Southern Africa Labour and Development Research Unit
An Economic Inquiry into
the Poor White Saga
by
Iraj Abedian
Barry Standish
Sa1dru Working Paper No. 64
Rondebosch
November 1985
ISBN 0 7992 1006 4
I
I
I
1
TABLE
OF
CONTENTS
Page
Acknowledgements
3
List of Tables
4
List of Figures
5
INTRODUCTION
7
1.
9
CURRENT CONJECTURES ON THE SOLUTIONS
Afrikaner Self Help
Institutional and Sociological Factors
Economic Growth
9
9
10
STOCKS AND FLOWS
14
III. HOW MANY POOR WHITES?
16
IV.
MARKET IMPERFECTIONS AND UNEMPLOYMENT
17
South Africa in Perspective
18
1.
2.
3.
4.
18
21
22
24
24
27
II.
V.
Population
The Economy
Labour
Wages
Real white wages
Real black wages
Spread of wages
28
A Model of the Labour Market 1900-1940
29
THE POOR WHITES AND STATE INVOLVEMENT
35
1.
2.
3.
4.
5.
6.
7.
8.
9.
35
41
47
49
50
The Overall Chronology
The Relief Schemes
Total Employment on the Relief Schemes
Wages and Benefits
Total State Relief
Total White Employment
Expenditure on Relief Measures
Poor Whites and Poor Blacks
The Costs of State Involvement
1
52
56
59
64
VI.
THE FISCAL AND MONETARY IMPLICATIONS
1.
2.
3.
4.
Composition of Government Accounts
Macroeconomic Perspective
The Business Cycle 1920-1946
Balanced Budget Fiscal Policy
The Gold Standard
Public Deficit, Public Borrowing and
Public Debt
The Fiscal ~mplications
The Monetar:' Impl fcations
64
65
65
67
69
71
74
77
CONCLUSION
78
BIBLIOGRAPHY
80
APPENDIX
APPENDIX
APPENDIX
APPENDIX
83
84
85
I
II
III
IV
82
2
ACKNOWLEDGEMENTS
We wish to thank H. Giliomee, D. Hendrie, D. Horner, D. Rees,
F. Wilson, members of the School of Economics at UCT and the
Editors of the South African Journal of Economics for their
valuable comments on and criticisms of earlier drafts of this
paper.
All omissions and views expressed remain our own
responsibility.
3
LIST OF TABLES
page
1.
White employment in manufacturing, mining and
construction,
selected years 1920 - 1950.
11
2.
Estimate of the number of blacks displaced by
whites in
manufacturing due to the civilised
labour policy 1920-1950.
13
3.
The growth in South African output 1911-1950. 21
4.
Number of whites employed on forestry settlements. 44
5.
Relief labour employed by the railways 1932-1938. 45
6.
Subsidised and non-subsidised relief work provided
by provincial,
divisional
and municipal
authorities
1932-1938.
46
7.
Percentage share of the private sector in the
creation of subsidised relief works 1932-1936. 47
8.
White male adults employed on subsidised, and nonsubsidised relief works 1920-1940.
48
Estimate of the total number of poor unskilled
whi tes assisted by state intervention in the
labour
market
1933-1940.
51
9.
10.
Government expenditure on unemployment relief
measures during the poor white era 1920-1940. 57
4
LIST OF FIGURES
page
l.
The difference between potential white working
population and white employment in the formal
sector
1920-19.51
17
2.
Population by race group
3.
Whites by home language 1936-1951.
19
4.
Immigration and emigration
20
5.
Immigration by country
6.
Various industries as a proportion of total
industrial output 1924-1954.
22
7.
Average real wages paid to whites
25
8.
Average real wages paid to whites in selected
industries 1919-1950.
26
9.
Average real wages paid to blacks
27
10.
Real wages paid to skilled whites,
whites and blacks 1911-1950.
ll.
1910-1955.
18
1924-1957.
1924-1957.
20
1915-1950.
1915-1950.
unskilled
28
A model of the South African labour market
1900-1918.
30
A model of the South African labour market
1919-1923.
32
A model of the South African labour market
1924-1931.
33
A model of the South African labour market
1932-1940.
34
Whites employed obn subsidised and unsubsidised
relief works 1920-1940.
49
Regular and relief work employed by the railways
and central government 1920-1940.
51
White employment in the public and private sectors
1919-1950.
53
18.
White employment in the public sector 1920-1950.
54
19.
White employment in the private sector 1919-1950.
55
12.
13.
14.
15.
16.
17.
)"
5
20.
21.
22.
23.
24.
25.
26.
27.
28.
White employment in the four largest manufacturing
industries 1924-1950.
56
The number of blacks employed relative to whites
in the public and private sectors 1920-1950.
60
The number of blacks employed relative to whites
in the public sector 1920-1950.
61
The number of blacks for each white employed in
the private sector 1920-1950.
62
The number of blacks for each white employed in
four manufacturing industries 1920-1950.
62
The relative
1915-1950.
63
Index of the
1920-1946.
value
South
of
white
African
and
black
business
wages
cycle
66
Excess of taxes over ordinary expenditure
1910-1946.
67
Taxes as a proportion
expenditure 1920-1938.
68
of
total
government
29.
Velocity of money
30.
Public borrowing and budget deficit
31.
Changes in public debt and public borrowing
1920-1940.
73
Government expenditure as a percentage of the GDP
1930-1946.
74
Composition of government revenue 1920-1938.
76
32.
33.
1920-1940.
6
70
1920-1940.
72
INTRODUCTION
I
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I
Over the past fifty years a wide spectrum of social sCientists,
historians, sociologists and political sCientists, have shown
great interest in the analysis of the so-called 'poor white'
phenomenon in South African history. Prior to, as well as in the
wake of, the extensive study of the (first) Carnegie Commission
of Inquiry into the Poor White Problem, the causes of the
phenomenon were discussed thoroughly by numerous scholars,
(inter alia, Sadie (1975); Le Roux (1984);
Davies (1977);
Giliomee-(f-979); Moodie, (1974». It is generally agreed that
the most important factors causing this phenomenon were:
a lack
of scientific farming methods; inheritance laws which divided
farms into what became uneconomic units;
a lack of literacy and
industrial training; the rinderpest epidemics; the 'scorched
earth' practices of the Boer War;
the Great Depression;
competition by blacks for unskilled work, and successive severe
droughts. These factors led to the establishment of a growing
pool of displaced whites, unemployed, unemployable, povertystricken and mainly Afrikaans-speaking. Although this phenomenon
had already received attention by the end of the 19th century, it
was only in the early 20th century that it came to be regarded as
a serious problem, involving as many as 300 000 people.
(Carnegie Commission Report, Vol.(viii), 1932, p.32.)
Despite numerous studies, there are several aspects of the poor
white problem which have not received adequate investigation.
This paper examines a number of these issues:
While there is general agreement that the problem was largely
eradicated by the 1950's, there are divergent views about its
solution.
The present study scrutinizes the strength of some
important views.
This we do in Section One.
Generally, we
regard the poor white problem as a reflection of a dynamic
process of adjustment to economic decline in the rural areas and
economic development in the urban areas of South Africa. It is
necessary to have the problem in perspective and to comprehend
all the factors which contributed to its eventual elimination.
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In Section Two a new way of looking at the issue is presented
where the poor white problem is established as a stock-flow
phenomenon.
To support this hypothesis, Sections Three and Four
provide theoretical abstraction.and empirical evidence.
As to
the former, a macroeconomic model of the South African labour
market at the time is introduced. As such, it is crucial to have
an overview of the prevailing socio-economic conditions in mind.
Socio-economic phenomena do not occur, and are seldom explicable,
in a vacuum.
We provide macroeconomic information on the
structure of the economy and the pattern of. wages. With the help
of the mode 1, some 1 ight is thrown on one of the most contentious
aspects of the poor white saga, namely, whether the poor white
experience was a poverty or an unemployment phenomenon.
I'
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7
Insofar as the empirical support of the stock-flow hypothesis is
concerned, in Section Five,
a summary of the evidence is
submitted.
This, in turn, will throw light on another
controversial aspect of the issue:
the role of the State in
solving the poor white problem.
In the attempt to document
State's involvement, focus is placed on the ~~2~~_2E~£~~2! of
poverty alleviation projects.
By this, we do not intend to
underplay the crucial statutory and administrative role the State
played, in the 1920's and the 1930's, in ensuring a pattern of
resource allocation favourable to the whites in general and poor
whites in particular.
It is well known that South Africa in the
1980's is suffering the consequences of the discriminatory
measures introduced over the period under study.
To avoid
obvious repetition in this section, we concentrate only on the
quantification of the number of individuals helped directly by
the State and not abstract guesses of "what might have been".
A final aspect of the phenomenon that deserved scrutiny is its
implications for fiscal and monetary variables.
This is
discussed in Section Sic.
To provide the reader with adequate
background information in this section, we discuss (briefly) some
of the relevant theoretical and empirical issues, such as the
South African business cycle, the gold standard system, and the
balanced budget philosophy.
The conclusions of the study follow
in the next section.
Despite an enormous amount of investigation, i t has been
impossible to compile continuous and comprehensive data on some
variables.
Consequently, we have had to concede that the
available statistics fail to answer some of the theoretical
questions.
Even where we have succeeded in finding statistics,
there have often been gaps or other inadequacies.
Thus the
coverage of all the variables is not consistent, e.g. during the
years of the Great Depression (1929-1932) the annual industrial
census was waived (and much valuable information was lost).
Consequently, the discontinuity is seen in the various trends.
Moreover, the very nature of the 1929-32 period, as an abnormal
economic period, makes the intrapolation technique inapplicable
and significantly distorts trends across a large part of the
period.
8
I.
CURRENT CONJECTURES ON THE SOLUTION TO THE POOR WHITE PROBLEM
The validity of ideas advanced by some wrtters on the subject
require closer examination.
Afrikaner Self Help
Some opinions hold that growing Afrikaans nationalism transcended
all other differences wi thin the ranks of the Afrikaans people
and created an avenue which allowed poor whites, predominantly
poor Afrikaners, to emerge from the poverty cycle. It has been
claimed that the Reddingsdaadbond, formed in 1939, channelled
funds to Afrikaans companies and Afrikaans education in such
quantities that the poor white problem was rapidly overcome
(Sadie, 1975).
There is some dissenting opinion:
Le Roux calls this the
'myth' of Afrikaner self-help. He contends that ' .•• one cannot
be unduly impressed by the contribution [the Reddingsdaadbond]
made to the elimination of poverty' (Le Roux, 1984, p.13).
In
support of Le Roux we attempt to show that the poor white
phenomenon in the form of overt unemployment of whites had
largely been eliminated by the late 1930s.
An organization
launched in 1939 is unlikely to have contributed significantly to
the elimination of a problem which had already been reduced
substantially.
Institutional and Sociological Factors
Le Roux (1984) argues that institutional and sociological factors
contributed significant ly to the establ ishment of an Afrikaans
power base which transcended rich-poor and capi tal-l about
dichotomies.
Le Roux's analysis, moulded in the light of Giddens's theory of
structuration, regards the latent political power of the poor
whites at the time as the major force making the government
undertake institutional and legal reforms so as to improve the
competitiveness, and hence economic viability of the poor whites.
Le Roux argues, for example, that adoption of Afrikaans as one of
the official languages removed one of the poor whites' handicaps.
Furthermore, 'once the ability to speak Afrikaans [after its
establishment as one of the two official languages] was required
from all civil servants, the children of the poor whites gained
an advantage vis-a-vis the unilingual English speakers' (Le
Roux, 1984, p.I7T.-----The broadness of Giddens's theory, and Le Roux's application of
it to the poor white issue, helps explain the rise of Afrikaners
to economic prominence by the 1970s. The theory is fundamentally
geared towards long-run socio-political developments.
Its focus
on long-term variables in turn tends to divert attention from the
modus operandi of removing white poverty in the 1930s. It is the
active participation of the State in the short-run, that is, long
before the 'whit~ only social democratic policies' bore fruit,
9
that has been underplayed by Le Roux. As is shown later, the
provision of various employment relief measures by the State
served to qualify poor whites for subsequent absorption by the
public and private sectors.
Access to permanent employment was
further reinforced by the State's whites only social policies to
secure an increasing prosperity for the whites, who at a point in
time had been poverty-stricken.
Economic Growth
A popular belief, h,~ld mainly by proponents of the free market,
suggests that the poor white problem began to fade away in the
wake of rapid economic progress in the 1930s and early 1940s. As
Henry Kenney suggests: 'South Africa's departure from the gold
standard in 1932 coincided with a new phase of rapid growth,
especially of the hitherto insignificant manufacturing sector.
Freed from the burden of an over-valued currency and subsequently
stimulated by a rise in the price of gold, the economy grew at a
rate of more than 7 per cent a year between 1934 and 1940. It
was the major reason for the end of the Poor White problem, so
little amenable to direct State intervention.' (Kenney, 1980,
p;81. Our emphasis.).
We must agree that rapid economic growth from 1934 on did
contribute markedly to alleviating white poverty.
However, we
disagree with Kenney's perception of the Erocess by which this
was achieved. By the time the problem had been eliminated, the
relative increase in the employment of poor whites was so much
greater in the public sector than the private sector that there
can be little doubt as to which sector contributed most to the
reduction of unemp 1 oyment. Whi 1 e emp 1 oyment of poor whi tes by
the public sector is dealt with later in the paper, some
estimates of increased employment of poor whites by the private
sector are made here.
Given available data, it is difficult to quantify employment of
both blacks and whites by the whole private sector.
We
therefore have discussed the three major sectors: manufacturing,
mining and construction.(l) The increases in white employment
for these sectors given in Table 1 show white employment
increasing by 78 000 between 1920 and 1940.
The growth in
employment between 1920-33 (16 000) is significantly outweighed
by the '1932-40 increase (63 000) and the 1940-1950 increase of
76 000.
In both periods, manufacturing made the major
contribution to these increases. (2)
1.
2.
Agriculture is ignored as this was largely the source from
which the poor whites were coming.
A data incompatibility problem presents itself in this
section:
data presented by the Department of Statistics in
Union Statistics for Fifty Years varies substantially from
data given in later data sources, e.g. South African
Statistics 1980.
The earlier sources provide far more
detailand-we-do at times refer to the earlier sources.
10
Table 1:
White employment in Manufacturing, Mining and
Construction Selected Years 1920 to 1950
Manufacturing
Year
33
36
50
51
70
87
110
155
1920
1925
1930
1933
1935
1940
1945
1950
Inc.1920
to-1933
Inc.1933
to 1940
Inc.1940
to 1950
Source:
403
527
123
951
473
677
929
074
Mining
37
31
35
34
42
54
51
55
939
685
674
667
315
767
564
906
Construction
3
5
7
4
9
10
8
19
487
771
107
137
173
930
502
147
Total
74
73
92
90
121
153
170
230
829
987
904
755
961
374
995
127
18 548
-3 272
650
15 926
35 726
20 100
6 793
62 619
67 397
1 139
8 217
76 753
Calculated from Department of Statistics,
South African Statistics, 1980, p.74.
While these increases in white employment are significant, the
argument that these were largely increases in employment of poor
whites does not stand up to scrutiny. As the Chairman of the
Transvaal Chamber of Mines stated in 1924:
' ... when the present Government came into power last year, I
was sent for by the Ministers, who desired to know what the
Mining Industry was prepared to do towards the solution of
this problem of unemployment. We informed them that the
Industry could give no guarantees, that it certainly woul~
not employ men that were not required, as thereby unempl~
ment would eventually be increased instead of decreased
but that if the Industry were left to itself to develop on
ordinary economic lines, there would be steady expansion of
employment for European workmen at a fair anq reasonable
wage. We were reproached then and have been since in the
House, I think thoughtlessly and most unfairly, with the
charge that in a national crisis we were doing nothing to
assist.
In point of fact, we have done a great deal, and
have done it upon the only lines that are for the permanent
good of the country and the men concerned.
I have referred to this question at our quarterly meetings
during the year, but I mention it again now because
apparently there is still some confusion of thought
respecting relief work and employment in any industry.
The
11
former is the province of the Government of the country, in
which all are concerned.
The latter is an entirely
different matter, which can only proceed on definite
economic lines.
If these be tampered with, the result
assuredly will be ... eventual increase in unemployment and
the defeat of the objective we have in view.'
(TCMAR, 1925, pp.54-55.- Our emphasis.)
The poor whites we~e almost entirely individuals who could
perform manual worl: only.
They were largely illiterate and
unsuited to ski lIed positions.
The Carnegie Commission of
Inquiry into the Poor White Problem documented the phenomenon.
'Education was largely looked upon among the rural
population as something foreign, as a thing that had no
bearing on their daily life and needs (Vol. II, p.viii).
The adaptation of adult immigrants to the city is often
prevented by the fact that they are unskilled workers
(Vol. II, p.xxii).
Most probably it was in English that the word [poor whites]
was first used in South Africa, particularly by English
speaking town-dwellers who viewed the influx of
impoverished and untaught persons from the farms sometimes
with scorn and often with annoyance ..•. But unfortunately a
certain portion of the better educated and more favourably
situated Dutch-speaking population are also beginning to
feel ashamed of this group of their people and to treat
them with some contempt and little sympathy.'
(Vol.I, p.17).
The poor white must therefore be regarded as an unskilled worker
and would only have been taken up into employment as a manual
labourer.
It makes no sense to assume th~t poor whites were
employed in skilled positions.
We have attempted to separate the poor white component from
increased total white employment for the 1920-1940 period.
The
method used produces only a rough estimate of these proportions:
The advent of the Pact government started the process of
substituting poor whites for unskilled blacks. This can be seen
in Table 2. Between 1920 and 1924, on average, there were 2,19
blac~s employed for each white in manufacturing.
By 1930 this
had declined to 1,72 and by 1935 reached a low of 1,49.
This
decline, for the purpose of calculation, may be regarded as a
substitution of unskilled (poor) whites for unskilled blacks. If
no substitution had occurred and if the black and white
employment ratio had remained at the 1920-1924 level, then by
1935 black employment would have been 121 000 and not 105 000 - a
12
difference of 16 000.
