July of 1980, a black crowd armed with whips and mallets
toppled the bronze statue of Cecil John Rhodes from
its pedestal in Salisbury, Zimbabwe. The caption of
the Associated Press photograph of the event read, "Symbol
of Colonialism Toppled in Zimbabwe." Rhodes, after all,
was the only man in history to have two nations and
a federation named after him-Rhodesia (now Zimbabwe),
Northern Rhodesia (now Zambia) and the Rhodesian Federation
(which had included Malawi, Zambia and Zimbabwe). In
less than ten years, under the royal charter granted
to him by the British government, he had colonized millions
of square miles of the richest part of southern and
eastern Africa. This territorial empire proved ephemeral-
not even his bronze statue lasted out the century. He
created another empire, however, De Beers, which endured.
Rhodes arrived in the
port of Durban in South Africa in September of 1870.
He was then a gangly boy of seventeen with a long face
that made him appear taller than he was. He spoke with
a squeaky voice that disconcerted other passengers on
the boat. He had left England and traveled to South
Africa because of his failing health. He had a collapsed
lung and a weak heart, and his doctor predicted he would
not live to the age of twenty-one. His father, a poor
vicar in Hertfordshire, sent him on this voyage so that
if he did not miraculously recover. he would at least
die peacefully in a warm climate. His total stake in
the world, a gift from his aunt, was two thousand pounds.
Even with meager resources,
Rhodes was possessed by a dream. He wanted to extend
the British Empire throughout the world. In a will he
drew up several years later, he directed that whatever
money he ha acquired in his life be used to form a secret
society that would attempt, among other things, to bring
the United States back under British rule. He also envisioned
building a railroad from Capetown, at the southern tip
of Africa, to Cairo, at the other end of the continent.
The dream railroad, like all his other schemes, was
only a means to an end, as he had no real interest in
wealth. The end was colonizing Africa, from Capetown
to Cairo, for the British empire.
As he believed that
his life was not destined to be a long healthy one,
he set out immediately to acquire the capital to realize
his grandiose ambitions. A year earlier, diamonds had
been discovered near the Orange River on the edge of
the great Karoo desert in South Africa. Never before
had diamonds been found in Africa, and fortune hunters
from all over the world were converging on this spot.
His older brother Herbert, who was a prosperous cotton
grower in Natal province, had already staked out a number
of small claims.. Rhodes decided to join his brother
in the diamond rush.
He hired an oxcart for
the rugged trip to the diamond fields, which took a
month of traveling across open veldt. He bought a pick,
shovel, and other prospecting gear. And, as he was preparing
himself for the entrance examination for Oxford, he
took along with him a set of the Greek classics.
His brother's claims
were on a farm owned by two brothers, D.A. and J. N.
De Beer. The De Beer brothers were Boer settlers, interested
in farming, not diamonds. They sold off their land to
the swarm of prospectors and moved on, leaving behind
only their name: De Beers.
When Rhodes arrived
at the De Beers farm, he found the diamond rush in full
frenzy. After setting up his canvas tent, he wrote to
his mother, "I would like you to have a peep ... from
my tent door at the present moment. . . . Imagine a
small round hill, at its highest point only 30 feet
above the level of the surrounding country, about 180
yards broad and 120 feet long; all round it a mass of
white tents." He added, "It is like an immense number
of ant heaps covered with black ants as thick as can
be; the latter represented by human beings."
This encampment, which
was occupied by some 50,000 fortune hunters, was the
second most populous "city" in the whole subcontinent
of southern Africa. Within the next couple of years,
the tents were replaced by corrugated iron shacks brought
by ox cart from Capetown, and the city was named Kimberley
in honor of Lord Kimberley, the British secretary of
state for the colonies.
For Rhodes, however,
Kimberley remained a human anthill. When his brother's
claim yielded only meager results, he decided that immediate
profits were not in mining but in servicing the needs
of the multitude of "ants" who were pouring into Kimberley
by the thousand each week. He began his enterprise by
importing ice cream, and then jugs of water, which he
sold to the thirsty diggers. In doing so, he realized
that water was a two-fold problem for the claim owners.
On the one hand, they needed an ever-increasing amount
of fresh water for their black laborers as they dug
deeper into the ground for diamonds. On the other hand,
the seepage of ground water into the mines, as the diggers
approached the water table, was threatening to collapse
the dirt walls of the mines. There were thousands of
adjacent mines surrounding Kimberley, and the owners
needed a means of pumping the water out. Rhodes now
saw an opportunity for making his fortune.
He reckoned that soon
a steam-powered pump would be needed to suck the water
out of the mine. No such machine existed in Kimberley.
In fact, there was only one steam pump in all of South
Africa. Seizing the opportunity, Rhodes invested all
the money he had in buying it.
No sooner had Rhodes'
steam pump arrived in Kimberley than a torrent of water
flooded the Kimberley Big Hole mine. As the walls began
to collapse, the thousands of black workers in the mine
had to be pulled out of the mine with ropes. The individual
claim owners, who each owned various sections of the
floor of the mine, desperately needed Rhodes' pump and
they had no choice but to pay whatever he demanded.
