Page 41 - SARB: 100-Year Journey

Indeed, the historical record reflects that when the SARB finally came into existence, it not only had prominent proponents, but it also had no shortage of credible opponents. It is the latter group to whom founding Governor William H Clegg’s early speeches were directed. Throughout the SARB’s 100-year history, successive governors, including the current Governor of the institution, have had to repeat this routine in varying degrees. In short, criticism of the institution – whether warranted or not – is the norm. However, it becomes more pronounced in times of political uncertainty and economic difficulty.
Clegg was thrust into the storm when he assumed his duties and was confronted by a hostile reception. Clegg used his inaugural address to stockholders as a platform to rebut the cynicism about the Bank’s mandate. In so doing, he dispelled any expectations that the institution would deviate from the core functions of a central bank to alleviate political pressure impressed upon it to accommodate broader economic considerations of the time.
Governor Clegg used the occasion to bring perspective to, and refocus on, the task at hand: the SARB’s role in ensuring discipline in the Union’s credit extension regime. Miners and bankers alike, as well as other industries, wielded considerable power and influence in the Union, but Clegg and his officials went about with the business of central banking unswayed and undeterred.
The relationship with the government
When Postmus became the second Governor, there was growing political unease about the Bank’s oversight role.
On 17 March 1932, the Secretary of Parliament in Cape Town sent a letter to Postmus in which he asked three questions: whether the Bank would agree to a Select Committee made up of Members of Parliament to examine the Bank’s accounts; whether the Bank believed undertakings initiated and sustained with public funds should not be subject to government control; and whether the Bank would support the appointment of independent auditors.
Governor Postmus responded at length.
While Postmus supported the appointment of auditors, he disagreed with any form of parliamentary oversight.
Postmus wrote: “Examination of the accounts of the Bank by a Select Committee of the House of Assembly would lead to the conclusion that the House of Assembly through the Government supervises the operations of the Bank, and consequently could, if so desired, influence the Bank’s management. It seems to me to be undesirable that the Bank’s policy and the management of its affairs should be liable to be drawn into the political arena.”
Furthermore, Postmus detailed how the Bank had already cooperated closely with the government in terms of the Currency and Banking Act 31 of 1920.
Since the Postmus episode with Parliament, the relationship between the legislature and the SARB has evolved. At present, Parliament is a key channel through which oversight is exercised on the SARB. In this regard, the SARB accounts to Parliament, and the institution’s officials often brief lawmakers about the SARB’s affairs.
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