This difference is an estimate of the
number of poor whites who were part of the total white employment
increase in manufacturing of 37 000 between 1920 and 1932.
Table 2: Estimate of the Number of Blacks displaced by Whites in
Manufacturing due to the Civilised Labour Policy 1920-1950
Manuf acturing.
Black
White
Year
1920
1925
1930
1933
1935
1940
1945
1950
33
36
50
51
70
87
110
155
Source:
*
Note:
403
527
123
951
473
677
929
074
70
73
86
75
105
151
242
331
582
231
140
294
093
735
448
207
Employment
B/W
2,11
2,00
1,72
1,45
1,49
1,73
2,19
2,14
No. of Blacks
B/W = 2,19 *
Difference
71 388
75
93
87
12
164
242
333
531
547
356
519
361
448
842
2
7
12
15
12
120
407
062
436
626
0
2 634
As for Table l.
The B/W ratio is calculated at 2,19 by averaging the
B/W ratio in manufacturing between 1920 and 1924.
An averaging 1917 to 1924 would have been preferable
but comparable pre-1920 data is unavailable.
An estimate of this nature has two defects. First, it assumes
that production techniques remained constant in order to allow a
greater use to be made of unski 11 ed (white) 1 abour. Second, it
does not take into account those poor whites who were initially
taken into State employment, trained while in the employ· of the
state and transferring later to the private sector as semiskilled work~rs.
These workers were no longer unskilled and
would therefore not need to displace unskilled blacks in order to
enter employment in the private sector.
It is a moot point
whether these semi-skilled whites could still be regarded as
'poor' whites.
.
In the mining industry white employment increased by 20 100 from
1933 to 1940. Evidence is available to show that, in fact, all
the increases in white mining employment were solely for literate
~nd skilled whites - positions for which poor whites were mostly
not eligible. (1)
It can therefore be said that increases in
mining emp 1 oyment very se 1 dom contained poor whites (except of
the State-trained semi-skilled type or the newly educated
chi 1 dren of poor whi tes) and that the increases in white mining
employment did little to alleviate white poverty.
.
(1).
i
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I
See the annual reports of the Chamber of Mines, 1924;
1932 and 1937.
13
l,
In summary, the claim that economic growth alone solved the poor
white problem is too simplistic.
Certainly economic growth
contributed to solving the white unemployment problem, but three
factors were at play:
First, the private sector did employ
unskilled poor whites but, as shown above, the numbers are
insignificant in relation to the magnitude of the problem.
Second, economic growth allowed government access to increased
tax revenue and this permitted increased relief measures and
State employment. Third, economic growth increased the demand
for semi-skilled white .cabour. The main source of this semiskilled white labour was the poor whites who had been taken into
State employment as unskilled labour and given a modicum of
industrial training. As private industry absorbed increasing
numbers of these semi-skilled whites from State employment, so
the State was able to absorb and train increasing numbers of
unskilled whites.
It was in this category that economic growth
was of major importance;
but this would not have been achieved
without initial government training.
II.
STOCKS AND FLOWS OF POOR WHITES
The impression given by much of the literature on poor whiteism
is that the phenomenon appeared as a rigid social category of
displaced persons from which there was little chance of escape.
People within this group were destined to remain there for
decades.
Such a stock concept of the poor whites is clearly
false.
Poor whites were those who were driven out of rural
economic activity either because of the precariousness of farming
or because of the terrible droughts of the 1920s. As such, they
formed a 'flow' of individuals who streamed intermittently to the
urban areas.
Migration of bread-winners and their dependants
formed the stock of poor whites.
While the stock was growing
over the 1900-1932 period, it is not correct to assume that the
same individuals remained within it. We therefore suggest that a
more appropriate means of viewing the poor white problem is as a
stock-flow mechanism rather than as a rigid social category.
The flow of poor whites had its source in the rural unemployed.
The continual increase in this flow resulted in growing white
poverty, which had significant social consequences. As Sadie
suggests:
'Die lang assosiasie met die grond en natuur kon nie anders
as 'n stempel op die Afrikaner te laat nie.
Hulle het
hoofsaaklik 'n agrariese en landelike gemeenskap geword met
'n aarse instelling vir wie die waarheid gelee is in die
wat waargeneem, gehoor en betas kan word.
Hulle is nie
aangele vir bespiegeling oor aangeleenthede buite hUl
ondervindingsveld nie.
In hul ondervinding was onder
andere 'n swart of bruin persoon 'n primitiewe individu wat
gebruik moes word as 'n ongeskoolde arbeider en wat nie as
'n gelyke kon ontwikkel nie.
Dit vereis stedelinge en
14
intellektuele deurweek met die kultus van die stad, om te
besin oor algemene beginsels, om 'n filosofiese gedagtegant
te ontwikkel, te teoretiseer en die bestaan van probleme
anders as die van die fisiese dimensie te waardeer;
om
onder andere te besef dat die tradisie om 'n persoon se
waarde volgens sy vel te oordeel, nie verdedigbaar is nie.
Die suiwer praktiese mens, wat voortdurend gekonfronteer
word deur die onmiddellikheid van probleme, kan nie anders
as om aan bysiendheid te ly nie.
Daar is nog te min
stedelike Afrikaners van die eerste en die tweede
generasie, maar hulle getalle neem toe.'
(Sadie, 1975, p.lOO)
Simultaneous with this inflow, there were also a number of
outflows which increased in both variety and velocity over the
first four decades of the 20th century. These were made up of
first, the great variety of State relief schemes which were
introduced (and are discussed later). Second, a flow of newly
educated or re-educated poor whites, urbanized and equipped with
industrial skills, who were able to compete for work in the
private sector.
This education/re-education process occurred in
a number of ways. Many children of poor whites had access to the
newly created educational facilities formerly unavailable to
their parents.
Also they lived in urban environments and
therefore did not face the social and'industrial disadvan-tage
that their parents had faced. As a result they were rapidly
absorbed
into the work force.
While the, children were
receiving formal education, their parents were being absorbed
into the growing number of State relief schemes.
Once employed
by the State, many of these people received industrial training
and practical knowledge by formal instruction in the work-place
and by th~ informal 'learning on the job' process. After this
ini tial orientation process; these peopl e were ei ther absorbed
into the permanent establishment of government employment or,
when sufficiently trained, entered employment in the private
sector.
As mentioned earlier, it is here that we see the role of economic
growth as of major importance.
The State having employed
unskilled whites, was giving training to those with potential as
semi-skilled workers. As economic growth increased particularly
in the 1930s, increasing numbers of semi-skilled whites were
absorbed into industry. The vacancies which they left in the
government relief schemes were then again filled with,unskilled
whites who were again trained. Towards the end of the 1930s this
·labour turnover became so rapid that the State stipulated minimum
employment periods for whites in some of the relief schemes as a
safeguard against losses incurred when poor white employe'es and
their dependants had been transported long distances at
government expense to take up government pOSitions.
The third outflow ot·the stock of poor whites ca~e about as a
result of the Civilized Labo~r Policy (1924) with its many
ramifications.
At that time, a growing number of racially
discriminatory measures were introduced which affected the
15
substitution of unskilled white labour for unskilled black
1 abour.
These allowed some whites to be absorbed into the
industrial sector with little re-education.
III.
HOW MANY POOR WHITES?
Estimates of the nu~ber ~f poor whites vary, although the now
classic 300 000 is generally accepted as the number of people
(men, women and children) who were regarded as poor whites.
In a
study such as this, a single number at a single point in time is
rarely of any use, unlike a time series from which we may glean
many useful observations.
As there are no reliable figures for
whi te poverty or white unemployment, we have attempted to
calculate these figures.
This has been calculated by estimating the total potential white
working popu~ation from 1919 to 1950 and removing from it the
total number of whites who were employed in the formal sector.
This estimate is shown in Fig.l.
This summation of employment
proved to be less than an easy exercise but we are confident that
it is a reasonably accurate estimate. Total white employment is
calculated as white employment in mining, manufacturing,
construction, railways, central government, provincial
authorities, local authorities, formal farming, teachers (in
public schools) and the post office.
The establishment of an empirical estimate of white unemployment
between 1920 and 1950 is an exercise with dangers, both
theoretical and empirical. The numbers shown in Fig.l do not
represent actual unemployment for two important reasons.
First,
labour force participation is likely to change both over the
length of a single business cycle and as social forces and
customs will change over any long period of time.
However, the
direction of labour force participation is not always
determinate, e.g. as a country enters a recession, particularly a
severe recession, 1 abour force participation might increase as
wives and children attempt to supplement family income.
Alternatively, i t might decrease as wives, children and
breadwinners become resigned to simply not being able to find
employment and rely on handouts or soup kitchens. Second, the
participation of whites in the informal sector over this period
has not been taken into account in the calculation of the
residual measure.
Irrespective of these two theoretical problems in the calculation
of the residual, the data which is presented in Fig.l tells a
very important story, viz. the difference between the number of
whites who could have worked and those who were actually working
in the formal sector increased, from approximately 210 000 in
1920 to 330 000 in 1933 and then declines to 235 000 by 1950.
16
1--I
As a proportion of the population, the number of working whites
fell consistently from 1920 to 1933 and rose consistently from
1933 to 1950, with very large numbers involved. it can only be
assumed that this trend is also highly indicative of the white
unemployment situation over those decades,
i.e. white
unemployment increased from 1920 to 1933 and decreased
consistently from 1933 to 1950.
.
Fig.l:
The difference between potential white working
population and white employment in the formal
sector
1920 - 1951 (1 000) *
359...-----------------..
399
*
299f,........""I"""'r"..................................,................,..............,...........~
1959
1949
1935
1939
1925
1929
IV.
Most of the figur"es shown are calculated from official
government publications.
Public Sector data was taken from
Standish (1984).
The more important of the government
publications are given in the Bibliography.
MARKET IMPERFECTIONS AND UNEMPLOYMENT:
THE POOR WHITE PROBLEM
One aspect of the poor whi te issue to which economic" analysis has
not yet been applied is the question of whether the poor white
phenomenon actually was a problem in anything other than the
political arena.
The poor white problem would .be regarded as a
social and not an economic problem, if the market was seen to
respond to increases in labour supply, i.e. if it was evidenced
as a case of employment at poverty wage levels, wherein
increasing supplies of labour led to decreasing wage rates.
It
would be the result of these falling wages that leads to a
poverty problem, i.e. employment but at poverty wage rates. On
the other hand, the poor white phenomenon would be regarded as an
17
economic problem if it were seen as large numbers of persons not
only unemployed, but also unemployable, where large increases in
the supply of white unskilled labour had no effect on wages.
These people are thus not taken into employment and represent a
form of structural unemployment.
A need exists to explore the issues of poverty and unemployment
in the poor white era. To this end a model of the labour market
in South Africa during the first four decades of this century is
suggested. The mod81 is presented dynamically to reduce the
limitations of stati~ analysis.
For this purpose, the 1900-1940
period is divided into four sub-periods and the market structure
and individual changes for each period are discussed.
We need to examine the structure of the labour market and then
its relevant changes at this time.
However, due to the
interre 1 atedness of the 1 abour market and the structure of the
economy, it is necessary to consider the make-up and changes in
the economy itself.
SOUTH AFRICA IN PERSPECTIVE
1.
POPULATION
The composition of the South African population during the poor
white era.is little different from that seen in South Africa
today.
This is represented in Fig.2.
Africans have always been
the largest section of the population.
The total number of
Africans increased from 3,7m in 1910 to 8,4m in 1950 (2,1% per
annum). Whites, the second largest portion of the population,
increased from 1,3m in 1910 to 3,lm (2,2% per annum), while
COloureds and Asians increased by 1,8% and 2,2% respectively.
Population by race group
1920 - 1955
(1 000)
l
Whites by Home Language
Fig. 3:
1936 - 1951
(1 000)
Afrikaans ...................
...................................................
1599
•••••••••••••
~
•••••••••••••••••••••• .I' •••••••••••••
English
1999L_,.....,..-----'---"'"'~---'--------1
599
Othfl'
~-------------------~-~-------------~------
B~----------------------------------~
1951
1946
In discussing the poor white issue, it is a well-known fact that
almost all poor whites were of Afrikaans (Dutch) origin.
As
illustrated in Fig.3, it is evident that a large part of the
political concern over poor whiteism was due to the numerical
superiority of Afrikaans-speaking whites. In'1926, the Afrikaners
totalled 42% of the white population and the English 39%.
By 1951,
these proportions had hardly changed.
Contrary to popular opinion, immigration,_certainly in the period
under study, had little effect on the size or composition of the
white population although it contributed significantly to"the
supply of skilled labour. As can be seen in Figs.4 and 5, net
immigration is positive but isolated tti particular periods.
These periods are 1925 to 1929 with nearly' all arriving from the
United Kingdom;
1933 to 1939, with immigrants arriving from the
.United Kingdom, Germany and Holland; 1946 to 1949, which shows
tremendous increases in immigration, largely from the United
Kingdom with the final period starting in 1952.
19
Fig. 4:
Fig.5:
Immigration and Emigration
Immigration by country
1925 - 1953
1925 - 1955
(1 000)
(1 000)
3Qr-------------------------------~
29
19
9~~~~~~~~~~~~~~~~~~
1925
1939
1935
1949
1945
1959
1955
20
j
I
2.
THE ECONOMY
At the beginning of the 20th century, the South African economy
consisted of a large agricultural sector"and an: industrial sector
'which was limited to the railways and harbours, the gold and
diamond mines, the building trades, the printing and milling
industries, and a few small engineering workshops, and other
undertakings whicp had been started by those who were optimistic
as to the future of the country'.
(Report of Unemployment
Investigating Commission, 1932, UG 30-32, p.7.)
As can be seen in Table 3, a relative decline in the agricultural
and mining sectors followed the growing manufacturing sector
which accounted for 18% of the GDP by 1950.
Table 3:
The Growth in South African
Estimated GDP in
1970 prices -(R million)
Growth rate over decade
Share produced by
Agriculture
Mining I
Manufacturing
Source:
1911 - 1950
Outpu~
1911
1920
1930
1940
1950
1 225
1 000
1 947
3 170
4 434
-2,0%
6,9%
22%
18%
7%
21%
28%
4%
5,0%
14%
16%
9%
3,4%
13%
13%
12%
18%
13%
18%
Nattrass (1981), p.25.
Of the numerous major and minor economic fluctuations,
periods of , recession are of immediate importance:
only two
"The first of these economic re6essions topk place in the
period from 1920-22 and was largely the result of the
combined influences of the substantial labour unrest, which
took place on the Witwatersrand over this period and which
culminated in the Rand Rebellion of 1922, and a general
recession in the world economy.
The second period of
economic stagnation occurred during the period- from 1928-32,
the years of the Great Depression".
(Nattrass, 1981, p.25)
Wi thin the manufacturing sector i tse 1 f, the most important
component was to become the production of metal components,
machinery and transport e~uipment lFig.6). The second most
21
important part, although declining over the period, was food
processing (including beverages and tobacco). While third was
clothing and textile production, which increased from 9% of total
industrial output in 1924 to 24% in 1954.
Various industries as % of total industrial output
1924 - 1954
Fig.6:
~,---------------------------------------~
Metal indust.& :......... .
TfansPol'.t
.. ~qlltp";·
."
.....
30
20
................................
19
.,._... _.,.-..r
1924
3.
28
ol
J',.,J-.....,.~
,I'"----...--J"----~
35
49
..r--
..
.". ___ _
,_...
_ J - .....
Cl othi ng&
texti 1es
45
59
1954
LABOUR
At the turn of the century, the composition of the labour force
was as follows:
(i)
The skilled and semi-skilled labour force for the economy
as a whole was recruited from inter alia the UK, Holland,
and Germany.
(ii)
In the Cape Colony, the so-called Coloured community had
replaced the previous 'slaves'.
(iii)
Natal faced the disinclination of its black labour
inhabitants and hence it was found necessary to recruit
unskilled workers from .India.
(iv)
The Orange Free state and Transvaal I'had no difficulty
in obtaining the small number of unskilled workers and
domestic servants required by them from the remnants of
the decimated or broken tribes scattered throughout these
terri tories".
(Report of the Unemployment Investigating •
Commission 1932, UG30-32, p.7).
(v)
The railways labour was largely recruited from the
COloured community, but the unskilled white was also not
unknown.
22
l
(vi)
The Kimberley diamond mines recruited almost solely from
Basutoland. (Lesotho).
(vii)
The gold mines and coal mines of the Transvaal, having
failed to attract the South African blacks for
underground work, turned to portuguese East Africa.
(Mozambique).
With the cessation of the Anglo-Boer War in 1902, the economy
entered an unprecedented (post-war) boom which lasted for four
years. Between 1906 and 1908 a sever,e depression brought about
the first unemployment of a modern nature.
The decision to
repatriate the Chinese workers resulted in the opening of
employment for a large number of the black labourers:
'About the same time the mines began to employ numbers of
South African-born whites and to train some of them as
miners.
Year by year the number of white employees born
in South Africa increased and gradually, as the number of
overseas-born miners who for over twenty years had a
virtual monopoly,' decreased, their places were taken by
the South African-born whites'.
(Ibid., p.8.)
As a resul t, the percentage of South African-born whites to the
total white labour force in the Transvaal mines increased from
23% in 1908 to 32% in 1911, and 51% in 1921 and 65% in 1931.
After Union the government encouraged the establishment of
secondary industries which had already started in the coastal
cities and on the Reef. Tariffs/were used for this purpose.
The
war of 1914-1918 provided strong protection for secondary
industries resulting in a marked ,expansion. With the termination
of the war, tariffs continued for the support of industry. The
effects were fairly impressive, so much so that at the beginning
of the 30's the production of sugar, wine, fruit, butter and
cheese had reached a level beyond the absorption capacity of the
domestic economy.
'The necessary labour force for this expansion of
industry was obtained partly by the migration of the
more ambitious of the white unskilled rural workers, by
the employment of female labour, and by the introduction
of the native from the reserves into industry'.
( Ibid., p. 8 ) •
Over the period, the socio-economic condition of the black
popul at ion experienced substantial changes.
Economic necessity
on the one hand, and social transformation on the other, brought
about three categories of black labour.