Rhodes reinvested the
money he made in ordering bigger steam pumps from England.
He then ruthlessly drove whatever competition existed
out of his the pumping business~ his competitors charged
him with sabotaging their pumps~ and established a water-pumping
monopoly in all mines around Kimberley.
As he progressively
raised the charges for his pumps, the mine owners, and
even mine syndicates, could not afford to pay him in
cash. Instead, he got from them a share of the mines.
By the age of twenty-seven, he was the largest mine
owner in Kimberley. Although now exceedingly wealthy,
he had little interest in personal amenities. He shared
a tiny one-room shack with a business associate. He
wrote that the "chief good in life" was not for him
a happy marriage, great wealth or interesting travel,
but "the absorption of the greatest portion of the world
under [British] rule." In between his sharp dealings
in Kimberley, Rhodes managed to find time to take a
degree at Oriel College at Oxford. Here John Ruskin's
lectures on the virtues of imperialism renewed his ambition
to colonize Africa.
Returning to Kimberley,
he merged his interests with two huge miming syndicates
to form the De Beers Mining Company. He held the controlling
block of stock in this new entity and applied to the
Colonial Office in London for a charter. It was granted
in 1880, and was unlike any other charter ever given
to a mining company. Under its terms, Rhodes' company
was not confined to mining. It could build railroads,
lay telegraph wires, annex territories, raise armies
and install governments. Since the East India Company
had been established in the seventeenth century, no
company had ever been granted such unrestricted powers.
It was all part of Rhodes' dream of empire.
As the Kimberley mines
kept spewing out tons of diamonds, the price of diamonds
fluctuated wildly, and then, as diamond merchants were
unable to absorb these diamonds, the price dropped to
a few cents a carat. Mines closed, and claims were abandoned.
Rhodes wrote in a letter that diamonds were on the verge
of becoming a "frightful drug" on the market unless
production was brought under control. To accomplish
this, he proposed a new grand design for Kimberley:
the amalgamation of all the other mining companies into
his De Beers Company. Most of the other mine owners
were willing to be bought out by Rhodes. One was not.
His name was Barney Barnato.
Barnato, like Rhodes,
was an English subject. He had been born on July 5,
1852, in the East End of London. By coincidence, it
was the same day, but one year later, that Rhodes was
born; but here the similarity between the two men ended.
Barnato came from a Jewish slum, and instead of attending
school, he had to eke out a living on the street selling
rags and performing magic tricks for children. His real
name was Barney Isaacs, but he changed it to Barnato
so that he could join his brother in a music hall act.
The name stuck.
Barnato arrived in
Kimberley in 187 3 - He was twenty-one years old, and
had in his possession thirty pounds in English currency
and forty boxes of defective cigars. He proceeded to
sell the cigars to the diggers in the diamond fields.
He also gave boxing exhibitions, performed in a cabaret
and traded everything from feathers to garden vegetables.
The most profitable trading commodity proved, however,
to be diamonds.
Barnato bought diamonds
for cash from the diggers and quickly resold them. With
his profits, he bought up a number of unproductive claims
on the floor of the Big Hole. Then, to everyone's amazement,
these claims began yielding extraordinary quantities
of diamonds, even when rain storms made working the
adjacent claims impossible. Barnato was accused by other
mine owners of having salted his claim with diamonds
that he had illegally bought from smugglers and thieves.
But the charges were impossible to prove.
Whatever the provenance
of his diamonds, Barnato continued to expand his production.
With the money he sold them for, he began buying up,
piece by piece, the patchwork of claims on the floor
of the Big Hole. When cave-ins made it impossible to
dig any deeper in the Big Hole, mine owners rushed in
panic to sell their claims. Barnato continued to buy
these pieces of the jigsaw puzzle. Then, in 1883, he
gambled on sinking an underground shaft- the first ever
attempted for diamond mining. It worked, and the claims
he had bought for a pittance became worth a fortune.
just as Rhodes had gained control of the De Beers mine,
Barnato got control cr most of the Kimberley Central
Rhodes and Barnato-
both in their mid-thirties, by 1887, controlled the
world's two giant diamond mines. A confrontation between
these enormously ambitious men became inevitable. Rhodes,
if he was ever to have his empire, had to buy out Barnato.
He made the first move, attempting, with financial backing
from the Rothschild bank in London, to buy one of the
few pieces in the Kimberley mine that Barnato did not
own. He offered the then staggering sum of 1,400,000
pounds to the French financiers who owned it, not because
the diamonds in it were worth that sum but because it
would paralyze Barnato's effort to consolidate the Big
Hole into a single mine.
When Barnato received
word of Rhodes' bold offer, he himself offered 1,750,000
pounds to the French financiers for this crucial section.
He had no choice but to outbid his rival.
