THE MOST POWERFUL COMPANY IN THE WORLD
A new phase in diamond mining at Kimberley opened in 1885 that was to transform the industry’s prospects. After years of grappling with devastating reef falls in open-cast pits, mining companies began to experiment with underground operations, constructing shafts and tunnels to reach deep-level diggings. Though the costs of establishing underground operations were high, production and profits soared. The deep-level diggings, moreover, proved to contain even richer diamond deposits.
The introduction of underground mining, together with the increasing use of steam engines and other machinery, brought major changes to the organisation of the labour force. Rather than using white overseers, mining companies needed skilled miners. They were recruited from the coal mines of Cumberland and the tin mines of Cornwall; shaft sinkers came from Lancashire; artisans from the factories of Scotland and England. The number of colonial whites employed in the mines fell to just 10 per cent of the white labour force.
New laws were approved introducing a legal colour bar between white and black employees. Whereas British administrators had previously resisted legal discrimination, mining legislation in 1883 decreed that ‘no native is to be permitted to manipulate explosives or prepare the same for blasting or other purposes’. Blasting had to be carried on ‘under the supervision of a European’. Subsequent legislation ruled that: ‘No native shall work or be allowed to work in any mine, whether in open or underground workings, excepting under the responsible charge of some particular white man as his master or “baas”’.
To ensure a more reliable supply of black labour, mining companies organised their own system of recruitment. Recruits were required to agree to contracts running for six to twelve months rather than three to six. Their living conditions also changed. Originally, diggers had accommodated black workers on their compounds or encampments in tents or sheds. Subsequently, they were housed in barracks. From 1885, mining companies required black workers to live in fenced and guarded compounds on their property for the entire term of their contract. Closed compounds had the advantage of preventing diamond theft. They also provided mineowners with greater control of the labour force.
By 1889, all 10,000 black mineworkers in Kimberley were accommodated in closed compounds. Some discussion ensued about the idea of incorporating white employees into the compound system. But the idea was not pursued. Whites were permitted to live in the town, leaving blacks confined to segregated compounds.
The success of underground operations, however, raised once more a spectre that had overshadowed the industry since the 1870s: increases in production eventually led to price falls and declining profitability. As companies competed to raise production to gain higher profits, so simultaneously did they increase the risks of wiping out profits altogether.
The solution had long been foreseen: a monopoly company in control of the entire industry. Several attempts at amalgamation were made, but none succeeded. The only option left was for the major companies to fight it out among themselves for control. By 1885, the total number of companies had been reduced to about one hundred: nineteen in Kimberley mine; ten in De Beers; thirty-seven in Dutoitspan; and thirty-two in Bultfontein.
Two companies emerged as the most likely nuclei for a diamond mining monopoly: Kimberley Central, in which Alfred Beit was involved, and De Beers, Cecil Rhodes’s main vehicle. Both companies set about crushing smaller rivals by producing as many diamonds as possible. In 1886, Kimberley Central alone produced more stones than either the Dutoitspan or the Bultfontein mines and almost as many as the entire De Beers mine, boosting Central’s revenues but keeping carat prices low. De Beers developed its operations at breakneck speed, doubling the amount of ground it excavated in the process, showing, according to a bank report, ‘a reckless disregard for human life’. With accidents multiplying and disease rife, the death rate in the mine reached 150 per thousand employed.
Appointed chairman of De Beers in 1886, Rhodes relentlessly pursued the surviving independent companies in the De Beers mine. In 1887, in collaboration with Beit, he gained control of the last one left. De Beers thus became the first mine in Griqualand West to come under the control of a single company. In his report to the De Beers annual meeting in May 1887, Rhodes declared that amalgamation would enable the diamond industry to gain the position it ought to occupy, ‘that is, not at the mercy of the buyers, but the buyers under the control of the producers’.
Alongside his business activities, Cecil Rhodes developed political ambitions. His initial foray was to stand as one of the members of parliament for Griqualand West, soon after it was incorporated as a new province of the Cape Colony in 1880. His main purpose was to get the Cape government to build a railway linking Kimberley to the ports to alleviate mining company costs. A prominent politician in the Cape parliament, Thomas Fuller, remembered Rhodes in 1881, at the age of twenty-seven, as a ‘tall, broad-shouldered man, with face and figure of somewhat loose formation’:
His hair was auburn, carelessly flung over his forehead, his eyes of bluish-grey, dreamy but kindly. But the mouth – aye, that was the ‘unruly member’ of his face. With deep lines following the curve of the moustache, it had a determined, masterful and sometimes scornful expression. Men cannot, of course, think or feel with their mouths, but the thoughts and feelings of Cecil Rhodes soon found their way to that part of his face. At its best it expressed determined purpose – at its worst, well, I have seen storms of passion gather about it and twist it into unlovely shapes.
