Diamonds Are Forever

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.

On the Witwatersrand, the gold-mining companies quickly adapted the Kimberley precedent to the conditions of their industry. They required vast investments of capital to sink shafts, to process the rock, and to purchase dynamite and other stores. The price of their product—gold—was fixed by international agreement. Consequently, the only cost factor that they could readily control was the cost of labor. But in the early days on the Witwatersrand, as in Kimberley, they required a considerable number of workers with mining experience elsewhere—that is to say, men from Europe, America, and Australia; and they had to pay such people high wages to attract and keep them. That left only one controllable variable, the cost of unskilled labor. In the racist environment of South Africa, the outcome was the same as in Kimberley: the skilled white workers carried the unskilled whites with them into secure employment, high wages, and the opportunity of acquiring and exercising skills, while the companies employed Africans on short-term contracts, paid them low wages, and gave them no opportunity to live with their families, or to acquire and practice skills and move up the labor ladder.

The Randlords rationalized these differences by contending that Africans had an adequate livelihood in their rural homes and were only earning a non-essential supplementary income when they came to the mines. That claim remains part of the mythology of white South Africans to the present day. It was—and is—false on many counts. By the late nineteenth century whites had conquered the African peoples of southern Africa, and deprived them of most of their ancestral land and their capacity to produce a subsistence. Moreover, the Randlords were ignoring the devastating effects of the migrant labor system on African social life.

When the gold-mining companies resumed production after the British conquered the Transvaal in 1902, costs rose because they were operating at ever greater depths and with increasingly low-grade ores. In this predicament, the companies reduced African wages and there was a shortage of unskilled labor. Rather than raise African wages, the Chamber of Mines imported more than sixty thousand Chinese under three-year indentures, paying them even less than they paid the Africans, and repatriating them at the end of their contracts. By the time this scheme ended in 1910, the recruiting organizations created by the Chamber of Mines were bringing in sufficient Africans to meet the needs of the companies, without raising their wages.

In 1922, when the next crisis in profitability came, the Chamber of Mines reduced the proportion of white employees. The white miners—most of them by then Afrikaners—responded by staging a revolt in Johannesburg, some of them adopting a slogan that could only have been created in South Africa: “Workers of the world unite, and fight for a white South Africa.” The Smuts government brought in troops to suppress the uprising, but in the long run, since white labor had some political power and black labor had virtually none, the white miners won their point.

Reacting against Smuts’s heavy hand, the white miners carried the Labor party into an alliance with J.B.M. Hertzog’s Afrikaner Nationalist party, to win the 1924 parliamentary election. The coalition government then proceeded to pass laws to ensure that the superior jobs on the mines should be reserved for whites. The result was that the ratio of black miners to white miners dropped from more than eleven to one in 1922 to just over nine to one in 1925 and stayed thereabouts for the next forty years, during which time the gap between African miners’ real earnings and the real earnings of white miners was never less than one to ten.

In discussing the presence of Jews in the mining industry, Wheatcroft says that the important question was “not what the mining magnates’ origins were, nor even how honest they were, but what power they had and how they used it.” In dealing with the degradation of black labor in South Africa, he does not apply that dictum. He presents some of the relevant facts, but he scatters them among many different chapters and buries them under masses of details about the private and public lives of his characters. Moreover, he tells us very little about the pressures that were put on Africans to enter the labor market, or about the conditions under which Africans worked underground and lived in the compounds, and scarcely anything about the white workers who were the co-beneficiaries of African degradation. Indeed, before we can come to a conclusion about the extent of the Randlords’ responsibility for apartheid we need to have a tough assessment of the choices they might have made in their relationships with their shareholders, the state, the white working class, and the black workers. Wheatcroft gives us little help in this direction.

Wheatcroft is more forthright in dealing with the controversial question of the responsibility of the Randlords for the South African war of 1899–1902, which the British call the Boer War and Afrikaners the Second War of Freedom. The British blundered into that war in the naive expectation of an early and easy victory, which was to have been followed by the firm and lasting incorporation of the Transvaal and the Orange Free State into the British Empire. In fact, the war continued for thirty-three months; it consumed at least 22,000 British, 25,000 Boer, and 12,000 African lives; it cost Great Britain almost half a billion dollars; and, supreme irony, though the British won the war in a formal sense, they certainly lost the peace. In 1910 South Africa was indeed united, as British imperialists had hoped; but the prime minister and his chief lieutenant were Louis Botha and Jan Smuts, erstwhile leaders of Boer commandos. Half a century later a vehemently racist and anti-British Afrikaner political party got control of the government and in 1961 it removed South Africa from the British Commonwealth.

According to J.A. Hobson, a contemporary British economist and radical MP, Britain went into the South African war “to place a small international oligarchy of mine-owners and speculators in power at Pretoria”—an interpretation that influenced Lenin’s analysis of the relationship between capitalism and imperialism, and became the starting point for a strong tradition of materialist writing. The opposing interpretation, as in the work of Ronald Robinson and John Gallagher, put primary emphasis on the actions of British politicians and administrators and on their imperialist ideology.

There certainly was no automatic, impersonal capitalist drive to war, and the Randlords were not the primary warmongers. For one thing, they disagreed among themselves. A few of them actively worked for British military intervention. In 1895, Rhodes had masterminded what became known as the Jameson Raid, a futile attempt at an invasion of the Transvaal by a force under Leander Starr Jameson, in coordination with a revolt of the Uitlanders (foreigners) in Johannesburg, which was to have led to British annexation. But there was no Johannesburg rising and Jameson’s puny force surrendered ignominiously to a Boer commando. After that, Rhodes, chastened and discredited, did not have any significant effect on the events culminating in the outbreak of war.

