Evening star., 1961-03-26
BY ALICK DE MONTMORENCY
Contributing Writer

By ALICk DE MONTMORENCY
Contributing Writer
South Africa's withdrawal from
the British Commonwealth next
May is due to cut the last tenuous
constitutional link between the
Boer-ruled Dominion and the
United Kingdom. But negotiations
are already afoot between London
and Pretoria to preserve the eco
nomic and defense connections be-
tween the two countries.
p, Those defense connections are
of limited Importance, reduced
currently to a naval base which
the Admiralty maintains at ST.
monstown, near the Cape of Good
Hope. The present plan is to
keep it.
The economic and financial ties
are, on the other hand, Of great
Importance. For the investment
Of British capital, which started
$50 years ago when England took
over the Dutch possessions in the
area to prevent their seizure by
Napoleon, has turned what had
been a modest coastal settlement
into one of the worlds richest,
most modern and most prosperous
lands.
At the beginning Of the 19th
century that investment mainly
benefited the naval and military
establishments which England OPP
Grated in the country to insure the
refuelling and supply Of vessels
plying between her Indian empire
and the home ports. It reached q
peak when some 5000 colonists-
the vanguard Of hundreds Of
thousands Of later immigrants-
were landed in Eastern Cape Prov
ince to farm the California like
lands which stretched from the
coast into the wilderness of the
South African tableland. Each
pioneer family, chosen from
among innumerable applicants in
q war-impoverished England, was
provided with modest sum Of
money and with the necessary inn
plements, and was instructed to
raise vegetables and fruits for the
passing vessels in order to save
their crews from scurvy.
This investment, which had been
made with the Admiralty's funds,
has long ago paid for itself and
has little direct Importance on the
present British financial stake In
South Africa. But indirectly the
early settlement it financed was
the base from which England won
the lions share in the mineral
wealth discovered later on.
The Diamond Fields
The first Of the great mining
finds came in 1867, when a rich
diamond field was discovered at
Kimberley, in Northwestern Cape
Province. An English schoolboy,
who had come to South Africa
seeking a cure for a lung all
Il1ent, was among the first on the
site. He was Cecil Rhodes, and
three years later-at 19--he was
completely cured and the owner
Of a diamond empire which still
finances the scholarships he
founded.
An even richer era opened for
British investment further north
In 1885. The South African weld,
a high, thin-soil tabIeIand which
goes abloom with yellow, blue and
red flowers in spring, but is a
meager, parched pasture in sum-
mer and fall. was found to overlie,
at Witswatersrand, a thick "bIan-
ket" Of gold ore which is today
the worlds richest goldfield.
In the gold rush which ensued
and which saw a small farming
settlement - johannesburg - be-
come one Of the most opulent
cities In the world, British capital
lists and adventurers sank some
f200 million, equivalent to about
50 billion in present-day cur.
rency, into the Rand"
In 1918 the total British invest
l11ent in South Africa was valued
at $3.5 billion out Of an estimated
total British overseas placement
Of $35 billion. Only the United
States, with SIS billion worth Of
British investments on American
territory, Latin America with q
similar total, Canada with Just
over S. billion and Australia with
about $4 billion topped the Afri-
can Dominion as fields for Brit
ish venture capital.
Billions for War Effort
In 1S14-191s the British were
forced to realize SO billion worth
Of their overseas investments to
finance their and their allies war
effort. and in 1939-1945 another
$4.5 billion chunk Of investments
was similarly lost through Gov
ernment-imposed liquidation and
the British Labor Government
made further liquidations in l945-
1851. However, because the over
seas holdings were sold off with a
view Of getting the maximum
amount Of dollars-both United
States and Canadian-and Of such
foreign currencies as the Argentine
peso and the Brazilian milreis and
cruzeiro. the British financial