The first was the
detribalized black who opted for a career in industry as a
skilled or (mostly) semi-skilled worker,
The second was the
unskilled black work~rs who found man~al employment in
23
agriculture or in industry.
The third category consisted of
'target 1 abourers'. Most were
unski 11 ed, searching for
employment to supplement subsistence earnings.
The second and
third categories of black labour caused the dislocation of some
whites who had been employed as farm servants or who were tenant
farmers.
4.
WAGES
In neo-classical economic theory, it is expected ~2Eiori that
the existence of a large and growing labour supply will lead to
falling market wage rates and growing levels of employment. As
we have established that unemployment increased until 1933 and
then declined, it is important to establish the effects of this
on wage rates.
It would be expected that the large inflow of
poor whites from the country to the urban areas would have
depressed real average white wages and led to increasing numbers
of whites finding employment. As labour supply continues to
increase and wages fall, the unemployment problem changes to a
problem of employment at poverty'wages. There are three aspects
to the wage issue which need focussing on. It is important
first, to document the movement in real wages paid to whites.
Second, to establish the real wages paid to blacks.
Finally, to
show the extent and movement of the spread of wages between
skilled whites, unskilled whites and unskilled blacks.
An
examination of the relative changes between black and white wages
over the period will be indicative of relative labour supplies,
as we 11 as determine whether whi te wages were at the expense of
blacks'. These three issues are discussed below.
Real White Wages:
Real white wages in different sectors are shown in
Agriculture is neglected because of the lack of data.
24
Fig.7.
Average real wages paid to whites at 1938 prices
1915 - 1950 ( £ per annum)
Fig.7:
5Ra----------------------------------~~
41111
ConSl't. .:.- ...-.
3BB
.. ......................
'
2BB
.-.
'.
.........
............
-..:-.'
1BB~.....................~.......~~............,......"'""""..........,...,........,.....,.
1915-
192B
1925
193B
1935
194B
195B
The mines paid the highest wages over the period. Mining wages
paid to whites declined consistently between 1915 and 1927;
wages then increased regularly with a slowdown in the war years.
The construction industry was the second highest paying sector
for most of the period.
While it exhibits the same general
trends as in mining, the fluctuations are more extreme.
The
manufacturing sector paid generally the lowest white wages: this
declined from 1915 to 1921, rose between 1922 and 1929 and
continued to increase without interruption from 1933 to the end
of the period.
An examination of specific manufacturing
industries shows the more important industries following the
average trend.
(Food, cl,othing, metal and chemicals.
See
Fig.8.)
25
Fig. 8:
~~)~~
{"
,.
"
-
1925
193ta
1935
1945
195\3
In the period of rising white unemployment (1920 to 1933) it is
very important to note that the direction in which real white
wages moved is indeterminate.
In construction, wages increased
slightly over the period, in the mining industry, wages fell and
then rose, while in the manufacturing industry, wages declined
until 1920, increased in 1922, declined again in 1923.
By 1929,
manufacturing wages were slightly less than those being paid in
1915,
Only then did the wages rise.
Within the neo-classical paradigm, the movement in real white
wages can have two interpretations: it is possible, given the
already illustrated numbers of whites without work in the formal
sector, that what one witnesses is real wage inflexibility in the
face of massive increases in the labour supply, i.e. the increase
in the number of poor whites, for whatever reasons, was unable to
affect white wages. The other possible interpretation is that
the effect of the poor whites on white wages cannot be inferred
from the above figures:
i t can be argued that the relative
proportions of skilled whites to poor (unskilled) whites was such
that negative (wage) changes affected by inflows of poor whites
would be outweighed by productivity induced wage increases to
skilled whites.
This second interpretation does leave one with
the uneasy fee 1 ing that an
increase of 100000 whites not
employed in the formal sector (Fig.1) should have had at least
some noticeable effect on the average wages paid to whites.
26
f
Real Black Wages
An examination of the movement in real white wages, by
defini tion, requires a presentation of real black wages. Fig.9
shows the wages paid by sector.
These wages show the same
general picture as those for whites, although at a very different
scale. In mining, wages fell from 1910 to 1927, after which they
generally increase.
Unlike their white counterparts, black
miners are paid the lowest wage on a sectoral basis. Apart from
a few minor fluctuations, wages paid to blacks ,in manufacturing
show a general upward trend, as do wages paid in the construction
industry.
Fig. 9
Average real wages paid to blacks at 1938 prices
( £ per annum) 1915 - 1950
H U l r - - - - - - - - - - -_ _ _ _ _ __
99
89
79
COHSTRUCTJ ON f
': ................... ANUFAC1UHI HC
I.
69 J
SQl
.....
39 f
28
~
HfS
. . . . _"'. . . . . . ".__ . ._~-'" I,
~~.~
49 i ~~j:;:::r.·
)
HJtmiG
i'J""''''''' "
I
·~.·'\/---.-----v...
• :,
.4
' i . • . '"I ..
1929
1925
1939
!
1935
27
:
!.
1949
j
I
,.
1945
•
-4
1959
The Spread of Wages:
The spread of wages paid to skilled whites and unskilled whites
and blacks is shown in Fig.lO. As can be expected, wages paid to
skilled whites far exceed those paid to either unskilled blacks
or unskilled whites.
Evidence of unskilled white wages was
extremely difficul~ to find. In those instances where figures
are available the evidence pOints to unskilled white wages
falling between skilled white and black wages but tending to be
closer to unskilled black wages. Unfortunately, little time
series data is available for unskilled white wages and evidence
is only available in discrete instances until 1925.
Fig. 10:
Real wages paid at 1938 prices
( E per annum)
1911 - 1950
5951------------------,
Mining
499
.. .......
39g
-tlhit~
....................................
. ...............
...rI'''
....
~
...........
............
...... .
298
Manufact-hlack .r-----___ --J'--- ,.,==--;.:.;:-=.'"':'lIIC=-__ - - - r ~_........,.-"t; _ _ _ _ _ _ ..,...
Mining-hlack
8L-____~~~~. .~~~~. . . .~~~
1959
1915
1929 1925
1939 1935
1949 1945
uta
un5kiJI~d Nhit~
.....................
J"J".r-
28
A MODEL OF THE SOUTH AFRICAN LABOUR MARKET 1900-1940
Three distinct and separate types of labour were in evidence in
South Africa during the early part of this century. First, the
skilled workers, the elite, earned wages far in excess of the
other classes of labour and they were almost exclusively white.
During the earlier part of the period these were nearly all of
foreign origin with the majority coming from the United Kingdom.
Second, the black workers, mainly unskilled labour were largely
migrant and earned wages slightly in .excess of subsistence wages.
There was a perceived shortage of black labour at the going wage
rates then.
One of the greatest constraints on the contemporary
economy was the existence of a relatively stable gold price (in
South African pound terms the price of gold actually fell prior
to 1922). This gold price placed a constraint on the cost of
gold mining industry beyond which the gold mines would no longer
be profitable.
Until 1933, more than half the mines were
marginal operators which could not absorb any significant cost
increase. Increasing black wages in the face of labour shortages
"would have entailed a significant cost increase. The response of
the mining houses was rather to extend their recruitment area and
thereby increase their labour supply at given wages.
The third
actor in the social aren~was the poor white. A typical poor'
white had arrived from a devastated farm or smallholding with few
possessions and even fewer skills. He was unacquainted with
~ndustry or towns,
and was mostly Afrikaans-speaking.
To establish a model of this labour market, we need to assume
that the three components of the market were distinctly separate
and separable.
We consider this a plausible assumption for the
following reasons:
The skilled classes:
The only entry into the skilled categories was via the
acquisition of skilis. This was onl~ possible if some basic
level of education/training had been achieved.
It was therefore
impossible for unskilled labour, white or black, particularly in
the earlier part of the period, to be upwardly mobile.
The
alternative of job fragmentation at lower wage rates. as a means
of advancement was not available, due to minimum wage setting
across a wide variety of skills and industries.
The unskilled classes:
These consisted of both blacks and whites. The blacks had
contact with industry for some time then, accepted low wages
were subj ect to prosecution under the Masters and Servants
should they desert the ·workplace.
The unskilled whites, on
other hand, had had little or no industrial experience, would
29
had
and
Act
the
not
l
accept unskilled black wages and were not subject to the Masters
and Servants Act.
Furthermore, unskilled whites often excluded
themselves from certain manual work, particularly servant work,
as this was the 'Kafferwerk' of the not so distant slave days
(where the attitude had originated).
This attitude towards many
classes of work did not lie solely with the unskilled white.
Evidence is available which suggests that the attitude was also
widespread among employers and resulted in little demand for
unskilled whites as labourers.
In the 1 ight of this, we
I- osi t
a mode 1 covering four periods:
Period One: 1900-1918
Three markets are shown in Figure 11.
(White skilled, white
unskilled and, black unskilled). Wages paid to skilled whites
(Wsw) are shown to be relative~y high. The minimum wage rate
(Wmin) exist in the market but is applicable to the new entrants
only.
Thus, while
'Wmin' has no bearing on this market, it
nonetheless had two important effects. First, it guaranteed a
minimum income which would induce labour participation in this
market. Second, and more importantly, it denied access to the
unskilled and other labourers whose marginal revenue product was
below the legal minimum wage. These were mainly blacks and poor
whites.
Fig.ll:
Structure of South African Labour Market 1900-1918
White skilled
labour market
labour market
w
Me & MRP
w
Black unskilled
labour market
White unskilled
MRP & ~IC
unskilled white
w
Me
~RP
w.I-_ _ _.....
Wsub
Q~w
(aJ
(cJ
(bJ
30
QsQn
(d)
II
I
1
I
The supply curve of unskilled black labour is shown as horizontal
(a'la Lewis, 1956) at a level just above subsistence levels.
The demand is shown as Qusb with an equilibrium wage of Wbu.
This wage is above the maximum permissible wage (Wusb) given the
gold price ·constraint.
Max
A shortage of
Qusb
o
- Qusb
S
exists.
The third market is for unskilled whites.
The supply curve
(Susw) is shown as horizontal over the initial section again at
a level just above subsistence level. In this period, where the
poor white problem had not yet become too acute, the subsistence
wage can be seen to be above that of unskilled blacks. Given the
relative cost difference, the unskilled white is blocked from
entering unskilled black positions.
The poor white is also
prevented from entering the skilled white labour market as his
return to employers is less than the minimum wage rate operating
in the skilled market. As such, the poor white is not able to
partake in either market.
For him, the only demand which exists
is a small amount of state employment, largely in the Railways.
Period Two
1919-1923
This period brings increasing hardships for poor whites. With
all the factors pushing whites off the land, exacerbated by the
severe drought of the period, more and more unskilled whites
begin arriving in the urban areas. Those poor whites in towns
now begin to lower their expectations and become increasingly
more willing to accept labour of any. sort. The evidence shows
some wage flexibility up to a pOint.
For example, unskilled
whi te 1 abour wage was 66. per day in 1907 whereas it dropped to
4s. in 1911. (MacMillan, 1919, p.17). This appears to have sE!\;
the bottom line for the downward flexibility of wages.
In spite
of the increasing number of unskilled (poor) white labour, and
despite lack of demand, the wage rate remained at 4s. over the
period 1911-1923.
The minimum wage that whites are prepared to accept falls as
supply increases from Sl to S2' as shown in Fig.12.
The unskilled whites remain eXCluded from the skilled labour
market via the minimum wage barrier and from the unskilled
(black) market because of employers' attitudes towards unskilled
white labour and because the cost of using black labour was still
lower.
31
structure of South African Labour Market 1919-1923
Fig.12:
White unskilled
labour market
MRP& Me
uns"<.illed \\'hi~e
White skilled
labour market
w
Black unskilled
labour market
MC& :,IRP
5,
Me
w,
Min.W. I-~'-'\-_
\11 m b
Qu.b
Q~w
(a)
(c)
(b)
(d)
Period Three: 1924-1931
By this stage, the poor white problem had reached sizeable
proportions.
However the poor white did have one important
advantage and increasing political pressure is exerted on
government.
Following the recommendation of the 1922
Unemployment Commission and the 1922 Committee of the Heads of
Government Departments, the conditions in the labour market
underwent considerable changes over this period. Not only was an
active campaign of black-white substitution initiated but the
government also embarked upon a policy-package for training and
educating the poor whites. The development of secondary industry
was encouraged and tariffs were used to this end.
In the market for unskilled whites there is increased demand as a
resul t of growing government employment.
There is also a
decreased supply due to the government retraining schemes:
whites entering the retraining schemes are equipped with
sufficient skills to enter the white skilled market as the return
to employers is now equal to or above minimum wage levels. Wages
paid in these schemes are less than minimum skilled wages but
appear at times to have drawn unskilled whites off the land and
out of private industry.
32
Structure of South African Labour Market, 1924 - 1931
Fig.13:
Whit~
skilled
labour market
White unskilled
labour market
MRP&MC
unskilled white
w
w
. MRP8r:MC
Black unskilled
labour market
w.
w
w.
Min.W
Qww
(a)
(e)
(b)
(d)
In the skilled market supply increases and tends to force wages
down. Demand does not change significantly and declines with the
arrival of the Great Depression.
There is simultaneously a net decline in demand for unskilled
blacks as a result of the government's programme of white~black
substitution. There is also a possible increase in the supply of
blacks as the mining houses open up further areas of recruitment
and the perceived shortage of unskilled blacks is seen to be
eliminated.
Period Four
1932-1940
Over this period, market conditions changed substantially. Now,
the government was determined to eradicate the plight of the poor
white altogether. While the economy was still trapped in the
prevailing depression, the government allocated no less than 15%
of its budget towards job creation for unskilled whites. Some of
these whites now have a marginal revenue product (MRP) which is
distinctly attractive to the private sector.
The supply of
unskilled whites also decreases as the rural exodus is arrested
through substantial support by government to struggling farmers.
Simultaneously, the private sector, shaking off the constraints
of the Great Depression and released from the Gold Standard,
increases output and employment.
33
The market for unskilled blacks also benefits from this economic
expansion as increasing numbers of blacks are absorbed by private
industry.
Supply appears also to have increased due to the
growing impoverishment of the Reserves. All these developments
are shown in Fig.14 below.
Structure of South African Labour Market, 1932-1940
Fig.14:
White skilled
MRP &MC
labour market
unskilled white
White unskilled
labour market
Black unskilJcd
labour market
w
w
w,
Min. W. t---~~-.;....
(aj
Q~
-----Q-,-Qu'w --------Q-,
"'0
(bj
(cj
(dj
Summary of the Model
The foregoing model demonstrated the functioning of the labour
market as a dynamic adjustment to social and economic conditions.
It was shown that a combination of market imperfections in the
form of minimum wage legislation, attitude towards manual work
and racial biases of the employers, resulted in the prevalence of
unemp loyment amongst the poor whites.
This 1 ed to further
impoverishment of the poor whites.
In the absence of any
automatic market corrections, the Governnment was induced to
introduce legislative measures favouring poor whites, and
embarked upon an ambitious public works programme.
The modus
operandi of this programme is described below.
34
...
V.
1.
THE POOR WHITES AND STATE INVOLVEMENT
The Overall Chronology
From the time of the official recognition of white poverty in the
early years of the century, until its ultimate disappearance in
the 1950s, the State became involved in at least two ways.
First, by introducing numerous measures such as the
Apprenticeship Act (1922), the Civilized Labour Policy (1924) and
the Native Trust and Land Act (1936), the State ensured that
whites would achieve socially acceptable standards of living.
Such government involvement has been well publicized and is
largely excluded f.rom consideration here.
Secondly, through the provision of employment, the State
alleviated the plight of many poor whites.
It appears that the
phenomena began to fade away only when the State introduced a set
of workable devices to absorb the bulk of unemployed poor whites.
The chronological development of these devices and their overall
effect on employment creation are the focus in this section.
The official recognition of white poverty dates back to the time
of Union. At that time, the Railways was the sole government
agency which employed unskilled whites, although in relatively
small numbers. In 1911 the Railcways employed 3876 white, and 26
146 black labourers, with total railway employment of 54 752
(ARBR, 1912, p.ll).
That this was only the beginning was
recognized by the Board of Railways in 1911:
'The policy of employing white unskilled labour on work on
Open Lines formerly performed wholly by native and coloured
labour has been followed with encouraging results.
A
somewhat better type of white labourer is offering for
service and the wastage though still unduly high is becoming
less as time goes on'
(OYBSA, SA.No.13, pp.l~O-lOl).
In 1916 it was estimated that there were 39 000 indigents and
67 500 other poor whites in the Union.
The Central Authorities
established an office in charge of white labour but with a grant
of only £! 1 500 in the Department of Mines and Industry. (Ibid.)
In 1920 an unprecedented increase in unemployment occurred
' .•. due in varying degrees to the closing down of a number
of the low-grade mines, the restriction of diamond mining,
the inability of returned soldiers and ot~ers to find work,
and the financial depression which manifested itself towards
the end of the year'
(OYBSA, SA.19l0-1921, No.5, p.293).
35
The government's response was to appoint a Commission to
investigate the unemployment question at national level and to
recommend remedies.
The Commission produced three reports
presented in March 1921, May 1921 and May 1922.
In its second
report, the Commission addressed the problem of poor whites,
" ... a section of population which was estimated to number
approximately 120 000 persons' (OYBSA, SA.No.5, p.293).
Proceeding from the principle that remedies for unemployment
rather than relief should be provided, the Commission was to make
the following recomm'3ndat:;.ons:
1.
That the Government should take steps to maintain up-todate information as to (a) the number of unemployed and
indigent persons in the Union;
(b) the number of feebleminded, degenerate and permanently invalided persons,
especially children;
and further to secure (c) an
agricultural survey of the Union;
(d) a survey of industries
with a view to estimating the number of youths and apprentices
capable of being absorbed in various occupations.
2.
That provision should be made for vocational training of
the young on a much more extensive scale than hitherto, and
the extension of a system of apprenticeship in all industrial
undertakings.
3. That every assistance should be given to the gold and coal
mining industries to enable them to operate to their fullest
possible extent, that taxation levied in respect of them
should be upon results rather than upon enterprise and effort,
and that hampering and retarding restrictions not vital to the
public safety should be removed.
4.
