Abstract: South African Trust Companies and Boards of Executors and the Bank Act, 1942: From Self-Regulating "Financial Aristocrats" to Statutorily Controlled Deposit-Receiving Institutions

Anton Ehlers

Abstract

The focus of this article is on describing and explaining the nature and extent of the resistance of South African trust companies and boards of executors to the imposition of the statutory monetary controls of the Bank Act of 1942, and the dynamics generated during the administrative implementation of the stipulations of the Act. For comparative purposes, brief reference will also be made to examples of the development of trust companies in the broader English colonial world. A brief overview of the longer-term development of trust companies under the impact of statutory control in the South African financial services sector will conclude the article. As the aristocracy of financial institutions in South Africa, trust companies prided themselves on a reputation of service based on years of experience, integrity, trustworthiness, and continuity, which they built up over the years in the absence of a statutory supervisor and with only limited capital. The self-image and pride of these institutions was deeply rooted in this historically acquired reputation. They experienced the Bank Act and its application by the Registrar of Banks as a questioning, a doubting, of their reputation that insulted their honor and wounded their self-confidence; this explained their severe reaction.