All other issues and developments in the Union of South Africa during 1940 were overshadowed by the course of the great political struggle between General Jan Christiaan Smuts, the Prime Minister, and the cohorts of the Nationalist opposition under Dr. D. F. Malan, working in cooperation with the followers of General J. B. M. Hertzog. In September 1939 General Hertzog had opposed South Africa's entry into the war and was overthrown on that issue. Replacing him, General Smuts had secured a majority of 18 in the House of Assembly, which he had fought with success to consolidate and increase during 1940. The Nationalists, the Hertzog group, and a sizeable minority of the Labor party preached an attractive if illogical doctrine of appeasement. To them it appeared likely that Britain would lose the war; they therefore advocated the proclamation of an independent republic, which would welcome Germany's return to Africa — even to the mandated territory of Southwest Africa. Along with this line of argument many speakers introduced a strain of anti-democratic propaganda as well. The Smuts government, however, did not resort to repression of utterances which approached incitement to treason and sedition. Instead, General Smuts emphatically proclaimed his faith that Britain would win and that a British victory was necessary for the survival of an independent South Africa.
Events proved that a majority of the European population supported this view. An army of 100,000 was raised in twelve months on a volunteer basis. Few of those who had enrolled for service in South Africa demurred when they were asked to participate in military action anywhere on the African continent — notably in Kenya. The invasion of the Netherlands weakened the antipathy of many Boers to the war policy. The discovery of a German minefield off Cape Agulhas in mid-May did nothing to increase the Nazis' popularity. General Smuts' lines in Parliament held firm in spite of all opposition efforts. On Aug. 31, General Hertzog was defeated on a motion calling for peace, for the third time since the outbreak of war, by a decisive vote of 83 to 65 in the House. Not long afterward it became evident that Hertzog's Afrikanders and Malan's Nationalists had fallen out during an attempt to draft a program for the so-called Reunited Nationalist Party formed by the two groups on Jan. 28, 1940. On Nov. 7, General Hertzog resigned as leader of the party. Five weeks later he and his former finance minister, N. C. Havenga, resigned from Parliament and announced that they were retiring to private life.
In internal affairs the reverberations of the war situation were also predominant. There was much dissatisfaction with red tape and muddling in defense matters — some of it due to the apparent incompetence of the former Nationalist defense minister, Oswald Pirow, who had maintained close ties with Germany. It was expected that conditions would be improved as a result of sweeping amendments to the War Measures Act giving the government semi-dictatorial powers to further the war effort. The only major domestic reform of the year was a revision of the electoral law which granted increased representation to urban areas. Economic conditions were varied. Production for nonwar purposes languished, while the output of gold and vital materials found a ready market. Gold production reached record heights during several months of the year. Conclusion of a wool purchase agreement with Britain in August assured local producers of good returns until after the end of the war. Exports of fruit and other agricultural products to Britain were heavy. Because British convoys to the East were diverted from the Mediterranean to the Cape route after Italy entered the war in June, there was great activity in the major harbors. Despite a factory labor shortage, higher taxes and new government loans, strict price controls and appeals for thrift were instrumental in limiting to 3.6 per cent the rise in cost of living from the outbreak of war in November 1940.
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