SA experiences a monetary crisis due to the heavy drain of gold from the country during the Great Depression

The Great Depression had a profound effect on economies around the world and South Africa was no exception. South Africa's greatest exports at the time were in the agricultural and mineral sectors, but as world trade was at an all-time low, the demand for products from these sectors was reduced dramatically. The agricultural sector was hit especially hard, as the lack of demand destroyed prices on commodities that were profitable to many farmers. This prevented them from paying the mortgage on their farms and limited their amount of production. Although part of the mineral sector was badly affected, it was the gold mining industry that managed to save South Africa's economy from complete collapse. As gold was a safe investment during this period of economic crisis, international investors bought up large quantities. The price of gold rose dramatically, which compensated for the loss of trade in other sectors such as agriculture. At first, this seemed beneficial to South Africa but it had a reverse effect due the fact that South Africa's monetary system was backed by gold, known as the gold standard. Britain's departure from the gold standard devalued the British pound, but South Africa's refusal to do the same while large amount of gold left the country resulted in higher prices for local goods. South Africans therefore sent their money to Britain for investment and started buying up British goods as they were cheaper then locally produced goods. This led to an even greater crisis as the lack of demand forced local industries to end production. By 23 December 1932, South Africa was on the brink of economic collapse. Four days later, the decision to go off the gold standard saved South Africa's economy and aided in the eventual recovery from the Great Depression.