That industrial expansion should be encouraged by a
readjustment of tariffs and in other ways.
5. That cheap transport and marketing facilities should be
provided for the country's products, whereby farmers might be
better able to make a living on the land and the unnatural
drift from the land to the mines might be avoided.
6.
That marriage of the feeble-minded and of males under the
age of twenty-one should be as far as possible discouraged.
7.
That the system of Government departments, pOlice,
railways, and, if possible, municipal bodies purchasing and
supplying material and obtaining tenders in the Union for
making the necessary uniforms for their employees should be
continued as a means of providing continuous employment for
large numbers of workers.
(OYBSA, SA.No.5, pp.293-94).
These suggestions are of particular interest because most were
adopted by the Government and they became guidelines for
agricultural, transport and industrial policies.
36
J
While the Unemployment Commission was busy with its study to
alleviate the unemployment problem, the situation was also in
need of immediate relief. The Department of Mines and Industries
had the following to report in 1920:
'In the field of Labour during 1920 the serious state of
affairs as regards unemploym~nt chron~cled by other
countries after the cessation of hostilities had its reflex
in South Africa ..•. As is al ways the case in a crisis of this
nature, the main difficulty lay in providing for the
unskilled man .... the State is left the task of providing
work of some description for the semi- and unskilled, or
alternatively of granting pauper relief. The need for a
comprehensive inquiry into the unemployment problem led to
the appointment of the Unemployment Commission, but soon
after its appointment it became evident that other means
were required to afford immediate relief of a temporary
nature, pending the submission to Government of suggestions
for permanent measures.
To a Committee of Heads of
Departments, presided over by the Minister of Lands, was
entrusted the work of finding relief employment on State
works -- afforestation, irrigation works, road and railway
construction and repair ...• The main object kept in view was
employment of a nature requiring no skill. ... At the close of
the year the Committee had found employment for some 1 400
men' •
(ARDMI, 1920, p.105).
In that year a special 'Unemployment Expenditure Vote' was
introduced from which funds were transferred to the railways and
provincial authorities to initiate various projects with the
object of absorbing unemployed whites in the urban areas.
Unemployment in the rural areas was to be removed through
projects implemented by the Department of Forestry.
The
registration and placement of the rural unemployed were coordinated with the help of the local post offices involving 256
branches by 1927.
In 1920/21 the Forestry Department reported as fOllows:
'In order to assist in the alleviation of the prevailing
unemployment, endeavours were made to absorb additional
labour in afforestation works ... it was decided to utilize
the surplus labour mainly in the construction of roads for
opening up forest and plantation areas .... The cost of these
settlements proved to be very high indeed .... The costly
nature of the work hardly justifies the settlements from the
economic and purely forest point of view, but from the
social standpoint the Department of White Labour is well
satisfied with the resul ts. In March there were 890 White
labourers on the books of the Department, and altogether in
that month the Department was directly employing 1 370 White
labourers ... '
(ARDF, 1921, p.269).
37
The Railways, while receiving funds from the Department of Labour
for subsidizing employment, at the same time increased
unsubsidized employment of unskilled white labour. The early
1920s saw significant increases in unsubsidized railways
employment. In 1923, 4 390 white labourers were employed. By
1924 this had increased to 8 676 and by 1926 to 14 383 (see Table
8) •
The introduction of the 'Civilized Labour Policy' on 31 October
1924 marked the beginning of a greater intensification in the
drive to eradicate the poor white problem.
In terms of this
policy all departments were instructed to substitute 'civilized'
labour for 'uncivilized' labour.
These were defined as:
'Civilized labour is to be considered as the labour rendered
by persons whose standard of living conforms to the standard
generally recognized as tolerable from the usual European
standpoint.
Uncivilized labour is to be regarded as the
labour rendered by persons whose aim is restricted to the
bare requirements of the necessities of life as understood
among barbarous and undeveloped peoples'
(OYBSA, 1927-28, p.197)
'Civilized labour' was recognized as white labour by the Railways
and by private business which was coerced to implement the
civilized labour policy. However, the Department of Labour
interpreted 'civilized labour' to mean both white and coloured
labour. For a time the interesting situation developed of the
private sector substituting white for coloured labour, while in
government, coloureds were substituted for Africans.
In the
final analysis it appears that while the coloured people were.not
prejudiced by the civilized labour policy, they also did not
benefi t from it.
'As the result of an exhaustive enquiry into employment by a
committee appointed by the Department of Labour in 1926,
certain principles were adopted for dealing with local
unemployment. They are that, apart from the function of the
central Government to employ in all its activities the
maximum number of civilized labourers, a duty devolved upon
Provincial Administrations and local bodies
municipalities, divisional councils, etc. - similarly to
provide employment for civilized persons to the greatest
extent possible without assistance from the Government.
Should, however, abnormal unemployment occur in any locality
the following principles would apply.
Classification of the unemployed as regards physical fitness
for work would be made, the classes being fit, semi-fit, and
unfit:
38
=
(a) As regards the fit, if they are employed at the request
of the Labour Department, the difference in the wage-bill
cost, as between the economic wage and the civilized wage
agreed upon, is borne by the Government and the employing
body.
(b) In the case of the semi-fit to whom emploY,IDent is given
at the request of the Labour Department, the following
principles are applicable, subject to approval by the
Provincial authority concerned. The normal wage payable to
be 5s per man per diem made up as follows:
Employing body,
3s; Labour Department subsidy, Is; Provincial subsidy, Is.
When a higher or lower wage than 5s is paid, the subsidy in
each case to be one-fifth of such wage.
(c) The number of semi-fits to be subsidized must not be
greater than the number of non-subsidized unskilled
civilized labourers employed on a permanent basis by the
employing body in its normal services'
(OYBSA, 1931-32, No.14, p.170).
It was really the Great Depression with all its increased
hardships which saw the introduction of effective steps to absorb
much of the poverty by state employment. Prior to the Great
Depression, in 1927 and 1928, the country had been in the grip of
a severe drought.
The response of the government was to
reinstate a special vote which had existed in 1924 but been
discontinued in 1925 and 1926, viz. the vote for Relief of
Distress. This vote received a generous estimate of £ 400 000 in.
1927, substantially higher
than the expenditure on the vote for
Unemployment Expenditure which had begun in 192Q.
In 1927, the
Government could only appropriate
£ 30 000 of the estimated
£400 000, although in the following year a total of £426 000 was
appropriated through this vote.
Meanwhile, 'special interest is taken in the question of settling
Europeans and their families on the land, by placing suitable men
with farmers needing labourers and in any other way which may be
found possible' (OYBSA, 1927-28, No.10, p.148).
In 1930 the Relief of Distress vote was replaced by a vote for
Farmers' Special Relief with the obvious aim of ameliorating the
farmers' financial distress and hence preventing further inflows
to the poor white stock.
This fact was acknowledged by the
Department of Labour in 1933:
'The drought ... menaced the livelihood of thousands of farmers
so that many were compelled to seek employment on subsidized
works such as railway construction, irrigation schemes and
road works.
The influx increased the already large number
of unemployed to such an extent that it became impossible to
provide work for all and it followed inevitably that rations
had to be issued to thousands of unemployed .•.. The drought,
which was serious over the greater part of the Union,
affected the north-western districts of the Cape with
39
exceptional severity, but also,
to the farming population. '
(AADL, 1933, p.14)
seed wheat had to be issued
In January 1931 Parliament passed an Act (No.4 of 1931) to
provide for loans to certain farmers for the purpose of meeting
pressing liabilities and for matters incidental thereto. This
was a further measure to prevent the drift of drought-stricken,
bankrupt farmers toward t::>wns where they would join the ranks of
the poor whites. T~e following year, 1932, marked the height
of ...
" ... the abnormal unemployment position created, partly by
the unprecedented wor I d economic depression and part I y by
the serious drought conditions under which the greater part
of the Union suffered for a very considerable period .... As a
consequence the Department of Labour found it necessary to
increase very largely the expenditure on unemployment relief
and to grant subsidies to various local employing
authorities on a far more liberal scale than normally, to
enable them to provide temporary employment on specially
instituted relief works'
(OYBSA, 1932-22, No.15, p.180).
In June 1932, the Minister of Labour appointed the Unemployment
Investigation Committee which submitted a report at the end of
November of the same year.
The Committee's recommendations were,
briefly as follows:
(a) A special permanent fund to be created for preventing and
relieving acute and prolonged unemployment created by any cause
which would bring about such a depression that a considerable
proportion of the workers would be thrown out of employment.
(b) The administration of the fund to be entrusted to a Central
Board of five members consisting of representatives of (i) the
Union Government;
(ii) the rural community;
(iii) employees;
(iv) employers;
(v) local authorities. The appointment of the
members to be vested in the Governor-General-in-Council and to
be for a period of not less than four years.
(c) The amount of the fund to be not I ess than £ 5 000,000 and
to be raised by contributions from Consolidated Revenue and
Loan Funds.
(d) Subject to such conditions as may be laid down by the
Central Board, the fund to be used for the purpose of granting
subsidies or loans, or both, to Government Departments,
Provincial Administrations, Local Authorities, and Public
Bodies. Allor such portion of the fund as is not needed to
meet current payments to be handed over to the Public Debt
Commissioners for investment by them in specified securities.
40
(e) The assistance to be given to local authorities as regards
works of a capital nature to be confined to loans for a period
of five years, or to a contribution of a portion of the
interest for two or three years.
In respect of reserve works,
contributions in aid of expenditure by local authorities on
schemes undertaken specially by local governmening authorities
for the prevention and relief of unemployment during a severe
depression, other than works of a capital nature, to be made
from the fund to such extent, and on such conditions as the
Central Board may deem necessary.'
(OYBSA, 1932-33, No.15, p.182).
While the poverty position remained acute in 1933, a combination
of accentuated state involvement, adequate rainfall and economic
recovery helped reduce the unemployed population in 1934. At the
same time the Government changed its emphasis from providing
mostly temporary piece-work employment to the creation of jobs
that were also of a more permanent nature. Permanent measures
included (i) Land Schemes, (ii) Irrigation Works, (iii) Railway
Works,
(iv) the Special Service Battalion and (v) the Pioneer
Battalion.
By the end of the 1930s i t was apparent that the white
unemployment, problem was abating.
In 1939 the Department of
Labour reported that ,it was finding difficulty in filling
positions in the projeyts aimed at relieving unemployment:
' ..• It was noteworthy that the Department was in the
fortunate position during the period under review of being
able to offer work to every abl-e-bodied adult European male
who was in need of assistance and who was willing to accept
unskilled labouring work on such schemes. As a matter of
fact towards the end of the year large numbers of men were
required for Irrigation and Railways Construction Works, and
the greatest difficulty was experienced in securing the
required 1 abour force."
(ARDL, 1939, p.7).
The Railways experienced similar difficul ties and only sol ved
their shortages by allowing in as labourers older men than
previously.
(ARBR, 1937, p.15).
2.
THE RELIEF SCHEMES
The schemes which were designed to relieve white unemployment can
be divided into two types: those which were introduced directly
into (or by) government agencies and those which were introduced,
into government agencies but were paid for by the Department of
Labour.
Table 8 on P.48 provides a summation of employment
created by these projects.
(a)
Unsubsidized Schemes.
Four important schemes were
introduced which were not sUDsidized by the Department of Labour.
These were in the Railways, in parastatal jobs, in irrigation
works and forestry settlements.
41
The Railways:
The railways instituted a policy of substituting white labourers
for black. The number of white labourers increased from 4 400 in
1916 (11 per cent of total labourers) to 17 300 in 1936 (27 per
cent qf total).
By 1936 the Railways had become the major employer of unskilled
white labour in unsubsidized occupations.
The Department of
Labour had the following to report for the year:
'These statistics reflect the extent to which Government
Departments and the Railway Administration have provided
employment for Europeans not qualified for skilled work.
It
is particularly noteworthy that the Railway Administration
employed 17 244 European labourers, or 61 per cept of the
total number of European 1 abourers in non-subsidized
Government Services'
(ARDL, 1936, p.7).
It is worth noting that the Railways increased employment-of poor
whites in two ways.
First, as mentioned above, i t provided
employment for unskiiled white labour on a permanent basis
without receiving major subsidies.
Second, it created temporary
employment for which it received subsidies from the Department of
Labour.
(This is discussed below.)
Parastatal Jobs.
The establishment of ISCOR in the second half of the 1920s
provided a certain degree of relief to a few poor whites. While
statistical evidence is hard to come by, H.J. van Eck's
retrospective evaluation of ISCOR is illuminating. In 1951 he
asserted:
'Twenty-five years ago the Union of South Africa was faced
with a very serious "poor white" problem.
Several hundred
thousand white people from good basic stock were facing the
future with hopelessness and despair .... Many such valuable
people found employment in ISCOR, which was probably one of
the most complicated industrial undertakings ever to be
attempted in South Africa .... It may sound surprising to you
today that we had to face difficulties at that time in
introducing European operatives into industry. The early
fears of the skilled artisan have proved groundless. The
services of the skilled man today are at a premium and the
country is short of many thousands of skilled men.
This
position was brought about by the mobilization in the first
instance of European operative labour, who also acquired
prosperity and decent homes'
(Van Eck, 1951, pp.17, 18).
42
Irrigation Works.
This scheme was introduced in 1920 but initially did not assume
any major role.
In the 1930s however it provided notable
employment opportunities for unskilled labourers.
Reporting a
total employment of 3 213 unskilled whites in 1935, the
Department of Labour described the measure and its implementation
as:
'Labourers for the above-mentioned works are recruited by
this Department and are required to pass a medical test of
fitnes~ prior to engagement.
The Department meets the cost
of transporting them to the works .... Where practicable
provision has also been made for the workers to be employed
on piecework thus enabling diligent workers to increase
their earnings'
(ARDL, 1931, op.14)
Forestry settiement.
As early as 1922 forestry settlements assumed a significant
position in the relief of poverty for the rural unemployed. The
Department of Labour was particularly in favour of this measure
because:
'Of all the types of unemployment relief work so far
undertaken,
afforestation has proved i tse 1 f the' most
valuable, both financially for the state and as a means of
rehabilitating the workers and their families; this work
has the important element of permanency which is absent in
other forms of relief work'
(ARDL, 1922, p.12).
The modus operandi of the settlement of white labour on such
plantations is explained by the Department of Labour:
.
'This Department is responsible for the social welfare work
on Forestry Settlements and also selects the settlers and
arranges for the transport of families and their household
goods to the settlement. The camps on the settlement are
controlled by welfare officers appointed by this Department
but the settlers, when employed on afforestation work are
under the control of officers of the Department of
Agriculture and Forestry .... In addition the settlers are
provided with accommodation for their families in the form
of detached cottages, and with schooling for their children,
medical services and firewood, free of charge. Transport to
the settlement and from the settlement upon repatriation is
also provided free of charge by this Department'
(ARDL, 1936, p.15).
43
The available data on employment provided by this measure are
summarized in Table 4.
Table 4:
Number of Settlers and Whites employed on
Forestry Settlements (Selected Years)
December
1929
1930
1931
1932
1935
1936
1937
1938
Source:
Settlers
No. Employed
829
863
1 255
1 418
n/a
1 455
n/a
n/a
1
1
1
1
1
1
785
851
141
307
360
203
344
030
Dependants
3
3
4
5
320
571
549
145
n/a
n/a
n/a
n/a
Annual Reports of the Department of Labour and
Official Year Books of the Union of South Africa
for the relevant years.
(b) Subsidized Employment. Subsidized employment (subsidized by
the Department of Labour) was started in 1932 in the Railways and
subsequently extended to encompass the Land Schemes which
included (a) anti-soil erosion schemes, (b) eradication of
jointed cactus and noxious weeds, and (c) rural rehabilitation
and housing schemes.
Railway Construction and Improvement Works.
Describing this measure, the Department of Labour reported in
1935:
'In collaboration with Railway Administration it has been
possible for the absorption of both European and Coloured
unemployed persons.
These works are subsidized by this
Department either to the extent of full wage cost of the
unskilled labourers or on some other basis mutually agreed
upon .... The workers there employed are divided into two
groups, viz. those who are recruited by the Department, who
are housed in tents and whose families are not provided with
accommodation and those who are selected by the Railway
Administration and who together with their families are
accommodated in the model villages which were especially
constructed for them in the vicinity of the works'
(ARDL, 1938, p.13).
As shown in Table 5, subsidized white employment on the Railways
reached a maximum of nearly 5 000 in 1933.
To some extent
cOloureds also benefited although only until 1935.
44
-
----~----
Table 5:
Relief Labour employed by Railways
Year
1932
1933
1934
1935
1936
1937
1938
Source:
*
1
4
2
1
1
White
Coloured
961
764
714
827
349
806
629
238
329
741
377
*
1932-1938
Total
2
5
3
2
1
199
093
455
204
349
806
629
Annual Report of the Board of the Railways,
for each year
Paid for by the Department of Labour and
not recorded under Railways total employment
Anti-Soil Erosion Works (Scheme 'C') was designed to assist rural
unemployment and employed 5 008 whi tes in 1933, 5 806 in 1935 and
418 in 1938 (ARDL, 1938, p.13).
The Eradication of Noxious Weeds scheme was commenced in
September 1934. 'European labourers who are physically unfit for
ordinary government works are employed on this work' (OYBSA
1934/35, No.17, p.209). This scheme employed 422 white workers
in 1936 and 231 in 1938 (ARDL, 1938, p.14).
Provincial Authorities, Divisional Councils and Municipalities.
As mentioned before, in terms of the recommendations of the 1926
Unemployment Committee, the secondary and tertiary governing
bodies were also to help alleviate white poverty. The Central
Government had introduced a substantial subsidy scheme to effect
the employment of unskilled white labour by municipalities.
Subsidies were variable according to whether the labourer: (a)
was recruited on a regular basis in municipal service, (b) was
employed on temporary works, or (c) was regarded as 'semi-fit'.
In 1934, the subsidy formula was modified, increasing the level
of subsidy up to 75 per cent of their wage, especially in
category (a).
Generally, in the post-1934 period the State
seemed to have succeeded in changing the propensity of these
authorities from providing subsidized (mostly temporary) work to
creasing non-subsidized works in regular services.