Rhodes, at this point,
decided to offer Barnato a deal that would seem too
lucrative for him to refuse. Instead of bidding up the
price, which would only benefit the French investors,
Rhodes suggested that Barnato withdraw his bid. In return,
Rhodes agreed to buy this section of the mine at the
lower price and then immediately resell it to Barnato
for 300,000 pounds and a one-fifth interest in Barnato's
Kimberley Central mine.
accepted the offer. It permitted him to acquire the
section for 1,450,000 pounds less than he had offered,
and with it, he could operate the mine as a single entity.
He realized that giving Rhodes a one-fifth interest
in his mine would provide him with a bothersome wedge
into his company, but he assumed that he and his close
associates still owned a sufficient number of shares
to make it impossible for Rhodes to attempt to gain
control. Barnato made the fatal mistake of underestimating
To Rhodes, the deal
was only the opening gambit in his war for control.
~You could never deal with obstinate people until you
got the whip hand," he explained to an associate at
the time. The one-fifth interest was to be his whip.
Rhodes set about asking
the most powerful bankers in Europe, including Rothschild,
Jules Porges, and Rodolphe Khan, to help him buy enough
stock in Barnato's company to allow him to merge it
into his company. He argued that as long as there were
competing diamond mines, the market would continually
be flooded. Then prices would fall to a pont that the
public would realize that diamonds had no intrinsic
The bankers were quickly
persuaded that Rhodes was right: Diamond mining would
only remain profitable if it were done by a monopoly
that could systematically restrict the supply. They
not only agreed to use the stock that they and their
clients held in Barnato's mine to bring about the merger
but they also advanced Rhodes money to buy up shares
of Barnato's stock on the open market.
The rest simply required
an exercise in stock manipulation. Rhodes first drove
the price of diamonds down by dumping De Beers~ inventory
of diamonds onto the market. The price plummeted, and
as Barnato's associates unloaded their stock, Rhodes
bought it. When no more stock was available, Rhodes
and his backers began again bidding up the price, which
tripled in three months. By the time Barnato realized
that Rhodes was attempting to buy up his company, it
was too late. By March of 1888, Rhodes and his associates
had acquired the additional 30 percent they needed for
control of the Kimberley Central mine.
Barnato had no choice
but to acquiesce in the proposed merger. He met Rhodes
at the Kimberley Club, and over an amicable lunch they
worked out the terms of the consolidation. Barnato would
exchange his stock in the Kimberley Central mine for
stock in De Beers Consolidated Mines, as the new company
would be called. This would make Barnato the largest
single shareholder, though Rhodes, with his bankers
and allies, would be firmly in control of the new company.
Barnato would also be appointed one of four life governors
of the monopoly-a position he would hold as long as
he lived. The two men then shook hands on the deal.
Barnato told him, Rhodes later noted, "You evidently
have a fancy for building an empire in the north and
I suppose we Must give you the means to do so."
There were still, however,
some dissident shareholders in I lie Kimberley Central
Company who opposed the merger. They sued Barnato and
Rhodes, claiming in court that the new company would
no longer be a mining company but an adventure in imperialism.
They argued that under the De Beers charter the company
might "undertake warlike operations" in central Africa.
To prevent further
litigation, Rhodes and Barnato, who between them controlled
four-fifths of the stock in the Kimberley Central mine,
simply liquidated the company and sold its assets to
De Beers. The 5,338,650 pound check that De Beers paid
for the assets was framed and hung on the wall of the
De Beers boardroom, in which it is still conspicuously
Rhodes then proceeded
to buy up two other small pipe mines in the Kimberley
area-the Dutoitspan and Bulfontain. By 1890, he controlled
more than 95 percent of the world's diamond production.
The next order of business was restoring the balance
between world supply and demand. Rhodes believed that
the demand for diamonds was determined by the number
of "licit relationships," as he termed engagements,
between the sexes each year. By estimating the intended
marriages each year in the United States, which was
then the main market for diamonds, Rhodes believed it
was possible to project the market for diamonds each
year. In accordance with this "licit relationship" calculus,
he began to reduce production in Kimberley from three
to two million carats a year.
Rhodes further held
that there should be a single channel of distribution
of diamonds. He therefore contracted to sell De Beers'
entire production to a London syndicate of diamond merchants,
who would then resell the diamonds to cutters in Antwerp.
Once the diamond business
was rationally ordered into a monopoly, Rhodes moved
on to the matter of restoring the British Empire. He
was elected prime minister of the Cape Colony and organized
a military putsch, aimed at taking over the Transvaal
from the Boer settlers, that failed. Rhodes did, however,
succeed in colonizing a large portion of central Africa.
Barnato, who by now
was one of the richest men in the world, returned to
the music hall and acted in a number of amateur productions
in Kimberley. Then, in 1897, on an ocean liner headed
back to England, he either jumped or fell overboard
and disappeared beneath a wave.
Rhodes died five years
later at the age of forty-eight. His body was buried
on a remote mountaintop in Rhodesia. He had never married
and he had no heirs. He left almost his entire fortune
to Oxford to finance future Rhodes scholars. At De Beers
there was no immediate successor to Rhodes, but the
vacuum would not remain unfilled for long. Within a
year of Rhodes' death another young entrepreneur arrived
in South Africa. His name was Ernest Oppenheimer.