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Diamonds Are Forever

The Randlords

by Geoffrey Wheatcroft
Atheneum, 314 pp., $17.95

South Africa defies comparison with other countries. It is unique not only in the persistence of its rigid racial divisions, but also in possessing the world’s greatest accumulations of gold and gem-quality diamonds. Geoffrey Wheatcroft’s book describes the activities of the men who clawed their way to the top in the scramble for control of these mining industries toward the end of the nineteenth century—men who were the British imperial equivalents of their American contemporaries, the “robber barons.”

One can approach The Randlords with four different expectations: as a racy story about the goings-on of an astonishing variety of exotic people; as an account of how they came to dominate the first great industries in South Africa; as a description of their contribution to the degradation of the indigenous peoples of South Africa; or as a study of their part in British imperial history.

Consider Wheatcroft’s cast of characters. There is Cecil Rhodes, whose name was on the map until the fall of white Rhodesia in 1980 but still survives in Rhodes University, Grahamstown, and the Rhodes scholarships. Younger son of an English country parson, Rhodes went to Natal for his health in 1869. In 1877 in the first draft of his will he donated his growing fortune to the founding of a secret society for the reunification of Britain and the United States, and Anglo-Saxon domination of the world. By 1895, he dominated the diamond-mining industry of Kimberley, had a major share of the gold-mining industry on the Witwatersrand, and was prime minister of the Cape Colony and founder of Rhodesia. He was also planning a conspiracy to overthrow the Afrikaner government of the Transvaal Republic and transform it into a British colony.

Less well known is Alfred Beit, the shy and socially unobtrusive German Jew who was the brains behind the amalgamation of the diamond mining companies and the development of deep-level gold mining. There were Percy Fitz-Patrick, a South African–born Irish Catholic, the author of Jock of the Bushveld, which Theodore Roosevelt called “the best of all dog books,” who rose to a powerful position in the gold-mining industry and agitated for British intervention in the Transvaal, and Joseph B. Robinson, who was also born in the Cape Colony and was friendly with President Paul Kruger of the Transvaal Republic and detested by most of the other Randlords. Another outsider, Barney Barnato, son of a London publican, got control of enough claims in Kimberley to become a major obstacle to the amalgamation of the diamond-mining industry, until he lost out to Rhodes and Beit; he then proceeded to make a second fortune on the Witwatersrand gold fields, only to die a suicide in 1897.

Wheatcroft tells us much about the eccentricities of these people and their activities in early Kimberley and Johannesburg. He tends to divide them into two classes: relatively good guys such as Alfred Beit, the brains behind the organization of the diamond industry and the development of deep-level gold mining (“Of all the magnates Beit had been the meekest and most self-effacing, yet he was perhaps the greatest”), and insufferably bad guys like J.B. Robinson (“He had hated for most of his life, been hated in return, and hatred pursued him beyond the grave”).

Wheatcroft does not help us to understand why such men (his cast is much larger than those five) and not others rose to the top. They had very little in common, except ruthlessness in the pursuit of wealth; Beit and Barnato were Jews; Rhodes was the son of an Anglican clergyman. Robinson and FitzPatrick were born in South Africa, Rhodes and Barnato in England; Beit and his partner, Julius Wernher, were from Germany.

Rhodes, in particular, remains an enigma. With his squeaky voice, his rambling orations full of infantile political romanticism, he comes through to us as an utterly uncharismatic figure. Yet it was he, more than anyone else, who used his wealth with startling political effects, such as in founding Rhodesia and in planning the abortive coup in the Transvaal.

The first of the great South African discoveries was of alluvial diamonds in the banks of the Vaal River. By 1870 four surface outcroppings, or “pipes,” of diamondiferous ore had been discovered in the open land between the Vaal and the Orange; one of which, named after colonial secretary Lord Kimberley, became the most productive diamond mine the world has known. Men owned claims measuring thirty foot square, and dug deeper and deeper. Wheatcroft describes what happened:

Each little claim was a separate undertaking the size of a broadened squash court, with a regulated space left between claims for access. Some cut sloping adits, up and down which a wheelbarrow could be pushed. Others cut steps going down, smaller and smaller, to reach the bottom and centre of the claim by a kind of staircase…. The only way to clear the floor was by filling a bucket with broken ground which was then lifted to the surface by a mate or a black labourer. At the surface the cut rock was battered with shovels to break it up and then passed through a sieve. Then it was sifted a second time through a cradle or rocking sieve, and sorted. Before many months had passed each of the mines presented the same sight, a trellis of roadways and betwixt them a crazy patchwork of claims dug at varying depths.

By 1877, the Kimberley mine was a vast, deep hole, divided into 514 portions. If the industry was to survive, amalgamation was essential.

