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The Randlords in 1895: A Reassessment

Published online by Cambridge University Press:  16 January 2014

Robert V. Kubicek
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Extract

Ever since J. A. Hobson characterized financiers as monolithic and conspiratorial, particularly those who were supposed to have been responsible for manipulating decisively events which led to the outbreak of the South African war, historians have stressed the need to examine their financial activities. However, the South African goldmining financiers have not been as thoroughly scrutinized as the politicians (Chamberlain and Kruger) or the administrators (Loch, Rosmead and Milner). Rhodes, of course, has been much studied, but more as politician and imperial strategist than as a Randlord. One recent exception to this neglect is G. Blainey's study based on an examination of mining techniques and technology. He asserts that a certain sector of the mining industry was hard hit by the policies of the Transvaal government, and that it was Randlords from this deprived sector (the deep-level operators) who triggered the Johannesburg uprising. What follows, based on the records of the mining houses, attempts to answer several questions about the key Randlords in 1895 which have often been raised but not satisfactorily answered. How monolithic and conspiratorial were the Randlords? What devices did they use to generate capital and take profits? What in 1895 were precisely their financial requirements and expectations? Was there, as Blainey suggests, a common concern about capital wants and anticipated profits which distinguished Randlords who participated in the attempt to overthrow Kruger's republic in 1895 from those who did not?

II

Groups which search for profits are no more free of internecine disputes than groups which seek power.

Type
Research Article
Information
Journal of British Studies , Volume 11 , Issue 2 , May 1972 , pp. 84 - 103
Copyright
Copyright © North American Conference of British Studies 1972

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References

1. Hobson, J. A., Imperialism: A Study (2nd ed.; London, 1938), p. 59Google Scholar; and by the same author, The Evolution of Modern Capitalism (2nd ed.; London, 1906), pp. 265–272Google Scholar. See also Garson, N. G., “British Imperialism and the Coming of the Anglo-Boer War,” South African Journal of Economics, XXX (1962), 140–153CrossRefGoogle Scholar for a review of the historiography.

2. Blainey, G., “Lost Causes of the Jameson Raid,” Economic History Review, Second Series, XVIII (1965), 350–66CrossRefGoogle Scholar. Also see Denoon, D. J. N., “‘Capitalist Influence’ and the Transvaal Government During the Crown Colony Period, 1900-1906,” Historical Journal, XI (1968), 301–31CrossRefGoogle Scholar.

3. van der Poel, J., The Jameson Raid (London, 1951), pp. 105, 112Google Scholar.

4. Emden's, P. H.The Randlords (London, 1935)Google Scholar has been largely Superseded as a source for the personal and financial relations of the mine owners by the works of Cartwright, A. P., especially his The Corner House (Cape Town, 1965)Google Scholar, and Gold Paved the Way (London, 1967)Google Scholar. I am much indebted to Mr. Cartwright for amplifying a number of points in his published works and for helping me use archival materials in London and Johannesburg.

5. A number of problems prevent a definitive calculation. The most exhaustive studies of investment on the Rand have been conducted by S. H. Frankel. See his “Return to Capital Invested in the Witwatersrand Gold-Mining Industry, 1887-1932,” Economic Journal, (1935), 68–76Google Scholar; Capital Investment in Africa (London, 1938), Chap. IIIGoogle Scholar; and Investment and the Return to Equity Capital in the South African Gold Mining Industry, 1887-1965 (Oxford, 1967)Google Scholar. As he notes the industry in its infancy featured many flotations which were short-lived and which provided inadequate information about their capitalization. In calculating actual capital represented by vendor shares in his latest study, Frankel does not allow for their short-term over-valuation (Equity Capital, pp. 6, 11, 13). His earlier estimate (Capital Investment, p. 95) or actual capital invested up to the end of 1895, i.e. £17,329,391, includes capital derived from debenture issues which by his later calculation (Equity Capital, p. 119) stood at £1,461,194 unrepaid at the end of 1895. This would leave capital obtained from share issues at £15,868,197, a figure less than half his later calculation (Equity Capital, p. 116) but which is close to one I have derived (i.e. £14,836,060) mostly from examining the capitalization of the mines as set out in Goldmann, C. S., South African Mines (London, 1895–1896)Google Scholar. Goldmann worked for Sigismund Neumann, one of the important Randlords, and he was a director of a number of mines. He was, therefore, able to publish an exhaustive compendium from company statements. His work, however, is not completely authoritative because such mine owners as Barnato and Robinson provided misleading statements of working Capital supplied in their company prospectuses. If anything then, the figure of £15,000,000 is an over-estimate.

6. See The Economist, LII (December 8, 1894)Google Scholar, 1503-04 and LIII (September 21, 1895), 1237. In August 1895, a monthly settlement day for gold shares was provided on the coulisse, the unofficial stock market in Paris, but the next month it was decided not to permit the introduction of any new gold shares until January 1896. Ibid., LIII (August 31), 1147; and LIII (September 28, 1895), 1272.