Table 6
illustrates the point.
45
'Special Service' and 'Pioneer' Battalions.
In 1933 two army battalions were formed to help the unemployment
problem.
The Special Service Battalion was founded for men
between 17 and 23 years (ARDD, 1938, pp.4, 5). The obj ective was
to discip 1 ine and train these men wi th the intention of passing
them through to other sectors of the government.
In 1937, 3 788
members had p~sGed through the ranks of whom 882 joined
government depa<r.tments, 323 joined private industry and 332 were
discharged (ARDD, 1938, pp.4,5).
The Pioneer Battalion was open
to 'men between 18 end 30 years who, through lack of education,
were not eligible for entry to the Special Service Battalion.
By 1937, 1 084 had found employment while 625 were discharged'
(ARDD, 1938, p.4, 5).
Members who were still serving at the
outbreak of hostilities were absorbed into the general armed
forces.
Table 6:
Subsidized and non-subsidized relief works provided
by provincial, divisional and municipal authorities
1932 - 1938
Year
Month
1934
Jan
Dec
Jan
Dec
Jan
April
1935
1936
Source:
Subsidized
Provincial Administrations,
Divisional Councils &
Municipalities
12
6
6
3
3
2
711
907
329
594
309
954
Non-Subsidized
Government &
Provincial
Works
20
25
25
28
29
30
197
029
874
494
650
276
Official Year Books of the Union of South
Africa 1934-35 No.17, p.211, and 1937, No.18,
p.285.
Pri vate Sector and ReI ief Measures.
In the subsidized employment schemes both public and private
sectors were involved. However, the share of the latter appears
to be insignificant.
The data below, the only available
breakdown of the jobs, illustrates this.
46
Table 7:
Year
percentage share of the private sector in creation
of subsidized relief works, 1932-1936 (December figures)
Govt.Depts.
Prov.Auth.,
& S.A.RailDiv.Councils
ways
& Municipalities
12 466
17 700
6 907
nla
nla
1932
1933
1934
1935
1936
Source:
2 534
5 848
3572
nla
nla
Private
Sector
Total Subdized works
769
466
147
5 543
4 309
15
24
10
14
14
769
014
626
605
363
Private
Sector as
% of total
4,9
1,9
1,4
38,0
30,0
Official Year Books of the Union of South Africa
1932-33, No.15, p.18l; 1933-34, No.16, p.196;
1934-35, No.17, p.2ll.
It is worth noting that with the economic recovery in 1935, the
private sector substantially increased its share of subsidized
relief works. For example, of total subsidized work of 14 605,
the private sector generated 5 543 (38 per cent) in December
1935.
Its share in the fOllowing year was also over 30 per cent
of the total subsidized relief works, i.e. 4 309 'jobs.
3.
TOTAL EMPLOYMENT ON THE RELIEF SCHEMES
The construction of a continuous time series for total employment
faces two problems. The first is the fragmentary nature of the
data.
Second, is the rapid turnover which occurred in these
schemes, especially after 1933.
This turnover occurred as a
result of the government absorbing unskilled labour, training
these to semi-skilled status and these then being absorbed by the
private sector or into permanent government positions. Therefore
the totals shown for State employment in any particular scheme
cannot be regarded as a stock of State employment but asa flow
of poor whites through the State. Thus the cumulative stock of
poor whites assisted by the State would be the total of poor
whites employed by the State at anyone time, plus the poor
whites who had passed through the State into private industry.
The magnitude of this latter category would depend on the rate of
turnover. Data for the rate of turnover are unfortunately not
available.
Despite these limitations, Table 8 represents an
attempt to estimate the total employment created by the State
through direct job creation schemes and the numbers employed at
anyone time.
As is shown,
by the mid-1920s both subsidized and non-subsidized
relief measures absorbed a fair number of poor whites, although
the Rai 1 ways remained by far the 1 argest employer of unski 11 ed
47
poor white labour. The situation changed drastically in 1932, a
year in which the numbers in subsidized works increased by 99 per
cent and those in the non-subsidized works rose by an incredible
313 per cent. This upward shift was maintained in 1933.
In that
year a total of 58 751 of the poor whites were employed by
various State relief measures. This suggests that even before
the economic recovery occurred,
the State had brought
considerable relief to the plight of many poor whites.
White male adults employed on subsidized and
non-subsidized relief works
1920 - 1940
Table 8:
Year Subsidized Non-subsidized
Works
Works (excl.
Railways)
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1 400
7
4
10
3
3
3
4
5
8
7
15
23
14
i4
12
9
9
7
4
920
284
868
857
608
550
782
527
213
943
769
351
267
325
380
823
030
893
766
2
5
6
6
6
6
6
21
20
23
27
29
28
29
30
30
Unsubsidized
Labour employed
by Railways
5
4
4
4
8
12
14
14
15
16
15
14
14
14
15
16
17
17
18
18
19
932
271
506
042
835
512
982
856
664
562
560
564
696
913
351
880
045
158
756
390
676
137
383
870
235
248
722
023
836
736
018
355
300
150
658
702
188
Total
Employment
Provided
18
23
24
26
28
31
28
52
58
52
58
59
55
57
56
54
916
262
926
059
610
447
948
461
751
847
240
244
669
601
946
834
Sources: 1920 1926 and 1938-1940: Annual Reports of the Board of
the Railways for each year; 1927-1937: Commission of
Inquiry into the Cape Co loured PopulationUG54-37, p.44.
Official Year Books of the Union of South Africa
(various issues).
48
Whites employed on subsidised and unsubsidised
relief works
1920 - 1940 (1 000)
Fig.15
79r-------------------------------~
Iotal
/
;"
............ -"'-r .....
, --
59
I
I
I
39
./
19
.".. .......
-
I
................ ........ .
./ ...... J
~
",.,.'"
..............
................. , ....
o~~~-.~~~.-~~~~~.-~~~~
1929
4.
22
24
26
29
39
32
34
36
39
1949
WAGES AND BENEFITS
From the time of its inception, 'one of the principal
difficulties met by the unemployment committee was to determine
wage rates on relief schemes which would, on the one hand, enable
the man in the town to maintain his family, and, on the other
hand, fail to attract the man from the country' (OYBSA 1910-24,
No.7, p.2l5,).
Wages paid in 1920 and 1921 attracted increasing numbers of farm
labourers and others from the country districts.
Subsequently,
the wage rates had to be revised. Wages paid in various schemes
were low but considering all other benefits, mainly in kind, they
provided an adequate income. The evidence which is available
suggests that labourers were paid between 4 shillings and 5s6d
per day.
This compares with other public service wages of
Assistant Clerk 32s and Typist l2s0d per day (OYBSA 1910-25,
No.6, p.98).
White labourers employed by the railways received two additional
benefits: free housing and, in 1929, admittance to the Railways
sick fund.
The 'free housing' comprised hostels for unmarried
men and houses for married men.
White 1 abour employed on
irrigation works received free food, accommodation and medical
attention.
49
5.
TOTAL STATE RELIEF
As has been suggested, estimates of the magnitude of the poor
white problem have varied.
In 1922 an estimate of 120 000 is
mentioned.
By 1933 the Carnegie Commission put the number of
poor whites at 300 000.
What proportion of these passed through
the State's transformation process?
The problem appearL tJ ~2va ~een ~olved between 1933 and the
early 1940s, an6 our estimates are therefore confined to this
time period. Table 9 is used to estimate the magnitude of the
relief given to poor whites in the form of increased
employ.nent.
The estimated number of unskilled whites is the approximate
average number employed in the given sectors over the 1933-40
period.
The number of dependants per breadwinner is estimated at
a very conservative 2.(1)
With these estimates the total
number of poor whites supported directly by State employment and
indirectly by legislation at anyone time between 1933 and 1940
was 234 000, with the liQn's share of this falling to direct
State employment. The rci~e ~~ which these poor whites passed
throug~ -th') process of t,:'ansoi:'Clrr.1ation is unknown as the turnover
rate is unknown.
H0wsver, given the magnitude of the above
figures, this could have been \'(~~y slow and still have sol ved the
white poverty ;,;:ccblem.
The implications of Table 9 are enormous. Over a twenty-year
period the State supported a significant majority of the poor
whites through State employment; assisted them with free housing
and free medical services;
educated those who 1 acked the
education to enter the bureaucracy;
introduced 1 abour
legislation to effect the substitution of black labour by white
and through increased expenditure on schoo 1 s, educated and
trained the children of poor whites out of the poverty cycle.
Over a two-decade period State employment assisted by sustained
economic growth alleviated and then eradicated the poor white
problem.
While the numbers taken into employment are impressive even by
today's standards, it is very important to realise the extent to
which the relief works contributed to increasing government
employment of whites. Fig.16 illustrates this. Employment by
the central government totalled 98 000 in 1939;
59% of this was
made up of relief work employment!
1. There are only two areas under State employment where the
number of dependants for unskilled white breadwinners is
available.
These are 3 for municipal relief works (OYBSA
No.7, p.215) and 4 for forestry settlements (Table 4).
50
" .!kG _,
iIilO;;:;:k
AM; §MQ\JMiMt@UM
j
Estimate of the total number of poor unskilled whites
assisted by state intervention in the labour market
1933 - 1940
Table 9:
Est. No. of
unskilled white
breadwinners
employed 1933-40
Manufacturing
Mining
Govt.subsidized
employment
Rlwys.unsubsidized
employment
Other unsubsidized
employment
Total
Source:
Est. No.' of
dependants
Total
(2 )
14 000
28 000
42 000
20 000
40 000
60 000
17 000
34 000
51 000
27 000
54 000
81 000
78 000
156 000
234 000
Estimated from Tables 2 and 8.
Regular employment by the central government can be seen to
increase gradually and consistently over the period. Relief work
increases this significantly, especially after the dramatic
increase in 1933.
.
Fig.16:
Regular and relief work·employment by the railways
and central government 1920 - 1940 (1 000)
1aa~-----------------,
,JI-
Rai I total
Ba
~
.......
/'
'~:;:,a~.''''' .... ' .. ''
---..............
.'~
..........:,..
~
~
--..-i..._";'''''
69
49
29
1929
22
24
2B
39
51
32
34
36
3B . 1949
l
~
Relief work employment by the railways does not show any sudden
variation.
Rather, from 1926 onwards, it remains a fairly
constant proportion of railway's employment (approximately 25%).
An interesting feature of railway employment is its variation
over the time of the Great Depression: Over this period total
white employment by the railways declined from 59 000 in 1929 to
50 000 by 1933. This was due to a deliberate labour reduction
over the Great Depression in order to reduce costs. Yet, through
this cost-cutting exercise, the numbers employed on relief works
were hardly affected.
While skilled whites were being
retrenched, unskilled whites remained in employment, a feature
ill ustrating the pol i tical significance the poor white probl em
had gathered by 1930!
6.
TOTAL WHITE EMPLOYMENT
In order to present readers with a full picture of the poor white
era, the sectors of employment and important changes are
presented below:
The study of employment in South Africa during the earlier part
of this century is made particularly difficult by the lack of
data in many areas of white employment. Notable in these areas
is commercial agricultural (where some data exists), the
subsistence sector and informal sector activity.
However, even
some of the more expected data, like employment in the wholesale
and retail trades, and many of the services are missing. In the
public sector, this proves less problematic as only data for
ESCOM, ISCOR and the Post Office are unavailable.
These are
relatively small numbers and do not influence the trends unduly.
The employment of whites in South Africa, particularly in the
period under study, is most usefully broken into public and
private sector employment.
The public sector at the time
consisted of government (central, provincial and local
authorities), two State enterprises, i.e., the Railways and Post
Office, and a number of public corporations, (ESCOM and ISCOR are
the only two which are important for our purposes).
The private
sector was made up of agriculture, manufacturing, mining and
construction.
Employment of whites by the public sector and the
private sector are shown in Fig.18.
In the rising unemployment,
constant wages, period formal employment by the public sector is
shown to rise generally. The effects of the work relief schemes
are clearly evident and obviate any decrease in railways over the
Great Depression.
Public sector employment increases fairly
consistently and shows a distinct 'bulge' as a result of the
relief schemes. The private sector increases in 1933 to 1938 and
particularly after 1945 achieved considerable reduction in the
numbers of poor whites employed on the relief schemes.
In fact,
even before the end of the 1933-1938 employment expansion phase,
the government was finding difficulty filling many of the
positions in the relief schemes. The Minister of Labour noted in
1939:
52
'While in previous years unemployment and distress were
mainly counteracted by the introduction of subsidised and
other temporary relief works, which, at best, could only
be regarded as pa.lliative measures, the favourable
employment position has' enabled the Government to give
attention to the development of National Works of a more
permanent nature on which the task of rehabilitating many
of the backward and submerged sections of the community
has been assiduously pursued.
It is noteworthy that the
Department was in the fortunate position durin~
period under review of being able to offer wor~to every
~.
able-bodied adul t European male who was i-n need of
assistance and who was willing to acce.I7t'" unskilled
labouring work on such schemes. As a ma~ter of fact,
towards the end of the year, large numb~s of men were
required for Irrigation and Railway Con~truction Works,
and the greatest diffiCU~lty~z
was exper~nced in securing
the required labour force.
(ARDL, 1939, p.7)
Private sector employment, wh~e substantially greater than that
of the public sector~d9Ciines from 1919 to 1922. From 1922,
employment fluctuates to be only very slightly greater than the
total of 1919 by the beginning of the Great Depression. After
South Africa abandoned the gOld standard', employment growth is
seen until 1938 and resumes again after the war.
Fig.17:
White employment in Public and Private Sectors .
1919 - 1950
(1 000 )
499u-----------------_
......
......
.........
. . .....................................
~
399
........... ..........................
I
.....·:·Pl'i va tl!' SI!'C tOl'
2HH
Public Sl!'ctOl'
1HH........--
1929
1959
53
1
White employment in the Public sector
excluding Public Works 1920 - 1950
Fig.18:
( 1 000 )
1 2 5 . . - - - - - - - - - - - - - - - - -........
75
1925
1939
1935
1949
1945
1959
A closer examination of white employment in the public sector
reveals an interesting pattern:
employment by government
(central, provincial and local authorities) show a general upward
trend with very little deviation or variation. On the other
hand,
railways' employment shows quite different changes:
employment decreases from 1920 to 1921 due to the recession of
the time;
employment remains constant until 1924, when the
effects of the Civilised Labour Policy are seen to increase white
employment. At the onset of the Great Depression, the railways
reduced the number of its permanent workers until 1933, when
employment increases consistently to the end of the period.
54
Fig.19:
White Employment in the Private sector 1919 - 1950
( 1 000 )
299-----------------
Agriculture
...--- ~---~--~--~~.
~'"'--
..............
--......:.. ....
..
-,.
"anut ac:turi ng.... ·····
199
................................
..
....
........
"ining
....................................
'----.."..,..---",
Construction
--9~~~~~~~~~~~~~1~~~~...........................,
1929
1925
1939
1935
1949
1945
1959
-~~-~-~---~-~-~~-"-
With the private sector, an interesting picture also emerges
(Fig.19):
While employment in mining and construction show
variation but little growth, manufacturing and agriculture show
slight gains. After the Great Depression, farming employment
shows net losses while employment in manufacturing shows rapid
and sustained increases.
Within the manufacturing sector itself, the largest employing
industry is that in the production of basic metals-and metal
products this is the industry which exhibited the greatest postGreat Depression growth.
The second most important industry and
one which also exhibited tremendous growth in the early 1930's
was clothing.
55
Fig.20:
White employment in the four largest
manufacturing industries
1924 - 1950
( 1 000 )
35--------------------------~~~,
25
ClotJ.;ng
~ __
/!:J.U.!L:....r-~
I
15
I
/
.:"
-.... -
Food J""'J"-;..... .r
__ I
":.-r-'l~utm.'I'r._:r:::=:_:::_:_
..
...............
.,,-
."
5
1959
1929
7.
EXPENDITURE ON RELIEF MEASURES
Wi th the growing concern over the unemployment position and in
the light of the 1920 Committee of Heads of Departments, an
'Unemployment Vote' with a total budget of £154 000 was
introduced.
For the first two years the Department of Mines and
Industries and thereafter the Department of Labour was in charge
of the unemployment vote.
Financing of various relief works,
whether fully or partly subsidized, was done through this vote.
The Department of Labour was also responsible for collaboration
wi th provincial and municipal administrations, as well as with
other public and private institutions, to initiate and finance
relief projects.
56
Table 10:
I
I,
I
I,
i
I
'I
I
Government e~penditure on unemployment relief measures
£ '000)
during the poor white era 1920 - 1940
Unemploymt vote Other votes fm Loan Fund
Loan Forestry Relief of Farmers'
Year Current
Special
Distress
Budget
Fund
Relief
vote
77
28
% of
Total Budget
182
325
688
462
716
690
582
927
1 070
886
776
2 795
2 839
.1 664
5 583
4 661
5 216
4 426
2 620
1 825
0,6
1,1
2,3
1,8
3,0
2,6
2,2
3,4
3,8
2,9
2,6
9,4
10,4
4,9
15,8
12,4
14,1
11,2
5,8
4,1
1920
1921
1922
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
77
300
450
250
300
300
200
257
270
188
48
69
140
145
458
277
480
431
496
485
523
Source:
Estimates of Government Expenditure to be defrayed.from
(a) Revenue Funds, and, (b) Loan Funds, 1920-1942.
135
200
175
75
100
241
245
50
650
1 077
250
100
385
360
275
223
25
238
212
181
190
207
195
274
287
283
356
312
362
375
313
329
630
309
367
100
400
426
170
200
2 320
1 737
80
4 500
3 971
4 072
3 005
1 540
750
The 1920 Committee of Heads of Departments regarded forestry
works as an especially suitable measure. Thus the Department of
Forestty received not only standard subsidies from the Oepartment
of Labour, but also £rom the State Loan Fund.
Table 10
summarises the trend of various expenditure categories over the
period.
Unable always to provide adequate relief works for the
applicants, the Department of Labour frequently resorted to
handing out rations to the farming population in the 1920s and
early 1930s.
To ameliorate the plight of largely droughtstricken farmers, which was further aggravated by the occasional
outbreak of foot and mouth disease, the Government allocated a
sum of £100 000 in 1924 to the vote for 'Relief of Distress'.
