Rhodes developed the mines known as the DeBeers group. His great rival was Barney Barnato, who gave African finance the same erratic and picturesque tradition that the Pittsburgh millionaires brought to American finance. His real name was Barnett Isaacs. After kicking about the streets of the East End of London he became a music hall performer under the name by which he is known to business history. The diamond rush lured him to Kimberley, where he displayed the resource and ingenuity that led to his organization of the Central mine interests which grouped around the Kimberley Mine.
A bitter competition developed between the Rhodes and Barnato groups. Kimberley alternated between boom and bankruptcy. The genius of diamond mining lies in tempering output to demand. Rhodes realized that indiscriminate production would ruin the market, so he framed up the deal that made him the diamond dictator. He made Barnato an offer which was refused. With the aid of the Rothschilds in London Rhodes secretly bought out the French interests in the Barnato holdings for $6,000,000, which got his foot, so to speak, in the doorway of the opposition. But even this did not give him a working wedge. He was angling with other big stockholders and required some weeks time to consummate the deal. Meanwhile Barnato accumulated an immense stock of diamonds which he threatened to dump on the market and demoralize the price. The release of these stones before the completion of Rhodes' negotiations would have upset his whole scheme and neutralized his work and expense.
He arranged a meeting with Barnato who confronted him with the pile of diamonds that he was about to throw on the market. Rhodes, so the story goes, took him by the arm and said: "Barney, have you ever seen a bucketful of diamonds? I never have. I'll make a proposition to you. If these diamonds will fill a bucket, I'll take them all from you at your own price."
Without giving his rival time to answer, Rhodes swept the glittering fortune into a bucket which happened to be standing nearby. It also happened that the stones did not fill it. This incident shows the extent of the Rhodes resource, for a man at Kimberly told me that Rhodes knew beforehand exactly how many diamonds Barnato had and got the right sized bucket. Rhodes immediately strode from the room, got the time he wanted and consummated the consolidation which made the name DeBeers synonymous with the diamond output of the world. One trifling feature of this deal was the check for $26,000,000 which Rhodes gave for some of the Barnato interests acquired.
The deal with Barnato illustrated the practical operation of one of the rules which guided Rhodes' business life. He once said, "Never fight with a man if you can deal with him." He lived up to this maxim even with the savage Matabeles from whom he wrested Rhodesia.
Not long after the organization of the diamond trust Rhodes gave another evidence of his business acumen. He saw that the disorganized marketing of the output would lead to instability of price. He therefore formed the Diamond Syndicate in London, composed of a small group of middlemen who distribute the whole Kimberley output. In this way the available supply is measured solely by the demand.
Rhodes had a peculiar affection for Kimberley. One reason perhaps was that it represented the cornerstone of his fortune. He always referred to the mines as his "bread and cheese." He made and lost vast sums elsewhere and scattered his money about with a lavish hand. The diamond mines did not belie their name and gave him a constant meal-ticket.
In Kimberley he made some of the friendships that influenced his life. First and foremost among them was his association with Doctor, afterwards Sir, Starr Jameson, the hero of the famous Raid and a romantic character in African annals. Jameson came to Kimberley to practice medicine in 1878. No less intimate was Rhodes' life-long attachment for Alfred Beit, who arrived at the diamond fields from Hamburg in 1875 as an obscure buyer. He became a magnate whose operations extended to three continents. Beit was the balance wheel in the Rhodes financial machine.
The diamond mines at Kimberley are familiar to most readers. They differ from the mines in German South-West Africa and the Congo in that they are deep level excavations. The Kimberley mine, for example, goes down 3,000 feet. To see this almost grotesque gash in the earth is to get the impression of a very small Grand Canyon of the Colorado. It is an awesome and terrifying spectacle for it is shot through with green and brown and purple, is more than a thousand feet wide at the top, and converges to a visible point a thousand feet below. You feel that out of this color and depth has emerged something that itself incarnates lure and mystery. Even in its source the diamond is not without its element of elusiveness.
The diamonds at Kimberley are found in a blue earth, technically known as kimberlite and commonly called "blue ground." This is exposed to sun and rain for six months, after which it is shaken down, run over a grease table where the vaseline catches the real diamonds, and allows the other matter to escape. After a boiling process it is the "rough" diamond.