29
With the advent of deep-level mining on the Witwatersrand, the Randlords began to reorganise their interests to cope with the new demands of the gold industry. At the forefront of the changes were Alfred Beit and the Corner House. Beit had been an early convert to the idea of deep-level mining propounded by the American mining engineers employed by Wernher, Beit & Co - Joseph Curtis, Henry Perkins, Hennen Jennings and Hamilton Smith. Beit’s partner, Julius Wernher, was more sceptical. The costs of deep-level mining - of sinking shafts to a depth of 1,000 feet or more - were huge, with no guarantee of success. To spread the risk, Beit decided to invite the Rothschilds in London and in Paris, and other business associates to participate in a new mining vehicle.
The outcome was a company called Rand Mines that was floated in February 1893, with a nominal capital of £400,000 in £1 shares. The firm of H. Eckstein & Co contributed 1,300 claims to the new company as well as the controlling interests in five existing companies; the partners in Eckstein, including Beit and Wernher in London and Phillips and Taylor in Johannesburg, were compensated with 200,000 shares in Rand Mines. Rothschilds picked up 60,000 shares. Other associates allowed in ‘on the ground floor’ were the American mining engineers and members of the diamond marketing syndicate that Wernher had founded in London. Beit also used the distribution of shares to cement working alliances with other Randlords and with potential allies. The Transvaal’s state secretary, Willem Leyds, the chief justice, John Kotzé, and the editor of the Johannesburg Star, Francis Dormer, were each offered 200 shares at par. Bought for £1 each, the shares would be worth a small fortune if the theories about the scope of deep-level mining proved accurate. Within five years of flotation, they were priced at £45 apiece.
Among the chief beneficiaries was Rhodes. Rhodes had hitherto regarded the Witwatersrand as a sideshow to his Zambesia venture. But once it was clear that Zambesia was not the Eldorado he had been expecting, he pressed Beit for a foothold in Rand Mines. ‘I shall make some arrangements with Rhodes and Rudd,’ Beit wrote in July 1892, ‘so as to make their interests fall in line with ours. I think it would be wise to do so. Rhodes’s brains are not to be despised and if we had interests apart from theirs there would always be friction . . .’ Beit duly offered Rhodes’ company, Gold Fields, an allocation of 30,000 shares in Rand Mines at par, helping to save Gold Fields from oblivion and allowing Rhodes back in as a serious player on the Witwatersrand.
A late-comer to the deep-level business, Rhodes moved vigorously to consolidate his position, merging Gold Fields with three other companies to form Consolidated Gold Fields of South Africa with a capital of £1.25 million. The new company soon prospered. Its assets included 1.2 million shares in existing or prospective deep-level mines; 50,000 shares in undeveloped outcrop properties; 25,000 shares in De Beers; 47,000 shares in the British South Africa Company; and 87,000 shares in other Rhodesian businesses. It showed a profit of £207,000 in 1893, nearly £309,000 in 1894, and £2.1 million in 1895 - a larger return than had ever been shown in one year by a limited liability company registered in London. Dividends paid to shareholders amounted to 10 per cent in 1893, 15 per cent in 1894, and 125 per cent in 1895.
Rhodes also acquired the services of John Hays Hammond, an ebullient American mining engineer of world reputation, giving him free rein to develop his gold interests. They met to discuss terms at Groote Schuur in 1894. Hammond wrote in his autobiography:
I told him frankly that I had a very poor opinion of his properties but I felt that, with his backing, I could acquire some other mining interests to level up his investments. Rhodes picked up a scrap of paper only a few inches long and wrote on it: ‘Mr Hammond is authorised to make any purchases for going ahead and has full authority, provided he informs me of it and gets no protest.’ In this brief manner I was made chief consulting engineer of the Consolidated Gold Fields of South Africa, and soon afterwards of the British South Africa Company . . . On the sole strength of this little scrap of paper I spent many hundred thousands pounds.
Rhodes agreed to pay Hammond a salary of £12,000 a year, making him the highest-paid individual in southern Africa. A deep-level enthusiast, Hammond went on to acquire a string of Rand properties that proved highly productive, establishing Gold Fields as a major mining enterprise and providing Rhodes with another fortune.
Despite the huge profits they were beginning to make, the Randlords constantly grumbled about the difficulties the industry faced. Whereas the price of diamonds was variable and had fluctuated wildly in the two decades before De Beers established its monopoly, the price of gold was fixed by international agreement at 85 shillings per fine ounce. The only way for the Randlords to win bigger profits was to cut costs. Yet the problems of cost-cutting proved intractable. Skilled white miners commanded premium salaries. A shortage of black labour meant higher wages were needed to attract workers. With the expansion of deep-level mining, the high price of dynamite, fixed by Kruger’s monopoly concession, became an increasingly prominent grievance. There was similar resentment over Kruger’s refusal to join a customs union with the Cape and Natal, which resulted in imports for the mining industry being subjected to duties at Cape ports or at the Natal port of Durban as well as the duties imposed by the Transvaal; foodstuffs and beverages were also taxed. High railway charges on the three lines running into Johannesburg - from the Cape, Durban and Lourenço Marques - provided another source of grievance; with a monopoly of all railway traffic linking the Transvaal to the sea, the Netherlands South African Railway Company was able to levy exorbitant charges on coal, imported mining machinery and foodstuffs.
