Julius ever seriously considered forming his own company, such an
idea was abandoned when Porgès made him manager of
the London end of the business. The office was established at the
newly built Holborn Viaduct, conveniently close to the diamond dealers
of Hat ton Garden.
at Kimberley, during six months of 1881, a great inflated bubble
of speculation known as the "share mania" engulfed the town. It
was all very different to the struggles and dreams of the "Grand
Old Days of the Diamond Fields". The success of the French Company
and flotations by other main groups suddenly produced a frantic
scramble to form public companies by small claim holders, desperate
for capital to offset their debts. A Stock Exchange, the first in
South Africa, was established temporarily at an edifice of brick
and corrugated iron known as Beit's Building. When the boom began
there had been twelve com- panies, but soon there were seventy-one,
in which £8 million had nominally been invested. "The whole of Kimberley
took part in these flotations," said one writer. "Regular work came
to a stop, interest centred in the share market, life was lived
at high pressure, and champagne flowed freely. It was Kimberley's
was a heyday also for the common swindler. The prices of shares
rose to absurd heights, and plunged dramatically when banks called
in overdrafts. Inevitably many companies had to be liquidated, and
there were bankruptcies, including that of Rothschild, who had been
a main share dealer. There were also suicides, one being a friend
of the Wernher family.
the principal players in the complicated struggle for power, J.
B. Robinson was to end as a loser, though over a matter of years,
and he was to rise up again. Barnato and Rhodes, through some shrewd
manipulations, had their positions nicely strengthened. Beit was
not yet among the big names, but had steered a brilliant course,
and it was then, as a future colleague was to say, that his extraordinary
financial genius really came to be recognized. He also generously
helped to guide various small firms back from "insolvency to prosperity".
Even so, one-third of the companies floated in this period had gone
bankrupt by 1884.
had a small investment in the De Beers Mining Company, and it was
during this time of crisis that, as Julius put it, he came into
more intimate contact with Cecil Rhodes. To be more exact, he fell
completely under Rhodes's spell. Both men were still under thirty,
both more interested in making money than in the opposite sex. Beit,
though of course a foreigner by birth, seemed to be mesmerized by
Rhodes's grandiose and almost mystic, if jejune, ideas about expanding
the British Empire, which included not only enveloping the whole
continent of Africa but the "ultimate recovery of the United States
of America". Rhodes by then had already entered politics. After
Griqualand West had been formally incorporated in Cape Colony, he
had been elected a Member of Barkly West, and thus had a seat in
the Legislative Assembly at Cape Town.
the past decade the fortunes of the Kimberley diamond industry had
seesawed from euphoria to gloom. By mid-1882 the situation seemed
to be at its most critical ever. In his "Notes" Julius spoke of
the cut throat "senseless competition of producing". "Dividends
became the exception, and prices of shares in some cases dropped
to four per cent of their former values." Gradually the richer parts
of the mines were covered up by fallen reef. "It was a time of great
hopelessness and improvidence by the owners themselves. The French
Company suffered with the rest, but remained in an excellent financial
shape. Owing to their having a shaft sunk outside the Mine and thus
leading into it, they always managed to get some revenue, and they
succeeded in making some purchases of claim properties of high strategical
"hard school of experience" had now convinced claim holders that
only combinations among themselves could save the industry from
ruin. Amalgamations continued to take place. The question was, who
would rise to the top of the pile? In the Kimberley Mine the most
powerful, for the present, was Baring-Gould's Central Company, and
in the De Beers Mine it was Rhodes's Company. Julius was not happy
about his representation at Kimberley, and decided that he would
have to return. So in December 1882 he left for the Cape. He was
away for fifteen months, and during that time Porgès
made constant journeys across the Channel to London, at least twice
a month, "returning after dealing with mail and shipments".
now the letters to the parents resumed. There was smallpox at Cape
Town, and he did not linger there. Luckily, with the improvement
of the railway system, the journey from the Cape to Kimberley only
took four days. "Business looks indescribably miserable", he wrote
in February. "Only a few have ready cash. How most of them live
is a riddle to me." It was not until 6 April 1883 that he could
say: "I am gradually getting a little order out of this terrible
mess." A first priority had been to sack his agent Paul Keil.
was living in the institution known as the Old German Mess, frequented
by special friends like Alfred Beit, Martin van Beek, Hermann Eckstein
and newcomers such as J. B. (Jim) Taylor and Max Michaelis. "I do
nothing but business, and my social life is limited to this circle."
He got up very early and always first rode to the claims. During
the day there were constant meetings, and "therefore I do not feel
inclined to do anything in the evenings except playa hand at cards."
