appears
probable that in this area ten or eleven large gold-mines will be
established, and in no less than eight of these mines our company will
be very substantially interested, while we will also have some small
interests in the others.
This sensational 'strike' touched off an equally sensational 'boom'81 in
Free State mining shares on the Johannesburg and London Stock Exchanges
and in land values in Odendaalsrus itself, then a sleepy township with
a European population of just over 300 souls, 23 miles from the nearest
railway. 'Sandy tracks serve as roads. In the middle of the village the
market square, a piece of grass-covered veld, is lined with trees and
has only one building upon it. This is the municipal office, no larger
than a single office in a large Johannesburg mining house.'82
To
'capitalize' the future at an over-optimistic rate is the
characteristic of all booms; they are invariably followed by a violent
reaction, and the boom of 1946 was to prove no exception to the rule.
Apart from the very real problems which the opening up of a new field
necessarily involved—financial, technical and social—the opening up of
the Free State field coincided with the period of world-wide inflation
that marked the post-war years. South African wholesale prices (base
1953 = 100) stood at 67 in 1948: retail prices rose (in South Africa)
in the same period, 1948-53, from 77 to 100. Working costs per ton for
the Witwatersrand and extensions gold-mines were -£1 55. yd. in 1946 and had risen to -£1 75. od. in 1949; working profits per ton were 9s. 3d. in 1946 and had fallen to 8s. 7d. in
1948. It was the devaluation of sterling, and of the South African
pound, in 1949 which came to the salvation of the mining industry;
costs continued to rise, but the working profits per ton rose still
faster—they were 11s. 11d. per ton in 1949 and 175. \d. per ton in 1950. This was the year in which five companies started working in the Orange Free State.
Nevertheless,
it must be remembered that, whether on a long view the 1946 'boom',
with the possibly over-optimistic anticipations entertained of the
prospects of the Free State, was a disadvantage to the inining industry
or not, it certainly, in the short run, enabled the
81 'All
the achievements of Aladdin's lamp pale beside the £20 million boom in
Orange Free State mining exploration shares which the speculating
public has built up in a fortnight on the basis of iSs. worth of gold from a comparatively isolated 1J inch borehole core' —London "Economist, 27/4/1946, p.
679. The collapse of share'values in the latter part of 1946 was
influenced by an ill-advised statement by the chairman of Commercial
Exchange of South Africa to the effect that 'if the upward trend in
taxation, costs and wages is allowed to go on without a commensurate
increase in gold output, the Free State mines might never be opened'—Economist, 2/11/46, p. 723.
82 From a very graphic article in the London Times, issue of 13 May 1946.