Mining companies also became increasingly worried by the effects of the liquor monopoly used to supply African workers with cheap drink. According to the Chamber of Mines:
In very many cases the liquor supplied to the natives is of the vilest quality, quickly inflaming those who take it to madness, and causing the faction fights which sometimes have fatal results, and always lead to the, at any rate, temporary disablement of some of the combatants, and the damaging of property. Accidents, too, are often attributable to the effects of drink, and altogether . . . a large percentage of the deaths among the natives here is directly due to drink. In its bearing on the labour question, drink also plays an important part. The shortness in supply, as compared with the demand for labour, has been accentuated by it. Where possible more natives are kept in compounds than are actually required for the work to be done, to make allowance for those disabled by drink.
Along with grievances over monopolies, the scale of government corruption was another aggravating factor. ‘The Industry is blackmailed in every possible way,’ complained Jim Taylor, Wernher, Beit’s resident representative in Pretoria. ‘Every department has to be bribed to enable the merest trifle becoming accomplished.’
Two other disputes caused further acrimony. In 1894, a struggle broke out between Kruger and the Randlords over the underground rights to ‘bewaarplaatsen’ - the areas set aside by mining companies for dumping crushed residue and for water storage. The mining companies held the surface rights and, once they realised that payable reefs existed under the bewaarplaatsen, they claimed the underground rights. Their claim was supported by members of the Second Volksraad. But Kruger insisted that the underground rights belonged not to the surface-holders but to the state - a useful source of patronage. Large sums were used to influence the outcome. Lionel Phillips, the president of the Chamber of Mines and a member of Wernher, Beit & Co, wrote to Beit in London: ‘The Bewaarplaatsen question will, I think, be settled in our favour, but at a cost of £25,000, and then only because Christiaan Joubert [the minister of mines] has stuck to us like a leech.’ Kruger prevailed upon the First Volksraad to overrule the Second Volksraad but the Second Volksraad retaliated by passing a motion condemning the actions of the minister of mines and his officials. The Dutch-language newspaper Volkstem joined the attack. ‘Our State needs a Minister of Mines who not only is honest and clean, but who is knownto be so.’ In the end, the matter was shelved, but it added to the pile of grievances.
A similar struggle occurred over the cyanide patent for winning gold from ore. Kruger wanted a state cyanide monopoly to control it, with a favoured company acting as the government’s agent. Phillips wrote to Beit: ‘The cyanide monopoly . . . suddenly comes up again and is in a rather dangerous state. Fortunately Dr Leyds and Esselen [the state attorney] are dead against it and we may baulk it this year . . . next year however it will come up again [in the Volksraad] even if we succeed in postponing it. The other side is spending lots of money in bribes and we shall probably have to spend more next year than this to oppose it.’ On this occasion, Phillips succeeded in ‘baulking’ the monopoly.
The uitlander community, meanwhile, had become increasingly vociferous about their own grievances over political rights. By 1895, the white population of Johannesburg had reached about 50,000; most of them came from Britain and the Cape Colony; only 6,000 were Transvaalers, mainly impoverished Boers. No accurate survey of the overall white population of the Transvaal had ever been conducted, but even Kruger was prepared to accept that uitlanders by then outnumbered Boers.
The first organised uitlander opposition to Kruger came in 1892 when a ‘Transvaal National Union’ was launched ‘to obtain by all constitutional means equal rights for all citizens of this republic, and . . . the redress of all grievances’. Its leader, Charles Leonard, a prominent Johannesburg solicitor, explained the need for such an organisation to a public meeting in August 1892:
Who made the Transvaal? We came here and found the original burghers settled upon farms; they had no market; no means; their only means of living was to contract their wants . . . Who enabled them to live, who made markets for them? We! Yet we are told that we are mere birds of passage, and that, because they were here before us, we have no rights. We send our best men to Pretoria and let them plead their best - only to be snubbed. Memorials are sent to the Volksraad, and referred to a committee, and thereafter they are never heard of again. Unless we rise as one man and tell our feelings we shall never be understood and listened to.
But Kruger would not be budged. Petitions that the national union sent to Pretoria in 1893 received scant attention; a petition with 13,000 signatures in 1894 was no more successful; another petition sent in August 1895 was said to have been signed by 35,000 people, though some signatories were clearly bogus. Opposition members in the Volksraad were sympathetic to their cause. Lukas Meyer proposed that uitlanders resident in the Transvaal for five years who had reached the age of thirty-one and possessed a property qualification should be enfranchised. But after a long and heated debate, the proposal was rejected.
