IDEAS home Printed from https://ideas.repec.org/p/rza/wpaper/511.html
   My bibliography  Save this paper

The Cape of Perfect Storms: Colonial Africa’s first financial crash, 1788-1793

Author

Listed:
  • Roy Havemann and Johan Fourie

Abstract

This paper investigates the causes and consequences of colonial Africa’s first financial crash, which happened in South Africa’s Dutch Cape Colony. The 1788–1793 crisis followed a common sequence of events: trade and fiscal deficits were monetized by printing money, credit extension accelerated, the exchange rate fell sharply and inflation spiked. The domestic conditions were compounded by a deterioration of international conditions and political uncertainty. The final straw was the collapse of the Cape’s own Lehman Brothers – an unregulated merchant house, run by a prominent Cape family, which had been indiscriminately issuing the equivalent of promissory notes. The policy response during the crisis included fiscal austerity, an attempted reorganization of domestic financial intermediation and continued monetary easing, which depreciated the exchange rate and triggered inflation. A new domestic bank was created. Yet the Cape economy would not recover quickly; the effects of the Cape’s first financial crash would be felt deep into the nineteenth century.

Suggested Citation

  • Roy Havemann and Johan Fourie, 2015. "The Cape of Perfect Storms: Colonial Africa’s first financial crash, 1788-1793," Working Papers 511, Economic Research Southern Africa.
  • Handle: RePEc:rza:wpaper:511
    as

    Download full text from publisher

    File URL: https://www.econrsa.org/node/1051
    Download Restriction: no
    ---><---

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. South Africa’s first financial crisis
      by Johan Fourie in Johan Fourie's Blog on 2015-06-02 00:33:56

    More about this item

    Keywords

    financial crisis; Eighteenth century; institutions; banking; Africa;
    All these keywords.

    JEL classification:

    • N27 - Economic History - - Financial Markets and Institutions - - - Africa; Oceania
    • N17 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Africa; Oceania
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rza:wpaper:511. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/ersacza.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dane Rossenrode (email available below). General contact details of provider: https://edirc.repec.org/data/ersacza.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.