Modern diamond mining as we know it began in South Africa’s diamond fields in the 1870s. We continue with the story of how it developed and how Rhodes came to monopolise the Kimberly diamonds.

By Dr Michelina Andreucci

THE two shrewd, able young men determined to stay soon became rivals.
One was Rhodes the digger, who had come at his brother’s suggestion to supervise his gang of workers and sort diamonds on the edge of the mine. The other was Barney Barnato, a kopje walloper, a Whitechapel Jew, with the worst of Jewish traditions behind him; of whom it was said: “…The only man he (Rhodes) feared in South Africa was a cunning little Jew called Barnato…”
At first; business was frenziedly speculative; with wide fluctuations, due to flooding, over-buying or nervousness in the money market. One heard of a claim being bought for £50, and finding diamonds worth from £15 000 to £20 000 in two months. Claims soon went up in value until (around the time of Rhodes’ arrival at Kimberley) they were worth from £2 000 to £4 000 each.
There were many good chances missed from lack of cash; for banks, as is the case today in Zimbabwe, treated the claim holders with little respect and much suspicion. Yet by all account, Rhodes handled the banks with boldness and skill, and by 1875 Rhodes was considered ‘…a man of some importance and authority…’
Rhode’s firm grew in strength until by 1880 the first De Beers Mining Company was registered, with a capital of £200 000; becoming the world’s largest diamond miner in the industry. De Beers and its subsidiaries came to own mines that produce approximately 40 percent of the world’s annual diamond production; for most of the 20th Century over 80 percent of the world’s rough diamonds passed through De Beers of South Africa.
In 1873, Rhodes returned to England to attend Oxford University, where he attained the philosophy of his imperialist credo of ‘…the conquest of Africa for the British Empire’ which he pursued the rest of his life. His philosophies of British Imperialism where a brotherhood of elite (white) Anglo-Saxons would occupy and dominate Africa ‘from Cape to Cairo’, the Holy Land and other parts of the world, leading to the ‘ultimate recovery of the United States of America…’
In 1874 and 1875, after the softer, yellow layer near the surface had been worked out, the diamond fields of South Africa were in the grip of depression and many left. Rhodes and Rudd were among those who stayed to consolidate their interests.
They believed diamonds would be numerous in the hard ‘blue ground’ kimberlite that had been exposed after the initial diggings.
Over the next 17 years, financed by British banker and politician N.M. Rothschild & Sons, (of the international Rothschild financial dynasty), Rhodes and his partners succeeded in buying up the smaller diamond mining operations in the Kimberley area, becoming ever wealthier.
By his mid-30s, Rhodes, the sickly consumptive boy had become, in today’s terms, a billionaire.
From 1880 to 1895 Rhodes’ star rose steadily. Basic to this rise was his successful struggle to take control of the rival diamond interests of Barney Barnato, reckoned to be the more powerful since the Kimberley Mine was richer and bigger than the De Beers.
Barney Barnato was to be Rhodes’ only rival. As a child Barnato was a little, weakly, sorrowful boy, often seen sitting crying on a doorstep in a Middlesex Street; as a youth Barnato stood outside the Garrick Theatre in Leman Street, begging from the theatre goers.
In such hard schools Barnato learned sharpness of wit and resourcefulness. He learned to use his fists as well as his head and his tongue; ignorant, impudent and self-confident, together with his partner Cohen, with £30 and 40 boxes of doubtful quality cigars as their sole capital, they would pound the African kopjes for stray diamonds, full of resource, energy and high spirits.
Barnato was a shrewd, cunning man, said to be ruled by the love of money; learning to handle men with the false bonhomie of the street corner. Like Rhodes, he believed in amalgamating small claims. They raced neck and neck, till by 1880 he floated the Barnato Mining Company, which comprised some of the richest claims in the Kimberley Mine.
For the next eight years they were to struggle for mastery, until in the end the best man won. Rhodes marshalling forces, arranging detail, his mind constantly at work conciliating or defeating opponents, consolidated the diamond fields upon his own terms.
Rhodes’ power and strength in the diamond-mining industry developed until, in 1880, he formed the De Beers Mining Company; a company whose extraordinary powers led to acquiring lands for the purpose of extending the British Empire. He also formed Goldfields of South Africa, with several large gold mines in the Transvaal — although Rhodes was alleged to be less successful with gold as he was with diamonds.
The Witwatersrand Gold Rush in the Transvaal was an important part of South Africa’s history, where gold production went from zero in 1886, to 23 percent of the total world output in 1896. Its discovery also led to the founding of Johannesburg and tensions between the Boers and British settlers.
Both Barnato and Rhodes believed strongly that to amalgamate was to their best interests (in an industry in which monopoly could be justified); for not only would a single management lessen working costs, but it would eliminate competition in selling and controlling the supply, for the value of diamonds depends on their scarcity.
To flood the market with diamonds would be an economic crime. While both men were clearly aware of this, each was determined to amalgamate only on his own terms.
While Barney Barnato had the interests of his shareholders as well as his own; Rhodes wanted to use the wealth to develop the North (including Zimbabwe), which according to Barnato’s partner Cohen; “…Barnato often told me that Rhodes was dotty…. He would gasp with mocking laughter as he spoke of Rhodes’ crackpot schemes…”
Rhodes planned the Consolidated Diamond Company be given the necessary powers for his expansionist plans.
The negotiations fell apart and a major battle began between them.
Rhodes began to buy. Prices went up; but he still bought. Barnato’s supporters were tempted by the high prices as they fell one by one. Barnato found himself overpowered; he could only surrender.
The final negotiations were reported to last all one morning, afternoon, evening and night, finally reaching a settlement at four in the morning.
On March 13 1888, Rhodes, together with Charles Rudd, who was also a partner in the Niger Oil Company, achieved control over the diamond industry in Kimberly by consolidating his De Beers Company with Barnato’s interests to form the De Beers Consolidated Mining Company Limited.
Barnato was made a life governor, Rhodes the chairman and got his way with the constitution of the company. De Beers reputedly had the largest capital in the world at the time of £200 000 (currently between US$24-30 million on the international exchange).
Dr Michelina Rudo Andreucci is a Zimbabwean-Italian Researcher, Industrial Design Consultant and Specialist Hospitality Interior Decorator. She is a published author in her field. For Comments E-mail: linamanucci@gmail.com