The Consolidation

And now having seen what Rhodes is trying to do, let us turn to Kimberley for a moment. Kimberley was to be the base of operations, the source of supplies. The diamond mines were of value to Rhodes not for themselves or because they gave him personal wealth, but because they furnished him with the means to carry on his great campaign for a British Africa. We have seen how he gradually turned from digging to dealing in claims, with the general object of consolidating the diamond interest. He worked besides upon contracts, to empty the mine of water, to remove waste ground, and so forth. With immense energy and perseverance, he used such means to his end. There are stories of him scouring the country in a little cart to get wood for the wheezy old farm engine that he used to pump out the water. He met and surmounted a thousand difficulties, throwing them aside, as it were, with his own brawn and sinew, his mind constantly at work arranging detail, marshalling forces, conciliating or defeating opponents. At last, as we have seen, only two great interests were left—Rhodes and his friends in De Beers, and the Barnato Mining Company in the Kimberley Mine. Rhodes controlled his mine; but it could hardly be said that Barnato held the same position in the Kimberley, for the Compagnie Française held some important claims. But even in that company Barnato had an influential share, and Barnato was reckoned to be the more powerful since the Kimberley Mine was richer and bigger than the De Beers. Now it is plain that at this stage amalgamation was to the interests of both men, for not only would a single management lessen working costs, but it would eliminate competition in selling and control the supply. If there is one industry in which monopoly is justified, it is the diamond industry, for the value of diamonds depends on their scarcity. To flood the market with diamonds would be an economic crime. But while both men saw all this clearly, each was determined only to amalgamate upon his own terms. Barnato was all for his own interests and the interests of his shareholders—he was for strict business: Rhodes was for something more; he wanted to use the wealth of the mines to develop the North, and he proposed that the Consolidated Company should be given the necessary powers. To Barnato this seemed mid-summer madness. "Barnato," says Cohen, "often told me that Rhodes was dotty, and I'm sure he fully believed it. He used to gasp with mocking laughter as he spoke of Rhodes's 'crackpot' schemes." So there the negotiations split, and the great fight began. Barnato's weak point, as we have seen, was the holding of the French Company. Rhodes went to Europe, obtained the necessary financial backing, and bought these claims from the directors for £1,400,000. But Barnato had enough influence with the shareholders to organise a successful opposition to this settlement. Rhodes pretended to be beaten. He offered Barnato the claims for their equivalent in Kimberley shares. Barnato eagerly agreed, and so gave Rhodes a great holding in the Kimberley Mine. Then Rhodes began to buy. Prices went up; but he still bought. Barnato's supporters were tempted by the high prices. They fell one by one. Barnato found himself surrounded, overpowered, "bested," as he described it. He had nothing to do but surrender. The final negotiations, as Mr. Raymond tells us, lasted all one morning, afternoon, evening, and night, and at last at four in the morning a settlement was reached. Barnato was made a Life Governor, and in return Rhodes had his way as to the constitution of the company. "Some people," said Barnato, as he yielded the point, "have a fancy for one thing, some for another. You want the means to go north if possible, and I suppose we must give it you." Only one obstacle remained. Some of the shareholders in the Central Company objected that the Consolidation was illegal because De Beers was not a "similar Company." The case came before the Supreme Court, and the judges were amazed to hear of the powers of this diamond mining trust. "They can do anything and everything, my lord," said counsel for the shareholders; "I suppose since the time of the East India Company, no company has had such power as this. They are not confined to Africa, and they are even authorised to take steps for the good government of any territory; so that, if they obtain a charter in accordance with the trust deed from the Secretary of State, they would be empowered to annex a portion of territory in Central Africa, raise and maintain a standing army, and undertake warlike operations." It is not surprising that the Court decided that this was not merely a diamond company, and the Consolidation was stopped. But Rhodes took a short way with the objectors. He placed the Central Company in liquidation and bought up the property. Thus by January 1889 Rhodes had consolidated the diamond mines, and obtained the financial means for the northern expansion.