Ii
.
In 1927 parliament passed the Drought Distress Relief Act (No.25,
1927) in terms of which farmers suffering stock and financial
losses as a result tif the drought would receive Government
assistance.
A total of £400 000 was appropriated for this
purpose in that year.
57
As shown in Table 10, the Relief of Distress vote was superseded
by the Farmers' Special Relief Vote in 1930. A combination of
many factors such as the recessionary economic condition, severe
drought, and the growing stock of poor whites, resulting mainly
from the continuous drift of the farming population off the land,
justified the enormous increase (1 060 per cent) in 'Farmers'
Special Relief Vote' in 1931.
Total Government e}-.pend:'.ture on both preventive and curative
relief measures reached a maximum of an incredible 15,8 per cent
of the budget in 1934.
The cost to the Railways is not so easily available. In 1913 the
Railways incurred a cost of £90 000 as a result of unemployment
relief and £100 000 in providing housing for white labourers.
This wa~ 2,5 per cent of ordinary expenditure for that year (AR
General Manager of Railways, 1913, pp.82, 83 and 84). By 1923
the relief policy was so effective that the Railways admitted
itself to be overstaffed (ARBR, 1915, p.9). By the end of the
1920s the cost of implementing the civilized labour policy became
so embarrassing that the Board of the Railways and Harbours
minuted that the General Manager of the Railways need no longer
record the cost of the policy (Horwitz, 1967, p.253). The cost
to the Railways was extensive. As was noted at the time:
'The position of the Railway Department in relation to white
labour is peculiar.
On account of the outcry about
unemployment among White men some years ago, the Department
dismissed large numbers of its Native employees and took on
to do the same work White labourers at about twice the pay
of the Natives. Now, these men complain that their pay is
not, for White men, a living wage. The Government, after
sacrificing thousands of pounds regardless of economy, and
retrenching hundreds of its Native employees, now has the
pistol of a general strike held to its head and it is told
that, slack times or no slack times, there is to be no
retrenchment of White employees (Wilson & perrot, 1972,
p.330) •
The policy also had implications for the rest of the public
sector. Some public corporations found it impossible to continue
the policy of labour recruitment based on socio-political, as
opposed to economic, criteria. A case in point was ISCOR.
From
its inception in 1925 until the Great Depression ISCOR had
mainta'ined a whi te onl y work force. Al though the costs of this
to ISCOR are not known, in 1932 ISCOR claimed that, handicapped
by the Great Depression it would no longer employ labour on
humanitarian and not economic grounds and allowed blacks into its
workforce (Horwitz, 1967, p.253).
58
J
"'~--
8.
POOR WHITES AND POOR BLACKS
The poor white problem was started and compounded by an
increasing movement of whites from the rural areas into the urban
areas.
In this process, many things occurred or were brought
about. One of these,factors was the introduction of a variety of
legislation and policies which were aimed at assi~ting whites at
the expense of blacks.
These include such measures as the
Civilised Labour pOlicy and its many ramifications, the Wage
Acts of 1918 and 1925, the Apprenticeship Act and the Industrial
Conciliation Act.
In the study of, poor whiteism it is
insufficient to simply study white employment and white wages.
It is just as important to determine whether the employment and
wage changes were 'real' or whether there existed a significant
displacement of blacks, in which case this can only be regarded
as a 'nominal change'!
We approach this by studying two areas: the numbers of blacks
employed relative to the number of whites in the formal economy
was expected to give valuable insights into the methods by which
the poor whi te probl em might have been sol ved; second, it was
our belief' that an examination of the relative wages paid to
blacks and to whites would lead to a better understanding of the
dynamics of this part of our history. This information is shown
below:
Employment
Figure21 shows the number of blacks employed for each white
employed in the public sector and in the private sector.
The
immediate apparent difference between the two sectors is the
wide difference between the employment ratios.
The private
sector ratio varies between 3,8:1 to 4,5:1, while that of the
public sector varied between 1,1:1 to 0,9:1.
In the private
sector, it can be seen that the number of blacks employed for
each white increased, to reach a maximum in 1925. This is the
year in which the largest array of legislation disadvantageous to
blacks is introduced.
The effect is immediately apparent -- the
ratio of blacks to whites employed declines consistently from
1925 until 1934. Only with the start of the gold-led boom in
1934 is the trend reversed, 'as demand for all labour increases
and it is further accelerated in 1939 with the start of the war.
The public sector shows the approximate same general pattern, but
with less extreme movements and without the peak of 1925. The
ratio of blacks to whites employed declines from 1923 to 1934, at
which stage it begins to increase very gradually.
59
Fig.21:
The number of blacks employed relative to whites in the
public and private sectors
1920 - 1950
The trend followed by the various parts of the public sector is
shown in Fig.22.
(Provinces are not shown, due to a lack of
data.) Within the public sector, the ratio of black to white
remains remarkably stable for both the railways and the central
authorities.
Even for local authorities, which demonstrate
erratic short-term aberration, the 1.ong-run trend is generally
stable. However, both the local authorities and the railways
showed declining relative amounts of black employment between
1920 and 1934. It is here that we see the effects of the vast
array of government pro-white policies which were introduced in
that period.
The central authorities were able to replace very
few blacks with whites because they employed very few blacks, at
least blacks in permanent positions. No data is available which
suggests how many blacks were employed by the central authorities
in temporary positions, and what effect the pro-white policies
had on their work status.
60
Fig.22:
The number of blacks to whites employed in the public
sector
1920 - 1950
,
1.9
0.S
............................................................. ·crNTRA'L··G·O·V'ERN~ENr .... ··,.:.·······
9.8~~~9-~~~~~~~~~~~~~~~~
1935
194~
1945
i93~
19216
1959
In the private sector the effects of the civilised labour policy
can be seen on both the manufacturing and construction
industries. Both sectors exhibit the same general trend which
show blacks being displaced by whites until 1933.
From this
. pOint, .the general trend is upwards with increases in employment
reflected in both white and black employment.
Within the manufacturing sector, the racial displacement takes
place in surprising' industries.
As shown in the previous
section, the two industries which showed the,most significant
increases in white employment are clothing and basic metals and
metal products. As can be seen in Fig.24,. this growth in white
employment was not at the expense of black workers. These'two
industries, plus printing and chemicals, do only to a very slight
extent show the 'U' shape which is evident in the rest of
manufacturing.
61
Fig.23:
Fig.24:
Number of blacks for each white employed in the
private sector
1920 - 1950
Number of blacks for each white employed in
manufacturing 1920 - 1950
62
wages:
While the previous section shows that there is evidence of some
displacement of blacks by whites, at least until the recovery
after the Great Depression, the evidence with regard to relative
wages presents a somewhat different picture.
Relative value of Black/White wages
Fig.25:
.......
-
..,.
"-./\
,
P-\ ..... ,." ...
,i
\
.: ~ ",..
..
HAHilFAC)lilRI~
.. CONSTHUCTION
~~~
/
~':"";
~
..,'
.~
.
V
The data shown in Fig.25 show some extreme fluctuations,
particularly in construction, but also in mining until 1925. In
the construction and manufacturing industries, the relative wage
paid to whites declined until 1929.
From 1933 to 1940, the
relative white wage increases reflected a growing shortage of
skilled labour and declines again post-i939.
In summary, it can therefore be said that the government assisted
the poor whites in two ways. First it employed poor whites in
government relief schemes. Second, it did help poor whites at
the expense of blacks, at least from the 1920's until the end of
the Great Depression, by means of legislation aimed at
substituting white labour for black. It doesoowever appear that
the .effects of the latter method on allev'iatingwhite pov .. rty by
moving it onto bl acks was far less than the effects of a direct
government employment policy~
This conclusion is further
reinforced by the infor~ation, provided in Table 9 above.
63
l
9.
COSTS OF STATE INVOLVEMENT
In the previous section we provided estimates of monetary
expenditure incurred by the State in establishing various relief
measures.
These, however, were not the total costs. There were
other costs involved of which the most important were:
(oor
whites' hidden expenditure, and (ii) the opportunity cost of all
the above actions.
There is ample evidence that the State
provided a whole array of educational, medical, transport and
social services to t.:le poor white population. Expenditures on
such items were being drawn from various governmental votes,
making it impossible to quantify the level which actually accrued
to the poor whi tes. Such hidden expendi tures were, however, by
no means unsubstantial.
The opportunity cost of both explicit and hidden expenditures is
beyond the di~cussion of this paper.
More important is the
opportunity cost of what we term the 'legislative relief
measures'. That is the whole maze of statute law enacted to
ensure the advancement of the white population.
An analysis of
the costs of these measures for the black population, for the
inter-racial relationships and for the medium- and long-run
economic growth of the economy is indispensable for the
evaluation of the total cost of State involvement in solving the
poor white problem although it is certainly beyond the scope of
this study.
VI.
THE FISCAL AND MONETARY IMPLICATIONS
'How were these relief works funded?' Were they financed by an
increase in taxes, or were they funded through interdepartmental
reallocation of resources? Before discussing these questions, it
is necessary to provide some clarification on two issues. First,
is the institutional structure of government's financial
activities as reflected in the South African public accounts.
Second, the performance of the South African economy over the
period needs a proper perspective.
Due account should be taken
of the business cycle fluctuations and their influence on the
fiscal and monetary variables considered.
1.
COMPOSITION OF GOVERNMENT ACCOUNTS
Government financial activities were dealt with under two
headings:
The Revenue Account and The Loan Account. The former
included all expenditure of a recurring nature and they were to
be financed from recurring sources of revenue, mainly taxes. The
latter dealt with outlays of a capital nature that could
justifiably be financed by borrowing.
While the Revenue
Account financed the customary 'votes' of various government
departments, the Loan Account had additional expenditure to
cover, namely, loan services, debt redemption, the cost of
raising loans, and other expenditures. The two major components
64
""amz
of the Loan Account have been expenditure on loan services and
redemption of debt. Up until 1922, these two had roughly the
same magnitude although there were yearly variations. In the
post-1922 period, however, the redemption of debt became
relatively a larger part of the account.
Theoretically,
ways:
the debt redemption could be made in three
(a) from the yield of new loans;
(b) from ordinary income, provided that government ordinary
income exceeds government expenditure net of debt
redemption; and
(c) from a sinking fund if enough funds are available.
There co~ld, of course,
be interrelationship between the two
Accounts.
To the extent that ordinary (tax) income is used to
finance the expenditure items on the Loan Account, capital
investments are funded .from taxation. The inverse could also
occur, i.e., if revenue from taxes are not adequate to cover the
ordinary expenses of the government, resort is then made to
borrowing and registered under the Loan Account.
The rationale for classification of government expenditure into
two separate accounts was based on the belief that an expenditure
of an investment nature would expand production capacity,
generate revenue and hence repay its principal.
Thus it was
found feasible to borrow for such purposes.
The recurrent
expendi ture, on the other hand, was by and 1 arge of consumption
nature, for which borrowing,was not justifiable.
Consequently,
the dominant macroeconomic paradigm supported a balanced budget
policy. This is discussed in more detail below.
2.
MACROECONOMIC PERSPECTIVE
For the sake of our subsequent analysis, four features of the
South African economic scene require brief explanation. These
are discussed belOW:
Busines's Cycle 1920-46
An index of the economic performance of the period
is
necessary to establish whether the fiscal policy over the period
was anti-cyclical or pro-cyclical and, more specifically, if the
expenditure on the Poverty Alleviation Projects (PWP's) has
exerted any counter-cyclical pressure on the pattern of
government revenue and expenditure.
The subsequent analysis of
the fiscal and monetary variables should be seen in the 'light of
this index.
Given the available data, the best index of economic performance
for the period is the fluctuations in the GOP, measured in the
form of annual growth rate of the economy. This is illustrated
in Fig. 26.
65
Fig.26:
Index of the South African Business Cycle
1920 - 1946
Ii
I,
20
BOOM
15
I I
I I
• I
Ii
i i
i i
i!
Ii
5
I
I
I
I
: r
J'
I
I
I
II
I
t
f
,' ,
i i
i i
i I
I!
i I
10
I
I
~Ii
; I
i i
I
I
BOOM
BOOM
! l\v"\
lJ
i'
'i'
I,
'""'-
Ii
\,1
Q
i
Q
-5
-H~
i
I
I
I
i
I
29
22
24
26
29
The above corresponds fairly Closely with the business cycle data
provided by Leo Katzen (1964, p.69) who had measured the turning
points of the cycles:
June 1920
March 1922
August 1929
July 1932
April 1937
October 1939
-
March 1922
August 1929
July 1932
April 1937
October 1939
1962
Downswing
Upswing
Downswing
Upswing
Downswing
Upswing
A comprehensive analysis of the causes and consequences of this
pattern of the business cycle is beyond the bounds of this study.
A general overview of the determinants of business activity over
this period is given.
Benefiting from the economic expansion of the western countries,
South Africa, together with other exporters of raw materials,
enjoyed prosperous conditions, registering an average annual
growth rate of 5,2% in real terms during the 1921-1929 period.
Affected by the prevailing worldwide depression, the South
African GDP began to decline in 1929.
The recessionary
conditions persisted till mid-1932. The major upturn in economic
conditions occurred in 1934. The economic boom in the western
66
countries and South Africa's departure from the gold standard
resulted in a remarkable economic recovery which continued until
1940 at an average annual compound rate of 7,9%.
Insofar as the consequences are concerned, the fiscal
monetary impl ications wi'll be discussed subsequently.
and
'Balanced Budget' Fiscal Policy
The dominant fiscal paradigm at the time was the 'balanced budget
approach'.
This approach meant that the government attempted to
keep its current expenditure less than or equal to its expected
tax revenue.
In fact to do otherwise was regarded as economic
(and moral) folly.
Only for·non-recurrent (capital) expenditure
was the government permitted to borrow money (via the 'Loan
Account'). This, it was argued, was mainly because the capi tal
outlays would eventually be able to repay their own expenditure
and was very much in accordance with the spirit of 'Lesse fair -'
Lesse Passe'.
South Africa followed this approach very closely.
In fact, for
most of the period the government registered a surplus of taxes
over its recurrent expenditure, as illustrated in Fig.27.
Fig. 27:
Excess of Taxes over Ordinary Expenditure,
1920 - 1946
15---------------------------------------,
·v==\
~
10
~I============,-
...................
LLLL
,
~
__~--.-__~__~~~~~~~~~~
29 22 24 26 29 39 32 34 36 38 49 42 44 46
-5~
67
Within the balanced budget paradigm, we would expect an excess of
tax revenue over expenditure during (unexpected) periods of
economic prosperity and deficits
at times of (unexpected)
recession.
Focussing on the South African experience while the trend in the
1920's is fairly contra-cyclical its pattern in the 1930-1933
period is clearly p,-o-cyclical, Le., the government appeared to
have intensified t~e depression, by strict adherence to the
balanced budget approach. As shown in the figure, the deficit of
taxes over expenditure is reduced consistently from 1930 onwards
and turns to a substantial surplus by 1932 while the economy is
still in the grips of a severe depression. While part of this
surplus was due to the unexpected economic recovery in the second
half of 1932, the fact remains that over the recessionary years
of 1930-1932, the tax-financed proportion of government
expenditure was on the increase.
This is shown in Fig.28.
Fig.28:
Taxes as Percentage of Total Government Expenditure
1920 - 1938
X
100
95
I
I
I
RECE-I
SSION'
I
I
BOOM
RECESSION
,,
BOOM
I
I
I
I
90
I .-.
I'" ••
I'
..
85
I
I
I
30
75
70
65
I
.....
•.
.. (, .... ..
I
I
I
I
•
t"
...................
·1
'"1
: I
···············.1
.:" I
..-"
"\'
.:' I
.......... ,......
I .._.....
It
"
J',,'
,
I
,
'
,
I
I
192B 1922 1924 1926 1929 1939 1932 1934 1936 1939
68
The percentage of total government expenditure financed by taxes
rose from 69,6% in 1930 to 76,1% in 1932 and to 87,4% in 1933.
In the post-1933 period, as clearly illustrated, fiscal policy
remained pro-cyclical, i.e. public expenditure increased in line
with the private sector increases.
.
The surpluses of the 1920's and 1930's were, by and large,
transferred to the Loan Account. As mentioned before, the Loan
Account encompassed the redemption of public debt. Ever since
the Union in 1910 the government had floated large public debt
and effected substantial capital investment in, inte~~!!~,
Railways and Harbours, Local Works, Telegraphs and Telephones,
and Defence.
Thus it was not clear whether the transfer of
excess income from the Revenue Account to the Loan Account was
made to fin.ance new capital investment or to repay debt.
However, in the early 1930's, speculation against the expected
devaluation of the South African pound drew a significant amount
of funds from the Loan Account in the form of debt repayment and
reduced the monies available for capital expansion.
The Gold Standard
As a member of the Sterling Monetary Area, South Africa's
monetary pOlicy was conducted within and dominated by the
prevailing Gold Standard System in the. 1910's, 1920's and early
1930's.
According to this System, the money supply was only
marginally amenable to government intervention. Attempts to
monetize any substantial part of government expenditure would
have required additional morietary gold or foreign reserves
obtainable only through balance of payments (B.O.P.) surpluses.
The money supply in such conditions was largely dependent on real
forces, i.e., the ability of the economy to attract gold and
reserves. Until the end of the GOld. Standard, the South African
economy did not experience any substantial or persistent B.O.P.
problems.
Over the 1920-31 period, deposits, notes and coin
registered marginal positive and negative variations; Given the
fairly constant level of money supply, and in the face of no
substantial inflation/deflation, the velocity of money had to
increase in the wake of economic growth.
In other words, in
terms of the Fisher's equation, i.e. MV = PT, when 'M' and 'P'
pre fairly constant, any in·crease in 'T' would result in a
commensurate rise in 'V'.
This is shown in Fig.29::
69
Fig.29:
Velocity of Money as measured by GDP/MS, South Africa
1920 - 1940
:::1I
I
'1.A
6.
-""~/
S. 5 i/-~..?-
01
..
