when he manoeuvred to have one of Kimberley’s leading policemen – who was responsible for cracking down on illegal diamonds – dismissed from the force. Barnato’s operations eventually suffered ground collapse and mining on them ceased for three years.
When mining restarted in the late 1880s Barney was ready to take amalgamation at Kimberley to its logical end. This pitted him against Cecil Rhodes. He and Rhodes went head to head for control of the Central Company and although Barney was far richer than Rhodes he lacked Rhodes’s tactical skills. In the end Rhodes became the largest shareholder in Central, and he and Barnato became uneasy partners. Although Rhodes came out on top Barnato always believed that it was he who had triumphed, a view bolstered by his chirpy confidence. His self-bullishness was further supported by his election to the Cape Assembly in 1888.
The same year Barnato, intrigued by the gold discoveries in the Transvaal, went up to Johannesburg to see if this was an opportunity for him to make another fortune. Although sceptical at first he decided that the gold story was real and he enthusiastically began to buy up substantial leases on the Witwatersrand as well as other businesses, including the waterworks in Johannesburg. His nephew, Solly Joel, managed Barnato’s Transvaal operations as Barney himself began to spend increasing amounts of time in London. His long-term lover, Fanny Bees, whom he had lived with discreetly for 15 years, became pregnant for the first time and so Barney finally married her in London in 1892. A daughter, Primrose, was born in 1893 and they had two other children later. Barney also built a mansion on Park Lane in London within walking distance of Joseph Robinson and Alfred Beit’s mansions, all of them monuments to the wealth that could be made in the colonies.
For a few years Barney was intermittently feted by the establishment in London but was never really accepted due to his East End Jewish beginnings. Whether in South Africa or London he remained the jovial soul of the party, but the clouds were gathering over his business empire. He was overstretched and cracks began to appear. All was made worse by the infamous Jameson Raid which was to have supported an uprising of the uitlanders (foreigners who had gone to SA when the gold rush started) on the gold fields against the Kruger government. It was a disaster and many of the ringleaders were tried and sentenced to death.
Barnato aggressively attacked the Pretoria hierarchy and Kruger himself, demanding clemency and threatening to divest from the Transvaal completely. Whether his intervention was decisive or not, Kruger materially reduced the sentences but Barnato’s days were numbered in any case as investors lost confidence in him. His penchant for seemingly divesting from businesses before they crashed and manipulating his own companies with no regard for the interests of his fellow shareholders has an echo of the more recent activities of assassinated robber baron Brett Kebble. It is eerie that Kebble’s master company, JCI, was a successor company to Barnato’s Johannesburg Consolidated.
In 1897 Barnato, who had become disturbed and erratic, and his family set sale for England from the Cape. During the voyage Barnato fell or jumped overboard and was dead when his body was recovered (a fate suffered more recently by fraudster Robert Maxwell). Although Barney had built and, in part, lost a great fortune from diamonds and gold in South Africa, and earned a place in history, to many in both South Africa and England he was just a spiv from the East End who eventually flew too close to the sun.
The French Company falls to Rhodes
Rhodes left for London in early 1887 and there got financial backing to buy out the French Company; he crossed to Paris and after much negotiation his offer for the company was accepted. But Barnato, alarmed by Rhodes’s plan, moved to offer a higher price. This created problems for Rhodes, who was short of cash, but he had an alternative plan and he persuaded Barnato to allow him to complete his purchase of the French Company, which he would then sell on to Barnato’s Central Company for cash and shares.
Barnato agreed and so Rhodes lost the French Company but gained a 20% stake in the newly expanded Central Company, which by now as good as controlled the Big Pit. So Rhodes controlled De Beers and he had a sizeable indirect stake in the Kimberley Mine. From this point Rhodes began to work on Barnato to persuade him to cooperate in the amalgamation of De Beers with Kimberley on a 50-50 basis. Barnato waxed hot and cold over the proposition but could not bring himself to agree to it as he believed that Kimberley was worth more than De Beers.
Whilst this was going on the situation in the diamond market was deteriorating. The De Beers and Kimberley mines were producing flat out, selling diamonds into a market that was, as it had been for some years, oversupplied. Diamond prices were weak and when Barnato proposed to float the Kimberley Mine on the London Stock Exchange – which would have intensified the price war and severely undermined Rhodes’s plan for amalgamation of De Beers and Kimberley – Rhodes decided that a frontal assault on the Central Company to try and wrest control of it from Barnato was the only way to resolve things and so regain control of the diamond market.
In early 1888 Rhodes approached his loyal friend Alfred Beit to help him access the finance needed to enter the local stock market to buy Central shares. Beit responded positively and provided the required funds. Rhodes told Barnato what his plan was and battle commenced. Since both Barnato and Rhodes needed to acquire, either directly or for supporters, sufficient Central shares to take them above 50%, it was inevitable that the price of Central shares would rise sharply, and so they did from £14 to £49.
Whilst this was going on the underlying performance of the Central Company, and all other diamond miners in and around Kimberley, was deteriorating and most operations were barely profitable. Rhodes’s plan, however, justified his tactics, for if he could gain control of all the Kimberley diamond operations, and Central was critical to him, then he would be able to cut overall production, bring the market back into balance and the mines would once more be profitable.
The battle for shares raged on but Barnato’s supporters found themselves unable to resist taking profits as the share price of Central rose. Rhodes’s supporters were more disciplined and in the end his holding in Central rose above 50% and Barnato threw in the towel. Though he was personally much wealthier than Rhodes he could not match Rhodes’s tactical skill. The Kimberley diamond diggings were finally amalgamated and merged with De Beers Mining. The new company was called De Beers Consolidated Mines, a name that was to last until the end of the following century.
Final consolidation of the diamond fields
In 1889 De Beers gained effective control of Duitoitspan and Bultfontein, and all the diamond diggings in and around Kimberley were finally under Rhodes’s control. Barnato and Rhodes therefore became partners after years of rivalry, but their disagreements were not at an end. Rhodes had sought control of the diamond diggings, not only for the purpose of more efficient working and control of output levels and therefore prices, but also because he wanted to use it as his vehicle for extending British influence into the heart of Africa. Barnato strongly opposed Rhodes’s imperial dream and it is unlikely that the government in London was keen either. But Rhodes was on a winning streak and the new deed of the merged company had at its centre the mission not only to mine diamonds but also to extend British influence throughout the continent using De Beers as the vehicle should the board (i.e. Rhodes) so decide.
The last years of the 19th century saw the newly amalgamated diamond fields bedded down and some recovery in the market as a more disciplined approach to mining and selling was implemented. At the same time the diamond czars themselves – Rhodes, Barnato, Beit and Robinson – were busy on new fronts in the goldfields of Johannesburg, Rhodesia and, for all but Rhodes, in the acquisition of mansions in London. The Boer War was also looming, which Rhodes welcomed as allowing his dreams of African hegemony to flourish in the wake of the inevitable British victory. The British did indeed defeat the Boers and annexed the independent Boer Republics but it was a very hard fight indeed, and Rhodes died before the victory. Barnato and Beit also died young, Beit made it past 50 but to just 53. Only