Leading uitlanders and newspapers such as the Johannesburg Star became increasingly abusive. Uitlander numbers were exaggerated to bolster their case; many claimed that ‘nine-tenths of the population’ were denied the vote. A British visitor to the Witwatersrand, James Bryce, noted in 1895: ‘Hearing nothing but English spoken, seeing nothing all round them that was not far more English than Dutch . . . it was natural that the bulk of the Uitlanders should deem themselves to be in a country which had become virtually English, and should see something unreasonable and even grotesque in the control of a small body of persons whom they deemed in every way their inferiors.’ In Cape Town, Rhodes threw his weight behind the uitlander cause. ‘The Transvaal and President Kruger will have to consider whether a system should continue which refuses nine-tenths of the population under it the franchise.’
Another dispute over citizenship flared up when Kruger ordered a white mobilisation to deal with a dissident African chief, Lebogo, in the Zoutpansberg; British residents - twenty-three in all - as well as Hollanders and Germans were included. When five conscripts refused to obey the order, they were arrested. Their case went to the Supreme Court where Chief Justice Kotzé decided in favour of the state. The men were put under armed escort and sent to the Zoutpansberg. Leonard’s national union jumped in to protest, appealing for British intervention. The British government duly instructed Sir Henry Loch, the high commissioner, to visit Pretoria to sort out the dispute.
The farce that ensued was long remembered by both sides, but by Kruger with particular bitterness. As Loch’s train drew in to the new Pretoria station, a huge pro-British crowd was there to greet him with renditions of ‘God Save the Queen’ and ‘Rule Britannia’, much to Kruger’s obvious displeasure. As Kruger and Loch sat side by side in the carriage taking them to the Transvaal Hotel where Loch was staying, an Englishman carrying a Union flag leapt up on to the coachman’s seat. The flag draped itself around Kruger’s shoulders and though he struck at it repeatedly with his stick, he was unable to free himself from it. On their arrival at the Transvaal Hotel, there were further demonstrations of British loyalty. The incident was swiftly brought up in the Volksraad where it was deemed to be an open insult to the president. Kruger himself remarked: ‘I have not for a moment believed that decent Englishmen were involved. But, I am afraid, this is only oil on the fire, and that bitter feelings between the old and new section of the population are aggravated.’
As a fervent imperialist, Loch saw the matter differently. He believed that uitlander discontent could be used as a means for Britain to reoccupy the Transvaal. While he was in Pretoria, deputations arrived from Johannesburg urging him to intervene, telling him that Britain would be assured of a warm welcome from 10,000 able-bodied men if it decided to act. As a result of these discussions, Loch became convinced that an uitlander uprising was inevitable at some stage. In a secret despatch to the Colonial Office in July he spoke of the need ‘to force matters with a high hand on the ground’, warning ‘that the Uitlanders were bound to win in the struggle with the Boers, and that if they won without British help, they would probably maintain the independence of the Republic and pursue a policy hostile to federation’. He proposed that he should be authorised to deploy the Bechuanaland Protectorate police to support the uitlanders in the event of an uprising, prior to the intervention of British garrisons stationed in the Cape and Natal, and suggested that the railhead at Mafeking on the Transvaal border would provide a suitable base for launching an invasion.
A senior Colonial Office official, Sir Robert Meade, described Loch’s proposal as ‘extremely dangerous’. It would simply encourage the uitlanders ‘to make excessive demands and the Boers will understand that we deliberately mean to force things to an issue and bloodshed will be the inevitable result’. Meade concluded: ‘Every nerve should be strained to prevent such a disgrace as another S. African war.’ The colonial secretary, Lord Ripon, concurred. In trying to obtain the Transvaal by force, he pointed out, Britain might lose all of southern Africa. Loch was subsequently rebuked for his ‘extraordinary injudicious manner in coquetting with the would be Rebels’ and recalled from his post. But his scheme for external armed intervention in support of an uitlander uprising impressed Rhodes.
Adding to this pot-pourri of disputes and grievances was an even more potent factor. To counteract British pressure on the Transvaal, Kruger decided to cultivate links with Germany, rattling not only Rhodes in the Cape but British politicians in London. ‘If one nation [Britain] tries to kick us, the other [Germany] will try to stop it,’ Kruger explained in 1894. He encouraged German investment and German immigration. At a banquet to mark Kaiser Wilhelm’s birthday in 1895, Kruger spoke of cementing his ties with Germany. He referred warmly to the visit he had made to Germany in 1884 and to the cordial reception the Kaiser’s father had given him; even though the Transvaal was then only ‘a small child’, the Kaiser had treated him as ‘head of an important, independent State’. The time would come, he said, ‘when our friendship will be closer than ever’.
As for my German subjects, I have found them ever loyal, and willing to obey the laws of the land. I have had many difficulties with the Natives in this Republic, and I must say that, though Her Majesty’s subjects behave well and are loyal to the State, in times of trouble they turn to Great Britain and declare that they are the subjects of Her Majesty. The Germans, in this State, will not behave in a similar manner. Joyfully and willingly they obey the laws of the land and are not involved in the incitement of Transvaalers against these laws.
With the support of Germany and revenue gushing from the gold mines, Kruger was now in a position to establish the Transvaal as the dominant state in southern Africa, thus challenging British hegemony in the region and thwarting Rhodes’ plan for a confederation of British-ruled states. Rhodes decided the time had come to remove him.
The consequences were disastrous.
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