The heyday of the individual digger was brief. Initially, men—mainly Afrikaners—came to the diggings from various parts of South Africa to try their luck. They were followed by a flood of fortune seekers, including numerous prostitutes, from overseas—from Britain, continental Europe, and America. But such investors as Rhodes, Beit, Robinson, and Barnato soon bought up the claims of most of the diggers, and those who stayed became laborers or overseers of labor. The buyers were the first mining capitalists in South Africa. There followed a period of cut-throat competition among them, culminating in 1889, when De Beers Consolidated Mines dominated the industry, and Rhodes, Beit, and Barnato dominated De Beers.

But that was not enough. In a free market, the flood of new diamonds would collapse the price. The same men took two steps to prevent this. They cut down the production of diamonds; and they ensured that all of them should be marketed by a London syndicate which they controlled. They thereby established a system for keeping the value of diamonds high by limiting their production and controlling their marketing that has endured to the present day.

The digger phase in the Witwatersrand (White Waters Ridge) gold fields was even shorter. The southern Transvaal and northern Orange Free State contain vast quantities of gold. But the gold is spread in minute particles in narrow layers of hard quartzitic rock. Most of it is at great depths, though auriferous reefs did protrude through the surface at several points along the Witwatersrand in the southern Transvaal, where outcrops were identified in 1885. If a durable industry was to develop, it required heavy capital investment and much technological innovation—to provide the equipment to bring the rock to the surface from greater and greater depths, and to extract the gold from the rock.

The capital was raised by the men who had got to the top in the diamond-mining industry; the technology by American mining engineers such as John Hays Hammond. A breakthrough came in the early 1890s, when companies began to dissolve crushed ore in a solution of cyanide of potassium, which then precipitates its gold onto zinc shavings from which the gold is recovered and refined.

The structure of the gold-mining industry differed from that of Kimberley. Since there was an insatiable demand for gold, there was no incentive to monopolize its production or marketing. But the industry did need a central organization to act on its behalf for some purposes, such as negotiations with the Transvaal government for the supply of dynamite (which the government had granted as a monopoly to an entrepreneur) and the organization of a supply of African labor. For these purposes, in 1889 the leading companies, including those controlled by Rhodes, by Barnato, by Robinson, and by Beit and his partner Julius Wernher, formed the Chamber of Mines, which operated through an executive central committee of eleven, under a president who came from Corner House—the Wernher-Beit interest, which was far the strongest of the gold-mining houses.

Wheatcroft describes these developments well. “In late 1895,” he says, “the Mining World assessed Beit’s shareholdings at £10 million, Wernher’s at £7 million, Robinson’s at £6 million, Rhodes’s at £5 million, and Barnato’s at £4 million.” He also makes no bones of the fact that the capitalists—the Randlords as they had now become—were, in varying degrees, unscrupulous manipulators of the financial markets; here he highlights the exceptionally corrupt operations of Barney Barnato and his relatives. He distinguishes two economies:

The formal economy was the digging and crushing of gold and ultimately the paying of dividends by profitable companies. The secondary economy was stock-market operations, with the “trainers” backing “horses”—their own or others’. In this sense every one of the Randlords was to some degree a gambling trainer, all of them until the mid-1890s making a larger part of their income from the stock exchange than from gold mined and sold.

The mining magnates made one fateful contribution to South Africa: they presided over the creation of a rigid color bar in the first substantial industries in South Africa. Initially, there were black as well as white claim holders on the diamond fields, but from the first the whites objected to “niggers” being allowed to own claims. After the British annexed the diamondiferous area in 1871, their local administrators had no wish to impose a color bar, but in 1875, faced with demands by the diggers, they forbade blacks to own claims and limited their movements by subjecting them to pass laws.

In 1880 the area with diamond mines was incorporated in the self-governing Cape Colony, which was dominated by its white population. The mining capitalists and white workers were agreed that blacks in Kimberley should have no choice but to work as wage laborers. Moreover, as the capitalists got a firm grip on the industry as a whole, they tooks steps to check the leakage of diamonds from their marketing network. IDB (illicit diamond buying) became a serious crime—as it still is in South Africa—and black laborers were confined in close compounds for the duration of their contracts and rigorously searched before they returned to their homes. When the companies tried to impose body searches on white as well as black miners, the whites staged a successful resistance.

By 1889, with De Beers dominating the diamond industry, its labor force was split into two distinct racial classes: an upper class of whites, who were treated as free people, monopolized the skilled jobs and the supervisory jobs, and were well paid; and a lower class of blacks, who were confined to unskilled jobs at very low wages, housed in male compounds, and subjected to close and humiliating body searches.

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