Review

Reviewed Work(s): Money and Banking in British Colonial Africa: A Study of the
Monetary and Banking Systems of Eight British African Territories by T. Newlyn and
C. Rowan
Review by: Ida Greaves
Source: The American Economic Review , Mar., 1956, Vol. 46, No. 1 (Mar., 1956), pp. 202-
203
Published by: American Economic Association

Stable URL: https://www.jstor.org/stable/1816526

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202 TILE AMERICAN ECONOMIC REVIEW

Money and Banking in British Colonial Africa-A Study of the Monetary

and Bankinig Systems of Eight British African Territories. By W. T.
NEWLYN and D. C. ROWAN. (New York: Oxford University Press. Ox-
ford: Clarendon Press. 1955. Pp. xiv, 301. $4.80.)
This is a substantial addition to the scanty literature hitherto available on
the subiect of money and banking in colonial territories, and a useful contri-
bution to the current discussion of the economic position of "underdeveloped"
countries. The book is the outcome of two separate research projects in differ-
ent regions of Africa carried out by the authors a few years ago, and they say
their "study falls into three parts. The first of these is concerned with descrip-
tion; the second with analysis; and the third with prescription." Politically
and economically the territories are dependent upon the United Kingdom.
External trade is of great importance in their economies and they obtain al-
most all their capital from abroad, chiefly the United Kingdom. The internal
economic and political conditions in the several territories, however, are by
no means identical, and as they are under separate governments, information
about them has to be sought from several scattered sources. It is a consider-
able addition to the available economic information about the colonies that
the commercial banking statistics, which until 1951 were kept under a cloak
of official secrecy, are now published, but economic statistics for these terri-
tories are in general scanty and sometimes dubious. It is not strange, there-
fore, that differences occur in the treatment of various territories. Tanganyika
is scarcely mentioned outside of the official statistics in Chapter 1, and dis-
cussion of \Vest Africa is based almost entirely on Nigeria. The Gold Coast is
included by infelence, but Sierra Leone and the Gambia are excluded from
the authors' eight territories.
Chapter 1 provides a comprehensive digest of the population and external
trade of the several territories, and it is regrettable that a map has not been
included in the book for the benefit of readers who are not familiar with the
geogr aphy of Africa. The authors say that they do not deal with the historical
background of the present monetary position, but fortunately this does not
prevent their including an excellent chapter on the origins of the West Africa
Currency Board. Not only did this Board solve the immediate problems of
West Africa, which were to obtain for the colonial governments the seignorage
on the large volume of token coinage required by the trading characteristics
of the regrion, and to provide a currency which would not decline in value
through becoming redundant on the coast, it also provided a model which was
steadily extended to most other colonial territories. There is no other mone-
tary authority in a colony, and hence government monetary policy does not
extend beyond the narrow prescribed operations of the Currency Board. The
supply of money and credit, therefore, depends upon the policy of the com-
mercial banks, and the book offers a careful suirvey of the bank-s of this typ
found in these territories. The dominant position in colonial banking is held
by banks with London head offices and widespread overseas branches, most
of which antedate the present currency system. The authors call them "expa-
triate banks," but readers who take "expatriate" at its dictionary meaning

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 BOOK REVIEWS 203

should not be misled into thinking t

or otherwise deserted their roots an
not only pioneered the monetary economy in most parts of Africa, they have
also survived, without crises or loss to depositors, the suspicions, rumors and
runs in which Africa is fertile, and fluctuations of war and prices. Indeed, it
is because the authors regard "expatriate banking [as] essentially the exten-
sion of British banking into a colonial setting," that they criticize it for not
promoting economic development among Africans who cannot offer orthodox
security for loans, and whose record in their own business and banking is
described, with moderation, as one of "fraud and mismanagement." The rem-
edy prescribed is government action to provide medium- and long-term credit
for Africans, develop domnestic capital markets, and support indigenous banks.
The authors disagree with the two Bank of England advisers who recently
reported against the immediate establishment of central banks in the Gold
Coast and Nigeria, and thus remain consistent in their attitu-ide to official
policy. Starting with some caustic comments on the Treasury attitude that
led to the Currency Board, they deplore the official obtuseness or lethargy
which made currency commissions an unnecessary burden to the bankincg
public, maintained the 100 per cent reserves longer than their real purpose
justified, failed to maintain the convertibility of coins and notes in some
regions, invested savings bank funds in London when capital was needed in
the colonies, prevented the Development Boards taking the steps development
in Africa requires, and made the new Uganda Credit and Savings Bank an
empty tiLle. It seems that if a new monetary authority is to be an improve-
ment on official tradition, it must be new in more than naine.
IDA GREAVES
New York, N.Y.

Business Finance; Investments and Security Markets; Insurance

Financing Business Firnis. By CHARLES L. PRATIFER. (Hrlomewood, Ill.:
Richard D. Irwin Inc. 1955. Pp. xii, 569. $6.00.)
This book will be welcomed by those teachers of corporation finance w'ho
have become dissatisfied with the investment-oriented treatment given this
subject by most of the older texts, but who are as yet unwilling to go all out
in their acceptance of the newer administrative or managerial approach. Pro-
fessor Prather has attempted a compromise between these widely different
treatments and has been successful in integrating many of the more im-
portant features of each. Although the title to some might suggest a broader
coverage, the book deals with the materials ordinarily taught in modern
introductory corporation finance courses, which typically consider the finan-
cial problems of unincorporated as well as corporate enterprises.
After the usual introductory chapters dealing with the subject nmatter of
finance the legal forms of business organization, and the control of corpora-
tions, the text takes a more modern turn in presenting chapters on the prob-
lems of promotion, interpretation of financial statements, and financial plan-

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