.r'"~
\
Ii
I
'v "
\
5'0~-J
192Q
22
24
26
2B
39
32
34
36
39
49
It is evident that up until 1929 the velocity of money
circulation rose substantially.
In September 1931, with the
depreciation of sterling, it was natural that the South African
pound would have to follow suit. The party in power at the time
- the Pact Government - supported by the Reserve Bank, however,
kept the South African pound 1 inked to gol d.
The ensuing
controversy developed into a fully fledged opposition to
Government policy. Supported by the main Opposition Party - the
South African Party - the advocates for abandoning the gold
standard argued that:
(i)
the depreciation of the currency would correct the
imbalance between the tradables and non-tradables;
(ii) it would ease the stringency of money and credit
caused by the speculative outflow of capital;
(iii) it would stimulate the goldmining industry which in
turn would have substantial multiplier effects;
(iv) it would, should, restore the stable exchange rate
with sterling because Britain was the major trade
partner;
(v)
the depreciation of the currency would greatly benefit
70
the manufacturing sector
competitiveness, and finally
by
increasing
their
(vi) it would tip the scale in favour of the debtors who
had been severely prejudiced by the increase in the
value of money since 1929.
In the face of the irrefutable strength of the arguments, the
Government still refused to depart from the gold standard.
Speculation against the currency amassed rapidly.
Money supply
declined by -13,2% on an annual basis. As the conversion of bank
notes into gold reached a level of 2,5m to 3m within 3 days in
December 1932, the government had to succumb and South Africa
left the gold standard.
Budget Deficit, Public Borrowing and Public Debt
Al though interrelated, the three concepts have substantial
differences, especially with respect to their fiscal and economic
connotations.
Simply put, budget deficit is the difference
between total government expenditure (G) and total government
revenue, mainly from taxes (T),
in any specific period.
As
such, the deficit is a flow concept.
A distinction should be drawn between the two co~cepts of 'Public
Debt' and '~ublic Borrowing'.
The former is a stock concept
which represents the accumulated government indebtedness to the
'Public'· and 'Private' institutions and individuals.
The latter,
on the other hand, is a flow concept indicating government's
(Public) borrowing requirement towards financing either its
budget deficit or servicing/redeeming the stock of Public Debt,
i.e. :
(G-T) + (Qt x i ) + (dQt)
where
Publ ic( Government) Borrowing Requirement at
time 't'.
Government expenditure
Tax revenue
Total stock of Public Debt
Rate of interest
Change in the Stock of Public Debt
Thus, assuming Qt = 0, it would follow that public borrowing
requirement would be equal to the budget deficit for that period.
However, with
Qt>
and positive (nominal) interest rate
public borrowing requirement could diverge from budget deficit to
the extent that either interest rate ordQ changes.
Fig.30
illustrates such divergences for the period ~nder study.
°
71
Fig.30:
l
t;{j{j!!f'?
Trend of Public Borrowing and Budget Deficit
1920 - 1940
(£'000)
i
_______ ______ t.
f
'.
.,.D----~---~---_~
~ .;~' •• "o;.:::
~
~
.1'
, ..
,i
.,,~. ~
..
It
Ii
dW";ij
'il
lI
\
J
§
10000°1
A
75e,,~
~ ./
Pub] ic Borrowing
,\
~''''
I
\
/
~- ---"
I
J
/"
e
...... ..........
29
22
',r-"
..../
~
B.1'
lltlget "
iJf'r".1(:1·t: ............... :;
................. . ................................ ................
24
26
I
2B
39
32
34
36
3B
4B
While the budget deficit did not fluctuate considerably, public
borrowing showed substantial variation, particularly in the early
1930's. As mentioned before, the bulk of public borrowing during
the 1931-1932 period was due to the repayment of the foreign debt
component of the public debt. The rise in the public borrowing
therefore corresponded to the decline in the stock of public debt
during the 1931-32 period.
This is shown in the Fig.31 below:
72
Changes in Public Debt and Public Borrowing
1920 - 1940
( ~ m)
Fig.3l:
!5e--------------~---------------------,
100
59
.'
.
~
.'
'.'
I
....
Public Borrowing
•••••
..........................................
..,
...... :
. .......\..,........
........
Puhl i c Dtbt ,
-59
-19B
-1591-_~-.~...,-~~..,...,....,.~,r:-""~"';~""!
29 22 24 2'6 29 3Q 3'2 34 36 39 49
A comparison of the above two figures illustrates that ~ublic
borrowing is more closely correlated to fluctuations in the stock
of public debt than budget deficits. This is partly due to the
very definition of 'public debt'.' It is important to'bear in
mind that the Pubic Debt Commissioners (PDC), created under the
PDC Act, No.la of 1911, are obliged by law to invest all the
funds entrusted with them in the government stocks. Thus any
increase in the resources of the trust funds of the government
and the South African Railways, Provincial Administrations and
the like would, by implication, mean an increase in government
stock and hence a rise in the stock of public debt.
This
statutory structural arrangement therefore complicate the
interpretation of the three flows of 'budget deficit', 'public
oorrowing' , and 'changes in the stock of public debt'.
73
3.
FISCAL IMPLICATIONS
The fiscal consequences of State involvement in the alleviation
of white's poverty can be analysed by studying the pattern of
government expenditure and revenue over the period. A variety of
measures are discussed:
A crude indication may be found in the trend of total real
government spending over the period. From a total of £29,6m in
1920 the total expenditure increased to ~O,Om in 1934;
(a 68,9%
rise equivalent to .in annual compound growth rate of 3,8%).
The
corresponding growth rate of the GDP over the period was 3,7% per
annum.
While the comparison implies a marginal increase in the
share of government in the economy, year to year variations were
large. Fig.32 illustrates the trend of government expenditure as
a percentage of GDP:
Fig.32:
Government Expenditure as a percentage of the GDP
1920 - 1946
:';
27.5-----------------------------------------,
25,'1
G/V
22.5
17,5
15,0
\
12,5
I
2Q 22 24 26
I
2S 39 32 34 36 38 49 42 44 46
As can be seen in the figure, the general trend of G/y in the
1920's was downward. This was basically due to economic growth
over the period. The economy registered an average annual growth
rate of 5,2% in real terms during the 1921-29 period. Meanwhile,
the real average annual growth rate of government expenditure was
2,4%. The differential between the two growth rates explains the
downward trend of G/y in this period.
74
With the start of the ·widespread depression in 1929, and its
prevalence t i l l 1932, the GDP declined more steeply than
government expenditure. In 1932, while the economy was hardly
out of the depression, the government increased its budget by
25,8%;
raising its share of the GDP from 15,4% to 17,0%. This
was the climax of direct. government involvement in economic
resource allocation. For, the economic boom of the post-1933 era
effected remarkable GDP growth rates (7,9% p.a. on average) far
in excess of the rate of increase in government expenditure (4,4%
p.a.) and reduced G/y to 14,6% by 1939.
Generally, therefore, the 'Poor Whites Phenomenon' had little
impact on the (percentage) government share of the economy,
except for the year 1933.
The bulk of PWP's were financed
through 'reallocation method', i.e., some of the votes
(Departmental budgets) were reduced in order to make it possible
to fund the PWP's.
In the Revenue Account, votes such as Police,
Post, and Defence experienced either marginal or no growth in the
1920's.
At the same time, Public Health, Agriculture,
Irrigation, Labour and Child Welfare votes enjoyed substantial
and sustained increases over the period.
Furthermore, in
response to the social condition of the time, certain votes such
as Labour and Union Education were created. (For details of
expenditure allocation, see Appendices I and II).
On the Loan Account, similarly, there occurred substantial
reallocation of resources in this period. Entirely new votes
were introduced such as Forestry, Labour, Relief of Distress, and
Assistance to Farmers. The traditionally major votes in this
Account, e.g., Railways and Harbours, experienced budget cuts
which were at times substantial. (For details of the composition
of Loan Votes, see Appendix III and IV).
More specific fiscal implications of the PWP's can be seen in
the watershed years of 1922/23 and 1932/33. As mentioned above,
the two decisive Commissions in these years resulted in
substantial changes in government's role in and its resource
allocation towards the PWP's. In 1922, Government expenditure on
PWP's increased by 111,7%, mainly via Unemployment and Forestry
Votes. Economic conditions in that year were favourable (7% real
GDP growth) and new expenditure was financed from additional
taxes.
Spending on PWP's reached unprecedented levels in the period
1931-34 and constituted up to 15,8% of the budget (see Table 10).
Given the severe economic depression at the time, these increases
were indeed substantial and were initially financed by inter-vote
substitution. Almost all other votes had to face reduction so as
to make resources available for the PWP's so that the total
Government budget declined by -2,8% and -1,6% in 1931 and 1932
respectively.
In 1933 government budgeting pOlicy underwent a drastic change,
and government's budget increased by 25,8% on an annual basis.
75
Although the economic growth of the period was impressive, the
G/y ratio increased to an all-time high of 17%.
Government
borrowing, also, reached the unprecedented 35,1% of GDP.
Although the bulk of this increase was used for debt service and
redemption purposes, nonetheless, the increase in' the Loan Votes
was substantial, i.e. 44,4% in real terms, amounting to
13m.
Additional resources in the Loan Votes were almost entirely
appropriated to the Departments with the PWP's.
The major
recipients were:
Department
Budget increase in 1933
Agriculture
Labour
Irrigation
Land
Railways
Forestry
306%
50%
49%
42%
28%
18%
However, the bulk of the tremendous increase in expenditure was
financed largely through taxation.
Fig.33 illustrates the pOint
clearly:
Fig.33:
Composition of Government Revenue
1920 - 1938
"
"
100r--------------------------------------,
95
BORROWING
90
;:L /"
'1, ..
..-'
~\ ,G\
~ TAxES
\ . . -_ _ _
'D
\,-""-'"
61~--~~----~--._~~_.~--~~.-~~~~
1929
] n2
1924
1926
1928
1939
1932
1934
1936
1938
Total government taxes registered an annual rise of 48,4% in real
terms in 1933. While the (gold) mining taxes rose by 21,5%, it
was the income tax which bore the brunt of tax increases.
In
1932, income tax amounted to 6,lm, constituting 21,4% of total
taxes.
In the following year, income tax collected by the
government rose to
9,6m, representing 22,7% of total taxes. In
76
other words government revenue from income tax increased by 57,4%
on an annual basis.
It was this that financed the -initial
launching of the comprehensive PWP's of 1932/33.
In the post-1933 era, economic growth was impressive and its
resultant tax revenue enabled the Government to maintain its high
level of expenditure even while its percentage share in the
economy declined to a low of 13,5% by 1936. Moreover, by the
mid-1930's, government indirect involvement in the form of
statutory measures to help the whites in general, and the poor
whites specifically, was well implemented and reduced the need
for direct involvement in the form of fiscal resource allocation.
4.
THE MONETARY IMPLICATIONS
For as long as South Africa remained on the Gold Standard,
i.e.
until December 1932, government expenditure of any sort could not
have any noticeable impact on the monetary variables.
We have already noted that in the wake of the 1932 Unemployment
Commission, the Government embarked upon an unprecedented
increase in its expenditure on PWP's, resulting in an overall
budget increase of 29,3% in real terms, in 1933. While the bulk
of this expenditure was financed by additional taxation, its
implications for money supply were also enormous. Further, an
important consequence of South Africa's departure from the Gold
Standard was the removal of constraints on the ability of the
Government to monetize its expenditure. On a year to year basis,
the money supply increased by 52,7% in 1933. This consisted of a
30,2% increase in 'notes' and 67,3% rise in demand deposits. In
the wake of these colossal increases in the various components of
the money supply in 1933,- the velocity of money declined sharply
despite impressive economic growth.
(See Figure 29).
Rapid
money creation continued in 1934. Notes and Demand DepOSits had
a further increase of 15,1% and 23,9% respectively. The total
money supply, consequently, registered an annual growth of 20,5%
in 1934. The rate of economic growth was 11% per annum, thus
causing a further decline in the veloCity of money circulation.
With the prolonged economic prosperity of the second half of the
1930's, and less rapid money supply growth, the veloCity
stabilized accordingly. In retrospect, therefore, it was only
during 1933 and 1934 that the Government resorted to substantial
money creation to finance its outlays.
What remains
indeterminate, however, is whether or not this was influenced by
expenditure on the PWP's or would it have happened in any case?
In the wake of the depreciation of the currency and the inflow of
capital in anticipation of an economic boom, increase in money
supply might have been inevitable.
.
While it would be naive to reject the influence of other factors,
the unprecedently high level of Government expenditure should
account for a major proportion of the incredible growth of money
supply from 36,9m in 1932 to 76,7m in 1934; i.e. an overall
77
growth of 107,9%, or, annual compound growth rate of 44,2%. In
this respect, the alleviation of whites' poverty appears to have
entailed some monetary implications.
CONCLUSION
In the light of the analysis of South Africa's socio-economic
condi tion in the 1 ater 19th and ear 1 y 20th century, it has been
established that the poor white problem stemmed from changing
economic structure and exacerbated by a belated recognition, by
the State, of its prevalence amongst the population.
In this paper, it has further been demonstrated that the
functioning of the labour market at the time was not favourable
to the. poor whites.
Concurrent with a dynamic process of
adj ustment to economic and socio-ecological changes, a
combination of market imperfections, in the form of minimum wage
legislation, attitude towards manual work and racial biases of
the employers resulted in the prevalence of unemployment amongst
the poor whites.
This however did not effect any sustained
decline in market wages, although there is evidence of some
limited degree of wage flexibility in the 1910's.
In spite of the impressive economic growth of the 1920's, i.e. an
average of 5,2% per annum, the number of poor whites continued to
grow.
Even the discriminatory statutory measures, intended
specifically to benefit the whites, were of no immediate help;
although they became fundamental for sustaining white socioeconomic hegemony in subsequent decades.
In our view, a gigantic and well orchestrated public works
programme, initiated in the 1920's and matured by the early
1930's, set in motion a process which succeeded in eradicating
white poverty.
The functioning of this process was greatly
facilitated by the sustained economic growth of the post-1933
period.
To illustrate the operation of this process, we have not only
described the modus operandi of constituting proj ects, but al so
have suggested a stock-flow model of the poor white phenomenon.
In so doing we have challenged the conventional view of regarding
the poor whites as a rigid social category. The stock-flow model
has further helped pronounce the instrumental i ty of government
intervention in the alleviation of the plight of the poor. It
has been evidenced that the transformation process resulted
mainly from State employment.
Certainly relatively fewer
unskilled whites benefitted from the legal displacement of blacks
in private industry.
78
The increase in government employment, however, has been shown to
have been of transitory nature.
In other words, the introduction
of the various public works projects resulted in an once-and-forall rise in the trend of government employment. This trend began
to decline towards the beginning of the 1940's, as less and less
poor whites were available to man the various government
ventures.
Insofar as the funding of these projects is concerned, i t has
been documented that a combination of tax increases, borrowing,
and inter-departmental reallocation was used to finance the
undertaking. -At its climax in 1932, the evidence suggests, the
government allocated as high a proportion as 15% of the budget to
the anti-poverty schemes.
While combatting poverty and creating employment, the State
provided many positive economic externalities.
Many of the
employment schemes contributed significantly to the
infrastructure of the country, e.g. forestry settlements,
irrigation works, road and rail construction.
In retrospect,
thus, the state's involvement in the poor white saga could well
be viewed as a public wprks programme which achieved a remarkable
measure of success.
79
BIBLIOGRAPHY
The Poor White Problem in South Africa, Report of The Carnegie
Commission, vols.I-V, 1932, Stellenbosch, South Africa.
Abedian, I., and Standish, B. (1985)
the State, SAJE, 53(2), pp.14l-l64.
Poor Whites and the Role of
Davenport, T.R.H. (1977)
MacMillan: Johannesburg.
Davies, R.H. (1977)
C~ital, The State and White Earners
An
historical materialist anal~s:-of-ClasS-fOrmatIOn-linCl-c!ass
relations in South Africa 1900-1960. PhD. thesis, University of
Sussex.
Frankel, H.S. (1933)
Notes on the 'Cost of Living Commission',
SAJE, Vol.l, PP.109-ll2.
Giliomee, Herman (1979)
'The Growth of Afrikaner Identity' in
The Rise and Crisis of Afrikaner Power, H. Adam and H. Giliomee
(eds). Cape Town: David Philip.
Horwitz, R.
(1967)
York: praeger.
The Political Economy of South Africa,
New
Hutt, W.H.
(1933)
Economic Aspects of the Report of the Poor
White Commission, SAJE, Vol.l, pp.28l-290.
Katzen, L.
Town.
(1964)
Go!2~nd-.:!:.he~outh
African Economy, Cape
Kenney, H.
(1980)
Architect of Apartheid H. F. Verwoerd
An Appraisal. Johannesburg: Jonathan Ball.
Le Roux, P. (1984)
248, SALDRU, .C.T.
~o0E-Whites,
Carnegie Conference Paper No.
(1978) 'The Poor Whites Problem -- an economist's
perspective', Social Worker, March & June, pp.8-20 & pp.64-74.
MacMillan, W.M. (1919) 1!!~~Qut~~fr!£~~g!:~ri~~!:Q.2!em.
Central News Agency, Witwatersrand.
Moodie, T.D.
(1974)
Universi ty of California
The Rise
of Afrikanerdom.
Pres~----------
Berkely:
Morris, M. and Kaplan, P.
(1976)
~~.20uE-Po!!£Y~~~Stat~
Corporation: A case study of the South African Iron & Steel
~Q!:2Q!:~!!Q!!.
S.A. Labour Bulletin, Vo1.2, No.6, Jan. (Part 1 L
Vol.2, No.8, April (Part 2).
Nattrass, J.
change, OUP:
(1981)
The South African Economy:
Cape Town.
80
its growth and
O'Meara, D.
(1978)
'Puritans in Africa:
Story of
Afrikanerdom' , Journal of Southern African Studies, Vol.4, no.2.
Robertson, H.M.
(1934)
150 years of contact between black and
white, SAJE, Vol.2(4) and 3(1).
Sadie, J.L.
(1975)
'Die Ekonomiese Faktor in die Afrikanergemeenskap' in H. v.d. Merwe (ed~), .!dentitei~en_~eranderi!l9:.