For market operations in gold shares see Burn, J., Stock Exchange Investments in Theory and Practice (London, 1909), pp. 184–87Google Scholar, Powell, E. T., The Mechanism of the City (London, 1910), pp. 30-31, 66, 94–99Google Scholar; and Withers, H., Stocks and Shares (new ed., London, 1917), pp. 266–77Google Scholar.

7. Sayers, R. S., Bank of England Operations, 1890-1914 (London, 1936), p. 14Google Scholar, notes than an increase in the gold supply, the result of South African production, contributed to making the mid-nineties a cheap money period.

8. Hall, A. R., The London Capital Market and Australia, 1870-1914 (Canberra, 1963), p. 171Google Scholar.

9. Rand Mines, Johannesburg Archive (Subsequently referred to as R.M.J.A.), Rodolphe Kann to Julius Wernher, October 14, 1895, translated from the German. Also see The Economist, LIII, October 5, October 12, and November 9, 1895, pp. 1305, 1333, 1455–56Google Scholar.

10. At the height of the boom it was calculated that the issued capital of the mines for which a quotation could be obtained in London was £34,284,681, while their market value was £151,793,446. The Economist, LIII, (September 14, 1895), 1205–06Google Scholar. Cf. with n. 5 above.

11. Cartwright, , Gold Paved, p. 51Google Scholar. Gold Fields, formed in 1887, was the only large South African finance company registered in England and holding its annual meeting in London.

12. Ibid., pp. 54, 58. See also Galbraith, J. S., “The British South Africa Company and the Jameson Raid,” Journal of British Studies, X (1970), 145–161CrossRefGoogle Scholar for Rhodes's position on the board of the chartered company.

13. For the reconstruction of the company see, Cartwright, , Gold Paved, pp. 66–70Google Scholar and its articles of association, PRO, Board of Trade (Hereafter B.T.), Register of Companies, London, File No. 36936.

14. Ibid.; Goldman, , Mines, II, 140–41Google Scholar; and PRO, “Summary of Capital and Shares of the Gold Fields of South Africa, Ltd.,” December 14, 1891, B.T. 31/3813/23923.

15. South African mining companies at this time only issued debentures to meet pressing capital needs when the share market seemed unfavorable. Debentures were mostly taken up by the mine owners and their friends and usually redeemed as quickly as possible with money obtained from shares issued when the market improved.

16. Consolidated Gold Fields of South Africa (Subsequently referred to as C.G.F.S.A.), Johannesburg Archives, Rudd to Ernest Rhodes, November 16, 1894.

17. PRO, B.T. 31/3813/23923.

18. Bearer shares insured anonymity because evidence of ownership is established by possession not, as in the case of registered shares, by being recorded in company files. They are transferred by delivery.

19. C.G.F.S.A., London Archives, minutes of Directors' meetings, May 8, 1894 and May 22, 1895, Minute Book No. 1, 1892-95; and R.M.J.A., Wernher, Beit & Co. to H. Eckstein & Co., May 31, 1895.

20. C.G.F.S.A. Annual Reports, October 27, 1893 and November 6, 1895; and PRO, B.T. 31/3813/23923. European ownership of Gold Fields stock seems not to have exceeded 10 per cent. It likely had the smallest percentage of foreign investors on its books of any South African financial house.

21. C.G.F.S.A., Johannesburg Archive, list of Investments, April 30, 1895; and C.G.F.S.A., Annual Report, November 6, 1895.

22. Ibid., Transfer fees and dividends on investments yielded an additional £64,705.

23. C.G.F.S.A., Johannesburg Archive, Rudd to Ernest Rhodes, November 16, 1894.

24. Ibid.

25. C.G.F.S.A., Johannesburg Archive, see typed manuscript “Notes on the History of The Gold Fields,” compiled by the intelligence department of New Consolidated Gold Fields Ltd., n.d.; Cartwright, , Gold Paved, p. 80Google Scholar; and C.G.F.S.A., The Gold Fields, 1887-1937 (London, 1937), pp. 48–49Google Scholar.

26. C.G.F.S.A., Johannesburg Archive, Rudd to E. S. Birkenruth, an assistant Gold Fields manager, January 5, 1896 and Rudd's report to the Board of Gold Fields, February 5, 1896.

27. An important source of capital for the gold mines were several members of the diamond syndicate begun about 1889 to help maintain the price of stones, and in which Wernher, Beit played an important role. Rhodes's amalgamation to control production has overshadowed the significant activities of others to control sales. See Gregory, T., Ernest Oppenheimer (London, 1962), pp. 54–56Google Scholar.

28. For biographical information on the partners in Wernher, Beit and Eckstein's see Cartwright, Corner House, passim; Emden, Randlords, passim; and notes by E. Rosenthal, in R.M.J.A. “Wernher, Beit always controlled the Johannesburg firm. One-fifth of the profits went to the partners in H. Eckstein and four-fifths to the partners in London. But the Johannesburg partners did not share the profits made by the London firm and, although they were allowed great freedom of action, had to carry out the instructions of the London partners.” Cartwright, , Corner House, p. 118Google Scholar.

