonialism and the Political Economy of Money and Finance in Southern Rhodesia, 1945 to 1962

Academic journal article African Economic History

British Sterling Imperialism, Settler Colonialism and the Political Economy of Money and Finance in Southern Rhodesia, 1945 to 1962

Article excerpt

Introduction

This article traces the development of Southern Rhodesia's (colonial Zimbabwe) monetary system from the immediate post-Second World War, and its efforts to establish financial independence from the British pound sterling currency network until 1962. It deals with a very critical aspect of Southern Rhodesia's financial history within the context of the British Empire at a time of major global changes in international financial systems and relations. The article demonstrates that closely linked to settler ambitions for political devolution from Britain to form a dominion1 were very important financial considerations. Its analysis begins in 1945, a time when Britain tried to resuscitate a sterling currency system disrupted by the damaging impact of two world wars and a depression. London attempted to resuscitate the imperial economy on the back of African colonies, especially under pressure to settle dominions' sterling balances.2 The period from the country's colonization until 1945 was characterized by the colony's attempt to consolidate colonial monetary arrangements and grow the formal economy. By the end of the Second World War, Southern Rhodesia's economy had grown on the basis of an agricultural sector mainly anchored on tobacco, cotton, maize and beef production3; the mining industry's marketing of gold and other minerals experienced mixed fortunes, but all had backward and forward linkages with a fledgling manufacturing sector.4

With a more diversified economy, the colonial government sought a financial system independent from sterling to further drive its economy. Salisbury's (Southern Rhodesia's capital) demands for autonomy were refused as Britain proceeded to consolidate its colonial African financial network. London passed an imperial Exchange Control Act (1947) in an attempt to resuscitate the value of the sterling currency.5 The mechanisms of how Britain sought to achieve this, and Southern Rhodesia's involvement will be examined in what follows. The article concludes its analysis of the encounter between imperial sterling arrangements and colonial monetary aspirations in 1962. Thereafter, the election of a new government under the Rhodesian Front (RF) Party took the country on a different political and economic trajectory that ultimately resulted in the 1965 Unilateral Declaration of Independence (UDI).6 UDI culminated in the severing of financial and economic ties between London and Salisbury.7

This article breaks new ground in its examination of imperial-colonial financial relations, particularly focusing on the colonial experiences of Southern Rhodesia. Financial history only recently re-entered the academic domain in the wake of Zimbabwe's recent monetary problems.8 The country's currency, itself a creation of UDI Rhodesia, faced the first hyperinflation of the twenty first century and was demonetized in 2009.9 Thereafter, Zimbabwe adopted a multi-currency system dominated by the US dollar (US$) but the country is now facing a severe liquidity crunch. In fact, the Reserve Bank of Zimbabwe introduced new bond notes on November 30, 2016 on the basis of a US$200 million Afrexim loan facility, all of which has been criticized as desperation which will only lead to the introduction of a proxy and unstable Zimbabwe dollar.10 Zimbabwe's recent experiences indicate a huge gulf between today's challenges and crucial knowledge of the historical development of the financial system that is the foundation of the country's economy. This article contributes toward a better understanding of monetary arrangements in the period before Rhodesia's UDI in 1965. It provides an important background for understanding precursors of Zimbabwe's financial system and ultimately its challenges.

There are very few studies of African financial history and even fewer for Zimbabwe.11 However, there has been sustained interest in the history of the British pound sterling, including to some extent, its influence through currency integration on African economic history. …

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