As well as campaigning for a rail link for Kimberley, he was active in pressing for legislation to suit the interests of large mining companies such as De Beers. To ensure that his speeches were well reported and hoping to influence public opinion, Rhodes bought a controlling interest in the Cape Argus, the main newspaper in the Cape. The deal cost him £6,000. It was concluded in the utmost secrecy. Rhodes wanted the Argus to support him but to retain the semblance of an independent newspaper.
He was also an ardent advocate of imperial expansion. In a will he drew up in Kimberley in 1877, he instructed the executors of his estate to use his fortune to help extend the realms of the British empire – ‘especially the occupation by British settlers of the entire Continent of Africa’. In parliament, he was soon engaged in imperial issues, demanding British intervention to stop the newly independent Transvaal from extending its territory westwards into Tswana lands, thus blocking the Cape’s road to the north.
Freed from British control, Transvaal settlers – ‘freebooters’ – flocked across the western border agreed with Britain in 1881, knowing that Britain had no appetite to intervene. Many enlisted as mercenaries – ‘volunteers’ – supporting rival Tswana factions in return for promises of land. In May 1882, Mankurwane of the Tlhaping, a pro-British chief, reported to a senior British official in Pretoria: ‘I have the honour to inform you that there is a Commando of Free State and Transvaal subjects besieging my town of Taungs. I am told that those who form this Commando wish to take my country to form an independent Republic.’ By the time his message reached Cape Town, the siege was over and the Boers had won. Mankurwane was obliged to watch as Boer freebooters divided up his land into farms of 6,000 acres each for themselves. He was also forced to sign a treaty agreeing to refer all future disputes to the Transvaal authorities and not to the British. No British assistance was forthcoming. Writing to the British high commissioner in Cape Town in August, Mankurwane complained: ‘Seeing therefore that I had been deserted by the British Government . . . I have done that which I ought to have done long ago, namely made my peace with the Boers . . . and have had to give up a considerable portion of my country.’
With land taken from Mankurwane, running for more than a hundred miles westwards from the 1881 border, the freebooters – some 400 Boer families in all – proceeded to set up their own petty republic, calling it Stellaland, to mark the passing of a comet, and established a capital at Vryburg near Taungs. The capital was a modest affair, consisting of a score of brick houses, a few stores, a billiard room and a croquet ground.
Having disposed of Mankurwane, the freebooters turned on Montshiwa, another pro-British chief. Montshiwa held out for three months, but was eventually forced to surrender two-thirds of his land, losing everything south of the Molopo River. He too was obliged to acknowledge allegiance to the Transvaal. On Montshiwa’s land, the freebooters established the republic of Goshen, a name taken from Genesis – ‘the best of the land of Egypt given to Joseph’. The capital of Goshen, Rooi Grond, was simply a fortified farm, near Mafikeng, one mile west of the Transvaal border, occupied by a few dozen adventurers.
Both ‘republics’, however, lay across the road to the north, blocking access to the interior. One of the first actions taken in Vryburg was to impose a tax of £3 a fortnight on all traders passing through Stellaland. Stellaland and Goshen thus represented a significant threat to the Cape’s trade with the African interior, then worth a sizeable £250,000 a year. They were moreover an obstacle standing in the way of the only feasible rail route northwards to Zambesia, outside the Boer republics. It seemed inevitable that they would eventually merge into a greater Transvaal leaving the Cape out on a limb.
Preoccupied with more pressing issues than an obscure conflict on the edge of the Kalahari desert, the British government responded to Boer raids into Bechuanaland with studied indifference. ‘A most miserable page in South African history,’ a Colonial Office official noted in December 1882, ‘but as we shall not attempt to coerce the Boers, Montsoia and Mankoroane must face starvation as best they can.’
But Rhodes was galvanised into action. Despairing of British help and infuriated by what he saw as the ‘constant vacillation’ of British policy, he campaigned relentlessly for the Cape to take control of the area, stressing the advantages of ‘Cape colonialism’. In May 1883, he persuaded the Cape’s prime minister, Thomas Scanlen, to send him north to investigate the state of affairs in Bechuanaland and, on his return to Barkly West, bombarded Scanlen with telegrams, demanding intervention. But Scanlen was not persuaded.
In a speech to parliament in Cape Town in August 1883, Rhodes went further, claiming that ‘the whole future of this Colony’ was at stake. ‘I look upon this Bechuanaland territory as the Suez Canal of the trade of this country, the key of its road to the interior.’ If the Cape failed to secure control of the interior, then ‘we shall fall from our position of the paramount State’.