29. The Rothschild name appears on the list of shareholders of C.G.F.S.A. as well.

30. As Wernher explained it, “Paris is still the Mill through which most things have to go.” R.M.J.A., Wernher to Eckstein & Co., September 21, 1895.

31. Wernher, Beit also participated in Gold Fields's flotations and though they sometimes pooled their holdings to make or steady the market, they often as not sold shares in each other's ventures. Gold Fields, for example, sold its allotment of shares in Rand Mines.

32. Most of the remaining shares were issued as a gesture of good will or for additional claims to such mining magnates as Neumann, Carl Hanau, and Abe Bailey. See R.M.J.A., Rand Mines Account Book, n.d.

33. R.M.J.A., Annual Report for 1894, March 7, 1895. Beit wrote to Phillips on December 15, 1894, that “money will be easily found and we will have no difficulty to issue Debentures when required,” in R.M.J.A.

34. R.M.J.A., statement by Phillips, February 2, 1894, Rand Mines, Annual Report for 1893.

35. Mabson, R. R., The Statist's Mines of the Transvaal, 1903-04, pp. 550–55Google Scholar.

36. For part of these holdings see lists of securities, R.M.J.A., November 31, 1895 and June 9, 1896 lodged by Wernher, Beit with the Union Bank of London.

37. R.M.J.A., Wernher to Rouliot, November 15, 1895.

38. R.M.J.A., Wernher to Phillips, December 5, 1895.

39. R.M.J.A., Wernher to Phillips, November 22, 1895.

40. R.M.J.A., Wernher to Phillips, December 13, 1895.

41. For the most authoritative analysis of who was implicated in the uprising and the raid see Marais, J. S., The Fall of Kruger's Republic (Oxford, 1961)Google Scholar.

I have not been able to find precise evidence of how much Wernher knew of what was going on in Johannesburg or of how deeply involved financially his partner Beit was in the conspiracy. But the following remark made by Kann to Wernher on the eve of the raid indicates they both knew a great deal: “One can never be absolutely sure that the Colonial Office will not let one down in the end. I do not think that Rhodes, Phillips, etc., are imprudent enough to proceed without securing support.” R.M.J.A., Kann to Wernher, December 30, 1895, translated from the German. Cf. with Cartwright, , Corner House, p. 146Google Scholar.

42. As Wernher wrote later, to Rouliot, “We are all interested to maintain the [South African] Republic because that keeps the land free to all nations.” R.M.J.A., January 31, 1896.

43. See Cartwright, , Corner House, p. 148Google Scholar.

44. Beit died in 1906 at the age of 53. The course of his illness can be chartered through the letters exchanged by his partners in R.M.J.A. His estate was valued at between £7,000,000 and £8,000,000. Cartwright, , Corner House, p. 260Google Scholar.

45. Goldmann, , Mines, I, 141, 282, 551–52, II, 148Google Scholar; and The Story of ‘Johnnies’, 1889-1964: A History of the Johannesburg Consolidated Investment Co. Ltd. (Johannesburg, 1965)Google Scholar, written by J.C.I, staff but based on a draft prepared by A. P. Cartwright. Barnato's financial connections in Paris included the Imperial Ottoman Bank whose chief director, Sir Edgar Vincent, lost heavily in the market collapse.

46. Emden, , Randlords, pp. 138–40Google Scholar; Raymond, H., B. I. Barnato (London, 1897), pp. 144–46Google Scholar; and Cohen, L., Reminiscences of Johannesburg and London (London, 1924), pp. 113, 134, 160Google Scholar.

47. His interest in the mine that bore his name (the Robinson) was acquired by Eckstein's in 1888.

48. The Economist, August 17, and December 14, 1895, pp. 1075, 1616–17Google Scholar; and R.M.J.A., Kann to Wernher, September 9, 1895.

49. Goldmann, , Mines, I, 90–96, II, 137-138Google Scholar; and The Economist, July 7, 1895, p. 876Google Scholar.

50. [A. P. Cartwright], “A History of the Union Corporation Group, 1893-1966,” reprinted from Shorten, J. R., The Story of Johannesburg (Johannesburg, 1970)Google Scholar.

51. Mabson, , Mines of the Transvaal, 1903-04, pp. 46, 255–57Google Scholar.

52. One might note a parallel between the unwanted problems stirred up by activist governors encountered by British government [see especially Galbraith, J. S., “The ‘Turbulent Frontier’ As a Factor in British Expansion,” Comparative Studies in Society and History, II (1960), 150–168CrossRefGoogle Scholar] and die unnecessary complications foisted upon London business firms by local representatives.

53. Blainey, , “Lost Causes of the Jameson Raid,” Econ. Hist. Rev., Second Series, XVIII, (1965), 362–64Google Scholar.

54. van der Poel, , The Raid, pp. 6–8Google Scholar; and Robinson, R. and Gallagher, J., Africa and the Victorians (London, 1961), pp. 422–23Google Scholar.

55. Headlam, C. (ed.), The Milner Papers (London, 1931–1933), I, 324Google Scholar.