It was Percy FitzPatrick, the author of Jock of the Bushveld, who organized the Uitlander petitions for British intervention, wrecked an attempt by the Kruger government to negotiate a settlement, and published a bitter anti-Kruger polemic, The Transvaal from Within; but insofar as men like him contributed to the war, their motives were ideological rather than economic. The gold-mining industry was making substantial profits during the last years before the war. The Kruger government was redressing some of its legitimate grievances; and the Randlords had no compelling economic reason to risk the probable stoppage of production that the war would bring and the possible destruction of their mines. Nor were the Randlords the main decision makers. That responsibility lay with Joseph Chamberlain, secretary of state for the colonies, and, above all, Alfred Milner, high commissioner for South Africa.

It was Milner who encouraged FitzPatrick to foment the Uitlander movement. Milner brushed aside the Transvaal reforms, rejected Kruger’s offers of negotiation, and skillfully sucked the British government into the war. And Milner, a star product of the Oxford school of idealist philosophy, was the most narrowly ideological of all British proconsuls. He called himself “an imperialist, through and through.” He despised the Randlords as a class. Kruger’s Transvaal, enriched by gold, was pulling all of South Africa out of the British orbit. War, wrote Milner, would “knock the bottom out of ‘the great Afrikander nation’ for ever and ever.”

Wheatcroft has some interesting things to say about the origins of the war. He adduces fresh material about the attempts of the Randlords to square the press in Johannesburg and Cape Town—before the days of radio and television the press was, of course, the chief molder of public opinion. But he fails to describe the reforms authorized by the Kruger government and applied by its young state attorney, Jan Smuts, after Jameson’s Raid—reforms that went some way toward satisfying the legitimate economic interests of the mining companies. Indeed, he exaggerates the Randlords’ cohesion on the war issue and their influence over the events leading to the outbreak of war. For Wheatcroft it was “the War for the Rand.” Thomas Pakenham shows better judgment in his magnificent book, The Boer War.^* He calls it “Milner’s War.”

In his preface to The Randlords, Wheatcroft explains,

Some years ago I became fascinated by the story of the mining industry and the mining magnates of South Africa, a country with which I had no connections and which I had never then visited. There seemed to be no entirely satisfactory book on the subject. For one thing, more even than with most historical subjects, there was a yawning gap between the popular book and the academic; if one wanted to be sharp, between the uncritical and the unreadable. So I set off in the hope of bridging the gap, having managed to convey a little of my rapt interest to others who made the writing of this book possible.

Has he succeeded? Yes, he has produced a lively book, replete with details about the impact of the South African millionaires on British society in the reign of Edward VII—their properties in Park Lane and Belgrave Square and in the home counties, and their scramble for titles. FitzPatrick, Wernher, Robinson, and several others received knighthoods. He relates an amusing aftermath. In 1922 Lloyd George decided to elevate Robinson to a peerage and the award was actually published in the official gazette, but the members of the House of Lords poured out such “a torrent of abuse” on Robinson’s head that “a week later the Lord Chancellor read the Lords a letter from Robinson to Lloyd George,” declining the award. With varying degrees of success, Wheatcroft has chronicled the ways the Rand magnates organized the two great mining industries, subjected the indigenous people to degradation, and contributed to the British conquest of the Boer republics; but he has left some of the most interesting questions unanswered.

Wheatcroft misleads his readers about several phases of South African history. This is the typical weakness of the non-specialist author who carves a theme out of the history of a region without steeping himself in its broader setting. For example, his summary of the antecedents of the Bantu-speaking African population of South Africa concludes:

The Bantu began to arrive on the Limpopo in the sixteenth century and pushed on into the lush grazing lands of what is now Natal, settling not in tiny groups like the Bushmen but in hundreds of thousands, millions even.

This is a travesty of the actual process; its most blatant error is in dating the beginning of African settlement in the region in the sixteenth rather than the third century AD—an error with political implications, since South African propaganda has used the later date to vindicate white claims to the land.

Most egregious of all is Wheatcroft’s astonishing proposition that the manifesto issued in 1836 by the Afrikaner voortrekker, Piet Retief, “bore a striking resemblance to the Declaration of Independence.” Retief’s document was, it is true, written to justify his rejection of British rule, but that’s where the resemblance ends. It denounced the British regime in the Cape Colony for being influenced by Christian missionaries who had criticized Afrikaner ill-treatment of black people; and it asserted that the voortrekkers would “maintain proper relations between master and servant,” i.e., black and white, in the independent states they planned to found. This they proceeded to do by assuming ownership of land in Natal, the Orange Free State, and the Transvaal, and enserfing the African populations.

Wheatcroft’s tendency to repeat official South African propaganda crops up again when he comments on the contemporary scene. He describes the Progressive party that was formed in the Cape Colony after the South African war as “a coalition of jingoist, Dutch-hating, anti-Krugerite, moneyed imperialists and of Cape Liberals who hoped to introduce Coloured and other black citizens into the polity.” This is not far from the truth but he then goes on to call it “a curious mixture at first sight but exactly prefiguring the Progressive Federal Party, the South African opposition eighty years later,” which is to caricature the modern party.

He also denigrates African resistance to apartheid:

They want to be rid of white supremacy and yet they want to go on enjoying the benefits of a rich industrial society. Soweto is not merely a grim compound: it is the most prosperous black African city anywhere. This explains the continuing failure of the African Nationalist [sic] Congress and other revolutionary organizations to stir up the blacks. They have compromised with gold.

As anyone who has been reading the newspapers during the last few years should know, this simply misrepresents recent South African history.