Robinson, Barnato and Rhodes.
The Randlords pursue amalgamation
Robinson and Barnato had become enemies after clashes in the Cape Province Assembly in Cape Town, to which both had been elected in 1881. Robinson formed the Standard Company to expand his diamond interests and Barney and his brother Harry set up the Barnato Company. Both of these groups concentrated on the New Rush pit in Kimberley, but Rhodes’s diamond interests were concentrated on the nearby De Beers mine and he incorporated De Beers Mining in 1881 to hold these interests. He also managed to merge the interests with those of the Stow, English and Compton company at the De Beers diggings.
Rhodes seeks consolidation at the diggings
Rhodes also attempted to acquire other De Beers operations to achieve one consolidated operation at the mine, but other independent operators, although happy to consider his plan, could not agree a price. However, Rhodes was already working on a much grander plan to amalgamate the whole of the Kimberley area diggings including De Beers and New Rush, better known as the Big Pit. At the same time very tough legislation was being pushed through the Cape Assembly to bring an end to illegal diamond buying and on this issue, if no other, Rhodes and Robinson were in agreement. The practice, which it was thought had been behind much of Barnato’s success, had to be eradicated and with this aim in mind in 1882 the Diamond Trade Act was passed.
In 1884 the pace of change quickened. Rhodes had slowly but surely continued to work on the smaller holders at the De Beers mine and in 1884 merged his De Beers Mining with Baxter Gully and Independence, two of the larger groups still holding out. The New Rush mine in Kimberley continued to interest Rhodes in terms of amalgamation, and Rhodes was anxious to complete the amalgamation of all the mines in the area and to control them. The additional wealth an amalgamation would generate for him would allow him to pursue his political dream of an Africa annexed by Britain from the Cape to Cairo. Robinson and Barnato had less lofty reasons for supporting the concept of amalgamation; it would simply make them more money.
There were two key issues, which we have mentioned earlier, pushing the Kimberley area mines towards amalgamation – the problem of collapsing workings and the widespread practice of illegal diamond buying. There was also a continuing slump in diamond profits caused by overproduction as well as operating problems as the diggings went deeper. Another problem was one relating to the workers, who had already caused unrest in the 1870s with their Black Flag strike. To try and combat illegal diamond dealing a draconian search process had been instituted to cover all workers on the diggings, and the whites in particular objected to being searched so intimately. This unrest continued for some months and eventually led to a strike in 1883 that ended in a riot the following year. The police put the riot down with firearms, killing four protesters.
With all this unrest and the fall in diamond profits, share prices of the Kimberley mining companies fared badly. Central Company, which in 1881 had changed hands at £400, three years later had fallen to £25. Joseph Robinson’s Rose-Innes had fallen over the same period from £53 to just £5. Rhodes’s analysis, although he supported the war on illegal diamonds, was that the main problem facing Kimberley’s diamond industry was that it was producing too many stones for the world market and this was undermining prices and demand. Amalgamation and production control was the only answer, and others agreed with him. There was, however, deep reluctance in the diggings to share the burden of reducing supply evenly amongst the still numerous operations. As if these problems were not enough, Kimberley, despite rigorous health restrictions, suffered a smallpox epidemic which further rocked the diamond industry.
The most forward plan for amalgamation was one hatched by J.X. Merriman, head of the Mining Commission in the Cape Assembly, which saw Joseph Robinson as the catalyst for change. Whilst Robinson was certainly a respected and powerful figure and very keen on mine amalgamation in Kimberley, he had a problem in that his diamond mining interests had been badly affected by ground collapse and he was deeply in debt. His control stake in the Standard Company was pledged as collateral against his bank borrowings and he could not raise money to support Merriman’s plan and Merriman had to withdraw. The situation was opening up for Cecil Rhodes and in 1887 he and Beit successfully gained total control of the diggings at the De Beers mine and then turned their attention to the Big Pit, with Merriman and Robinson gone from the scene. However, someone else had been watching from the sidelines and now stepped forward – Barney Barnato.
The Big Pit at Kimberley in 1875 before Rhodes consolidated the workings
Source: Consolidated Gold Fields
Barnato battles Rhodes for control at Kimberley
Barnato, who had always had exposure to the Big Pit, had gained control of the Central Company which had formerly been controlled by Francis Baring-Gould. He merged Central with Robinson’s Standard Company in 1887 as Robinson divested himself of his shares to clear his bank debts. In summary, Rhodes had the De Beers Mine now sown up and Barnato had a very large stake in the Kimberley Mine, but there were still important stakeholders at Kimberley who Barnato needed to win over before he had complete control of the Big Pit.
One of these was Compagnie Francaise des Diamonds du Cap, popularly known as the French Company, which unsurprisingly was primarily owned by investors in Paris, including financier Jules Porges. Rhodes needed an interest in the Kimberley Mine if he was to achieve his dream of total amalgamation of all the Kimberley mines, which as well as De Beers and Kimberley included the Dutoitspan and Bulfontein mines. He decided to have a tilt at the French Company, but with much of his wealth tied up in the De Beers Mine he had to borrow over £1 million to have a chance of acquiring the French Company and thus getting himself into Kimberley.
Barney Barnato (1852-1897)
If Rhodes was the great political figure in late 19th century South Africa, his business rival Barney Barnato was definitely the most colourful of the Randlords. Barney was born Barnett Isaacs in 1852 in the East End of London, one of five children of Isaac Isaacs, a Jewish shopkeeper. His early life was one of grinding poverty and earning money by his wits as a Petticoat Lane trader and also with his brother Harry, a magician, in a minor music hall act in London.
Hearing of the diamond rush in South Africa, Harry went to Kimberley and set himself up as a diamond buyer and also starred as a magician at the Mutual Hall. Barney soon followed Harry to Kimberley in 1873 and set up as a diamond dealer, and also not very successfully worked some claims. His talent as a stage actor led him to augment his income with regular performances at the Theatre Royal in Kimberley, where he was a popular turn.
Eventually Barney and his brother joined forces to trade diamonds at a difficult time for the market and in 1876 they bought a further number of claims. This proved a good deal for Barney – the claims were highly prospective and initially produced a weekly income of £1,800. Barney also decided in 1878 to enter politics and stood for the Kimberley Town Council. He won his election in circumstances that some observers thought dubious, but he proved both a colourful and diligent councillor, particularly when supporting the local market by using the old promotional charm he had learned in the East End as a youth.
In the early 1880s the amalgamation of some of the Kimberley diggings as a result of the increasing depth of the mining led to the formation of the Barnato Company, which became one of the most profitable operators for a time. The difficulties that many of the new larger organisations mining in Kimberley experienced did not seem to trouble Barnato’s operations, which led to speculation that the company was deeply involved in dealing in illegal (stolen) diamonds, a common activity at the