Despite such rhetoric, Rhodes failed to win parliament’s support for colonial expansion. But he found Britain’s high commissioner, Sir Hercules Robinson, more favourably disposed to the idea. Robinson was an outspoken advocate of colonial ‘home rule’ rather than imperial rule and considered that colonists rather than metropolitan officials were better suited as agents of African administration. He was amenable to using his influence with London. The missionary lobby too was effective in prodding the British government into taking a more active interest in the fate of Bechuanaland. In negotiations with Kruger concluded in 1884, Britain agreed a new border for Bechuanaland, which allowed the Transvaal a slice of Tswana territory, but left the bulk of Tswana territory intact. The deal gave Britain overall responsibility for administering the troubled southern half of Bechuanaland, including the two republics of Stellaland and Goshen, thus securing the road to the north.
But Rhodes was adamant that what was needed for Bechuanaland was Cape control not imperial trusteeship and he continued to campaign for the extension of the Cape’s boundaries northwards. ‘Bechuanaland is the neck of the bottle and commands the route to the Zambesi. We must secure it, unless we are prepared to see the whole of the North pass out of our hands . . . I do not want to part with the key to the interior, leaving us settled just on this small peninsula. I want the Cape Colony to be able to deal with the question of confederation as the dominant state of South Africa.’
In 1884, he persuaded Robinson to appoint him as the British commissioner with responsibility for southern Bechuanaland. On learning of the appointment, an official in the Colonial Office in London asked: ‘What information have we respecting Mr Rhodes?’ A colleague replied that Rhodes was ‘a sensible man’ although inexperienced and untrained in administrative work. The general view in London was that he would ‘do very well as a stop gap’.
Rhodes set out for Bechuanaland in August 1884. His plan was to offer the Boer freebooters title for land they still occupied on condition they dispensed with their republics and accepted Cape rule. Stellaland’s Boers seemed ready to agree, but the Boers of Goshen, aided and abetted by Kruger, were far more hostile. In September, Kruger made his intentions clear by proclaiming the Transvaal’s annexation of Goshen and of Montshiwa’s remaining territory, in defiance of his agreements with the British.
Kruger’s arbitrary action finally prompted the British government to intervene. It sent an armed force of 4,000 men to clear out the freebooters and settled the future of Bechuanaland by establishing British control there in 1885. The southern half, up to the Molopo River, was declared a Crown colony called British Bechuanaland, with the expectation that it would eventually be transferred to the Cape. The northern half, including Kgama’s Ngwato chiefdom, became a British ‘protectorate’.
In Kimberley, Rhodes and Beit forged an increasingly effective alliance. Rhodes came to depend on Beit’s financial advice. Any problems concerning diamonds would invariably be solved by Beit. ‘Ask little Alfred’ became a catchphrase among Rhodes’s circle of friends. They were often seen together at the Kimberley Club, sharing a customary drink to start the day; their favourite tipple was a mixture of champagne and stout. They played poker there, albeit badly. Occasionally, they attended a Bachelors’ Ball, Rhodes vigorously twirling the plainest girl in the room, Beit indulging his penchant for tall girls.
In the final race to gain control of the diamond industry, their alliance was to prove decisive. Beit’s connections with foreign banks provided the finance for their takeovers. Their main rival was Barney Barnato. After months of frantic bidding and speculation, they all reached agreement in March 1888 to consolidate their assets in a single company: De Beers Consolidated Mines Limited. The company’s assets were considerable. It owned the whole of the De Beers mine, three-fifths of the shares in the Kimberley mine and a controlling interest in both Bultfontein and Dutoitspan. Barnato was the largest shareholder in the new company, with 7,000 shares; Rhodes had 4,000. Rhodes called on the remaining shareholders to surrender and triumphantly proclaimed his determination to make De Beers ‘the richest, the greatest, and the most powerful Company the world has ever seen’.
In the following months, Rhodes proceeded to buy out the remaining independent mine operators. By September 1889, he had achieved a complete monopoly of all Kimberley’s mines – accounting for 90 per cent of the world’s production. In alliance with the world’s principal diamond merchants, he then set out to achieve a marketing monopoly of the diamond trade, to ensure that the market could be manipulated to the best advantage, keeping supply in line with the highest price available. By 1891, virtually all Kimberley’s output was channelled to members of a syndicate based in London controlling the system.
At Rhodes’s behest, the new De Beers company was set up with ambitions that far outstripped the original purposes of the old De Beers company. Instead of being limited to diamond mining, Rhodes insisted that the new company be able to engage in any business enterprise, annex land in any part of Africa, govern foreign territories and maintain standing armies. He intended to use his fortune in furtherance of ‘big schemes’ he had long nurtured. ‘Money is power,’ explained Rhodes, ‘and what can one accomplish without power? That is why I must have money. Ideas are no good without money . . . For its own sake I do not care for money. I never tried it for its own sake but it is a power and I like power.’
From their base in Kimberley, the mining magnates next set their sights on the goldfields of Kruger’s Transvaal.