Cape Town: Tafelberg.
Standish, B. (1984)
thesis, U.C.T.
Van Eck, H.J.
(1951)
~2~~_~~£~£!~_2!_!~~_Sout~Africa~
Industrial Revolution, Hoernle Memorial Lecture.
Johannesburg:
SAIRR.
Welsh, David
(1974)
!~~_~2.!.:!:.!:!:.£~.!.~cono!!!y-.QLAfrikaneE
Nationalism in South Africa: Economic Growth and Political Change.
Adrian Leftwich (ed.). London: All·ison & Busby.
Wilson, F.
1911/1969.
(1972)
Labour in the South African Gold Mines
CUP, Cambridge.
Wilson, F. and Perrot, D.
(1972)
South Africa 1870-1970. Lovedale:
Outlook on a century:
Spro-Cas.
Innumerable government publications were consul ted.
relevant ones abbreviated in the text are:
The more
ARBR: Annual Report of the Board of the Railways and Harbours.
ARDMI: Annual Report of the Department of Mines and Industries.
ARDF: Annual Report of the Department of Forestry.
ARDL: Annual Report of the Department of Labour.
ARDD: Annual Report of the Department of Defence.
OYBSA: Official Year Book of the Union of South Africa.
TCMAC: Transvaal Chamber of Mines Annual Report.
ARGMR: Annual Report of the General Manager of the Railways.
Of the numerous commission reports used in the
following are the most important:
stUdy,
Report of the Economic and Wage Commission (1925).
Report of the Unemployment Com~ission (1922).
Report of the Unemployment Commission (1932).
The Relief and Grants-in-Aid Commission (1916).
The Low Grade Mines Commission (1920).
81
the
j --
--..-.---
•
APPENDIX I
ALLOCATION OF EXPENDITURE ON LOAN ACCOUNTS 1920 -1946
REAL TERMS (
1938
=
100 );(S.A.
Pound)
---------------------------------------------------------------------------------------------
YEAR
RAIWAY&
HARBOUR
PUBLIC TELEPH&
WORKS
TEL'GRAM
AGRICULTURE
LANDS
IRRIGAT ION
LOCAL
WORKS
LAND
BANK
FORESTRY
LABOUR
OISTRES
RELEIF
ASSIST.
FARMERS
SOCIAL
WELFARE
TOTAL
-----------------------------------------------------------------------------------------------------------------------------19204096178
1921
4540762
1922
2982634
1923
4956943
1924
4984548
1925
5759545
1926
5765021
1927
4633729
1928
5460307
1929
4116298
1930
3396461
1931
1828951
1932
719703
1933
918209
1934
847969
1935
647795
1936
1468708
1937
3626943
1938
6239777
1939
4872158
1940
3339063
1941
2726576
1942
1268969
1943
3529697
1944
4535148
1945
5008831
1'146
9847088
595171
485085
429040
393644
369154
478793
501026
387770
518486
472317
593719
627895
492954
450907
750835
1190313
1733261
1542595
1578771
1264415
18295"~
839947
497876
353759
789507
1049357
2801787
336679
361361
437092
495610
624796
564216
450974
413264
410517
487406
620491
545586
411025
441708
732947
916412
1134777
1242026
1243532
1420621
922274
874784
966310
938753
853631
1646162
2156331
20757
0
17878
15343
25359
16601
36858
4758
4149
70812
21513
101746
412691
743123
233848
200315
692868
262905
221338
261890
51875
453154
190000
98763
99459
190214
622416
314186
214251
275981
394035
582131
703327
623981
621951
741451
798741
547375
261163
369770
600247
716348
772332
1508047
1531204
1261250
714668
575011
557'125
558264
462135
598485
848371
480369
761199
1039965
848483
614838
222483
150828
133900
131014
239752
217646
276803
385824
576497
1149249
1392918
1665120
1832846
1358376
1300036
640593
198345
112936
316975
634235
721536
853484
2053044
1462645
1012582
1263689
1417137
1117752
1666311
IB04498
1875994
2241751
2333417
2039290
1343207
1541442
1650555
1690195
1738250
2964728
5153638
6132353
4515809
3712134
1711444
162894'1
2156731
3285300
8011970
----------------------------------------------------------------
SOURCE :
AUDITOR GENERAL ANNUAL REPORT 1920 -
1947
171468
378788
454133
777154
646353
787766
994490
615529
467727
656660
1825168
1142715
521921
412691
4659157
212766
530223
1036269
750000
1001001
193424
0
0
0
0
74460
31042
38170
210381
189635
179190
166244
18104~
177189
247324
264712
274265
357030
322914
381329
355787
319767
292959
591743
308760
365680
365343
396769
530469
626091
733750
852017
1063147
0
0
0
67638
53397
45462
116811
202503
234340
324148
784470
1190093
440191
39949
546943
488901
209996
176249
108110
32524
80122
7590
3726
1235
875
317151
39830
0
26196
372219
81173
4945
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
254
2315366
1808835
75165
0
4163485
4302975
3104245
1540459
756805
535537
182275
93463
40920
35465
26716
19551
0
0
0
0
0
0
0
0
0
0
0
0
0
0
151947
96293
0
0
0
0
0
0
0
8979791
8516240
7082856
9941203
10461680
11407890
12154350
10525100
10461600
9806757
10389850
10072570
8992145
12963170
12463060
13130240
15446550
19708940
22646440
20719530
53396080
49704240
55953080
52020060
51183600
45744750
32845840
i&:l
---~~~~~~~~~~~~~~~~~~~~~----------
----
APPENDIX II
PERCENTAGE ALLOCATION OF GOVERNMENT EXPENDITURE ;LOAN ACCOUNT 1920-4b
---------------------------------------------------------------------------------=------------------------------------------------RAILWAY&
PUBLIC
TELPH&
AGRIIRRILOCAL
LAND
FORESDISTRES FARMERS
SOCIAL
YEAR
HARBOUR
WORHS
TEL'GR
CULTUR
LANDS
GATION
WORKS
BANK
TRY
LABOUR
RELEIF
ASSIS
WELFARE
TOTAL
----------------------------------------------------------------------------------------------------------------------------------1920
45.b
b.b
3.7
0.2
b.9
5.3
22.9
1.9
0.3
0.0
0.0
0.0
0.0
100
1921
1922
'1923
1924
1925
192b
1927
1'128
1929
1'130
1931
1932
1933
1934
1935
193b
1937
193B
1'139
1'140
1941
1942
1943
1944
1945
194b
53.3
42.1
49.9
47.b
50.5
47.4
44.0
52.2
42.0
32.7
18.2
'8.0
7.1
b.8
4.9
9.5
18.4
5.7
b.1
4.0
3.5
4.2
4.1
3.7
5.0
4.8
5.7
b.2
5.5
3.5
b.O
9.1
11.2
7.8
27.b
7.0
23.5
b.3
5.5
2.3
b;e
B.9
10.9
30.0
bol
3.4
1.7
0.'1
0.7
1.5
2.3
e.5
4.2
b.2
5.0
b.O
4.9
3.7
3.9
3.'1
5.0
b.O
5.4
4.b
3.4
5.9
7.0
7.3
b.3
5.5
b.9
1.7
1.8
1.7
1.B
1.7
3.b
b.b
0.0
0.0'
0.2
001
0.2
0.1
0.4
.0
.0
0.7
0.2
1.1
3.2
b.O
l.a
1.3
3.5
1.2
1.1
0.5
0.1
O.B
0.4"
0.2
0.2
O.b
3.7
3.0
2.8
3.B
501
5.B
5.'1
5.'1
7.b
7.7
5.4
2.'1
2.9
4.a
5.5
5.0
7.7
b.B
bol
1.3
1.2
1.0
1.1
0.9
1.3
2.b
a.9
14.7
8.5
5.9
2.0
1.2
1.3
1.3
2.4.
201
2.7
4.3
4.4
'1.2
10.b
10.8
'1.3
1..0
b.3
,1.2
O.4t
0.2
0.6
1.2
1.6
2.b
17.2
14.3
12.7
13.5
9.B
13.7
1701
17.'1
22.9
'22.5
20.2
14.'1
11.'1
13.2
12.9
11.3
15.0
22.e
29.b
B.5
7.5
3.1
301
4.2
7.2
24.4
4.4
b.4
7.8
b.2
b.9
B.2
5.8
4.5
b.7
17.b
11.3
5.B
3.2
37.4
1.b
3.4
5.3
3.3
4.a
0.4
0.0
0.0
0.0
0.0
0.0
0.2
0.4
3.0
1.9
1.7
1.5
1.5
1.7
2.4
2.7
2.b
3.5
3.b
2.9
2.9
2.4
1.9
3.0
1.4
I.B
0.7
0.8
0.9
1.2
1.4
1.'1
3.2
0.0
0.0
0.0
0.0
O.b
0.4
0.4
1.1
2.1
2.3
3.2
a.7
9.2
3.5
0.3
3.5
2.5
0.9
0.'1
0.2
0.1
0.1
.0
.0
.0
.0
0.0
0.0
0.0
3.3
0.4
0.0
0.3
3.8
0.9
.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0,
0.0
0.0
0.0
0.0
0.0
0.0
0.0
.0
23.0
20.1
O.b
0.0
31.7
27.9
15.8
b.a
3.7
1.0
0.4
0.2
0.1
0.1
0.1
0.1
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.7
0.5
0.0
0.0
0.,0
0.0
'0.0
0.0
0.0
,100
100
100
'100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
----------------------------------------------------------------------------------------------------------------------------------SOURCE
ANNUAL REPORT OF AUDITOR GEKERAL 1920-1947
1M
1
CO
APPENDIX III
COMPOST 10K OF GOVERNMENT ORDINARY REAL EXPENDITURE 19iO
VEAR
1920
1921
1922
1923
1924
1925
192b
1927
1928
1929
1930
1931
1'132
1'133
1934
1935
193&
1937
1938
P~39
1940
l'l~ 1
1942
1943
1944
1945
1946
·'::OURCE
PUBLIC
HEALTH
'bB
20B
224
22B
353
351
377
3"
40b
41'
4.2
43'
3B5
'3B
501
552
582
b'7
7b'
771
87'
851
8.7
B71
1040
1139
1479
ANNUAL
DEFEHCE
BbB
1003
B22
B75
B. .
B95
5bO
95B
n.
957
825
753
753
1009
1179
1294
1 b12
18B2
1786
2995
PUBLIC
OESr
PUBLIC
ROADS
2324
5018
3080
2223
231&
5aqq
7b80
3556
2372
2359
2353
3701
3&91
4019
4171
4862
4639
POLICE
2432
2430
2429
2397
2398
2350
2371
1481
2571
4553
4B14
4559
3876
6299
6133
-
1 q4b (
PUBLIC
WORKS
3797
4044
4102
4924
5197
5123
5147
5250
5487
5767
b002
6247
6262
6773
6855
o'HO
....
53'
"2'
72 ..
b.7
715
765
Bb3
'2'
1016
1032
B2B
.,94
BBB
1060
1148
?-!::?~
5931
5Q08
5542
5511
5744
6035
6563
6743
6189
1356
1458
1490
1320
1329
1264
2&59
7623
5912
1307
2988
8222
8773
8997
5759
1436
1558
1864
2&BO
2705
2664
2824
3053
19S26
2804
26593
36990
42169
39821
32761
13682
2&82
3157
41&4
6844
7134
6981
6728
9931
11242
REf-·')Rl" OF THE AUDITOR GENERAL
(VARIOUS
1269
ISSUES>
193B
POST ..
TEL&TlG
2039
2318
2530
2561
2462
2584
2736
2790
2a9S
3031
3077
3083
2942
3108
3198
3581
3729
4044
100)
(
S. A.
AGRICULTURE
523
5Bb
b55
.45
1066
.43
73b
72'
78<
470
72'
771
".7
•• B
2298
Pound
FORESTRY
"8
155
13B
14b
'"
150
15B
390.9
172
17.
173
lBO
175
,.8
.30
1026
1106
215
220
22B
2<'
259
2Bl
273
27b
2b2
291
12B6
332
4881
1510
5217
1643
3<7
374
4192
4318
4173
4103
4056
4178
4427
1369
1764
1889
1508
1418
1129
'000)
IRRIGATION
12B
151
119
113
127
151
172
17b
lB2
202
21B
207
lBl
217
220
233
2.b
275
321
32B
2B.
25B
2'<
2b'
275
313
<••
UKEMPLY
MENT
LABOUR
RELEIF' CHILD
DISTRES WELFARE
o
<3
3B3
o
o
o
...
o
o
o
31B
2bl
237
2.,
229
1156
lB5
139
·211
264
b21
1012
.,.
555
'b5
'34
'0'
"b
«.
<B.
b37
72B
707
,.
o
..
b3
o
o
o
..
U.EDUCATION
270
.30
150
15q
lB'
..2
207
213
221
241
232
207
223
25B
3B'
.22
<..
lB3
191
IB7
lB3
191
20B
SOB
5n
bOO
73B
B02
B2<
792
7<B
Bll
'0'
'bl
1031
1132
I1B1
TOTAL
20628
227<;'6
25643
22497
22648
2434£
25740
26477
26819
28141
28769
28003
28472
35505
37520
38851
39498·
40709
41927
1210
44678
120B
61297·
1169
1112
68338
79308
87821
89152
2..
1121
1179
305
317
1665
99214
2292
96897
"'"
00
APPENDIX IV
PERCENTAGE COMPOSITION OF GOVERNMENT ORDINARY EXPENDITURE 1920-1946
----------PUBLIC---------------------puaLIc---PUBLIC---puBLic~-poST-.---;:GRI:----FORES:----IRRi:--uNEMPLy-----------RELIEF-o--CHILO---U:EDU:--------YEAR
HEALTH
DEFENCE
POLICE
DEBT
ROADS
WORKS
TELI-T1.0
CULTURE
TRY
GATION
MENT
LABOUR
DISTRES WELFARE
CATION
TOTAL
--lq20------0:8------;~2-----11:3-----2;=3-----i'4:;;------2:b----;;::;------i;;------o:;-----O:b------o:C;------0:0------0:2-----.:3------0:0------100-
tc?21
1922
1923
1924
1925
19260
1927
1928
1929
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946
SOURCE:
0.9
0.9
1.0
1.60
1.4
1.5
1.5
1.5
1.5
1.5
1.6
1.4
1.2
1.3
1.4
1.5
1.60
1.8
1.7
1.4
1.2
1.1
1.0
1.2
1.1
1.5
4.4
3.2
3.9
3.9
3.7
2.2
3.6
3.5
3.4
2.9
2.7
2.6
2.8
3.1
3.3
4.1
4.6
4.3
60.7
32.3
38.9
46.60
48.0
44.?
33.0
14.1
9.8
9.0
10.5
10.4
9.7
9.4
9.2
9.1
8.3
8.4
8.3
4.2
6;,.9
6.9
6.8
6.5
1:,.7
6.8
4.6
25.9
30.0
16.5
160.3
160.5
160.2
18.4
17.3
16.2
16.7
16.3
13.60
17.7
160.3
15.3
15.0
13.6
13.1
12.9
9.8
15.6
14.8
18.0
19.1
20.2
20.2
19.3
19.2
18.7
19.1
3.9
3.3
9.6
B.::;
9.8
7.9
3.0
3.2
8.7
9.2
6.7
e.s
3.2
B.B
4.3
9.3
20.6
21.1
17.6
16.7
17.4
17.4
17.0
16.3
16.0
11.4
6.5
10.0
11.6
AHHUAL REPORT OF' AUDITOR GEHERAL 1Q20 -
----.:~"":""'
2.7
2.7
3.2
3.1
2.9
3.0
3.3
3.4
3.6
3.6
3.0
2.9
2.5
2.8
3.0
3.2
3.3
3.5
3.3
2.2
1.9
1.6
1.5
1.6
1.6
1.9
1947
'".j-,,--e:lL:.
~~-.:._
10.2
9.9
11.4
10.9
10.6
10.6
10.5
10.8
10.8
10.7
2.6
2.6
4.2
4.7
3.9
2.9
2.8
2.9
1.7
11.0
2:.8
2.4
2.7
60.1
3.5
10.3
8.8
8.5
9.2
9.4
9.9
10.0
9.7
6.8
6.0
5.1
4.8
5.0
4.9
5.4
2.5
4.5
4.6
3.6
3.2
1.8
1.4
1.3
1.3
1.4
1.5
1.7
0.7
0.5
0.0
0.7
0.6
0.60
14.8
0.0
0.6
0.6
0.6
0.6
0.6
0.6
0.6
0.6
0.6
0.60
0.6
0.4
0.4
0.3
0.3
0.4
0.4
0.4
0.7
o.s
0.5
0.60
0.6
0.7
0.7
0.7
0.7
0.8
0.7
0.6
0.6
0.6
0.6
0.6
0.7
0.8
0.0
1.5
0.9
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.7
0.0
0.0
0.5
0.4
0.3
0.3
0.3
0.0
0.0
0.0
0.0
0.0
0.3
0.0
0.5
0.0
0.0
0.0
0.0
1.4
1.1
0.9
1.0
0 .. 9
4.1
0.6
O~O
0.0
0.0
0.0
0.1
0.0
0.0
0.2
0.3
0.0
0.5
0.7
0.7
1.7
2.6
1.1
1.4
1.1
0.0
1.0
0.0
0.7
0.6
0.0
0.0
0.0
0.0
0 .. 0
0.0
0.0
0.6
0.6
0.7
a.?
o.?
0.0
0.4
o.S
0.7
0.7
0.8
0.7
0.8
0.8
0.8
0.8
0.8
0.7
0.0
0.0
0.0
0.0
2.1
2.3
2.6
2.8
2.9
2.9
2.9
2.6
0.0
0.6
2.3
0.0
0.0
0.0
0.0
0.0
0.7
1.0
1.1
1.2
0.4
0.4
0.3
0.3
0.2
0.2
0.3
0.3
0.3
2.4
2.5
2.60
2.8
2.8
2.7
2.0
1.7
1.4
1.3
1.3
1.7
2.4
100
100
100
100
100
100
100
100
100
100
100
100
10·0
100
100
100
100
100
100
100
100
100
100
100
100
100
U')
00