28 - Why Would You Want to Eat Sushi in the Transkei?

Summary

In December 1932, in the throes of a deep recession, South Africa left the gold standard. Britain had abandoned it the previous year – and a political battle within South Africa’s government had ensured a delay that severely hurt the economy. The decision to leave had an immediate effect; instead of having the currency backed by gold, the South African pound depreciated, making South African exports more attractive to foreign buyers. It proved a huge boon to gold-mining companies. Gold prices rose rapidly and mining output expanded, increasing the demand for inputs and workers, and as a consequence government revenues increased significantly. In 1936, only three years later, the Johannesburg municipality could begin construction of the South-Western Townships, or Soweto, on the back of windfalls from the mining industry.

These mining windfalls – profits for shareholders and taxes for government – depended on one important factor: paying cheap wages.