He went to the Levys' about once a week, but the poor things had
suffered in the great game of "share mania". "Visits there would
not be very pleasant if one did not at once arrange for a game of
cards, which cuts off Mrs Levy's moanings."
the same, there was some good news to relate. "I have operated a
lot in the diamond business in the last month, and what is more
important, very successfully. This gives me a special pleasure,
as it is my old business, so to speak. But otherwise it still looks
dreadfully bad here, and for many there is no future at all. People
are leaving the place in hundreds, which is the best thing they
least sanitation in Kimberley had been much improved. Gone were
the days when cesspits "fermented and bubbled up". Dustcarts removed
rubbish daily. It has since been estimated that the death rate at
Kimberley during the 1870s had been nearly double the rate per thousand
found in Calcutta, regarded as the unhealthiest city in the Empire.
Julius, however, did not alarm his parents about the smallpox, which
arrived in the autumn of 1883. This was a particularly disgraceful
episode, for some employers jibbed at paying for medical care and
refused even to acknowledge the disease's existence in case it should
discourage the arrival of new black workers, or - worse - involve
the shutting down of mines. Only when whites became infected were
quarantine measures introduced.
claims were bought by Julius in the old "poor man's diggings", Dutoitspan
and Bultfontein, and also in Jagersfontein, as these mines had been
less troubled by reef falls. Such "outside ventures" were managed
for the firm by Hermann Eckstein, like Julius a Lutheran, the son
of a German pastor from Stuttgart and destined to prove an exceeding
lucky choice. Max Michaelis and W. P. Taylor, Jim's brother, were
co-opted to deal in diamonds on joint account, along the lines of
the arrangement made so successfully with Beit three years before.
Most importantly, Beit agreed that when Julius left Africa he would
take over the representation of the firm. It appears that Julius
was not much tempted to join Beit and Rhodes over their customary
glasses of champagne at the Blue Post, for we are told by Jim Taylor
(who took the credit of introducing them) that Rhodes still "had
no success" with Julius, although Beit "had little difficulty in
persuading Wernher to agree to most of Rhodes's great schemes".
The great schemes were still in the future. The close camaraderie
of the Old German Mess, where "we had such terrific arguments that
nobody could hear his own words", was to remain virtually unbroken
over the years, with important consequences for all its members.
discoveries at Barberton and De Kaap in the eastern Transvaal brought
some hope of a "new impulse in the land" but, said Julius, "I doubt
it somehow. The general tone is still very depressed." Levy was
now on the verge of bankruptcy, and had been taken on as "a kind
of agent" for the dealers Mosenthal & Co.
meanwhile made some nostalgic trips on horseback, eating "mostly
sardines and biscuits". He went to Griquatown and found that the
old chief, Waterboer, who had been imprisoned after the 1878 uprisings,
was getting a substantial subsidy yearly from the British government,
"which he invests in spirits and so is not presentable after 10
a.m.". Going on to Jagersfontein, where he said the diamonds were
among the finest though very few, he stayed at an inn on the Modder
belongs to a man who in 1872 robbed the Post Office which contained
£6,000 of ours. He then sat in prison for a few years. His wife
looked after the business in the meantime and did not do too badly.
There we now slept together in the living room, and the wife -
mother of fifteen living children - dished up the evening meal.
The man quietly smoked his pipe, and the governess played dance
music (on a Sunday!) to cheer us up, and we spent a comfortable
were still parties at Kimberley. "People seem to live on their losses.
They are so used to their conditions that as soon as there is an
opportunity for enjoyment there they are with all their hearts.
It is ridiculous, but at my age I still enjoy dancing." Relieved
by the successful reorganization of his team, Julius by September
was feeling like a "fish in the water". He preferred the warmer
because I can get up earlier, secondly because when the days are
longer and warmer one can get more work out of the niggers. The
hotter it is the better they feel. Instead of getting themselves
warm in winter by hard work they stand and squat about, and wind
their rags about their bodies to keep the cold off...of course
in winter wages are just as high or even higher, because there
are fewer workers available... The energy of the whites, unfortunately,
does not correspondingly increase, and a greater part of the labour
troubles here are due to this.
there was serious unemployment among the white labouring class,
and wages were actually in the process of being reduced. Whites
were usually employed as overseers in the mines. In September 1883
white workers as well as blacks were required to change into special
clothes on entering mines and be searched on leaving them. This
so-called "stripping clause" was considered degrading by the whites,
"bringing them down to the level of the niggers", for whom they
claimed nakedness was after all a "state of nature". Julius had
long ago maintained that some sort of personal search was necessary
in order to combat IDB, but the resentment boiled over, and there
was a strike that lasted for nearly a week. One of the ringleaders
worked for the French Company.
more alarming was the strike in April 1884. During a march on the
Kimberley Mine by white and black workers, six white men, including
one from the French Company, were shot dead by armed police: the
first casualties in industrial unrest in South Africa. But by this
time Julius was already back in London. His mother had been convinced
that he would deliberately look for new business just to delay his
departure, but he assured her that she was quite wrong, and kept
his word, even if he was "fabulously busy, right up to the last
moment". (In November 1883 there had been the largest reef fall
ever in the Kimberley Mine.) So now, he teased her, he was free
to settle down in some quiet cottage with a nice little wife to
care for him.