The rescinding of this clause in 1876 (Ordinance 12, Nov. 20th) effected great changes, the alteration in the law throwing the road open for capitalists to buy out small holders in the Kimberley and other mines, virtually leading the way to the extraordinary mania for company-mongering and share-rigging which existed in 1880 and 1881.
The repeal of this clause, however, which had never been in favor with capitalists, because it obstructed them from “blocking” claims in the mines, was hailed by some with delight, by others with foreboding, as the latter believed it to prognosticate the approach of monopoly and the departure of the individual digger. This repeal initiated a most remarkable period in the history of the diamond fields, in which a mania for company promoting and for mad speculation seized the whole community, of which a repetition is now going on at the De Kaap gold fields. It may not perhaps be a matter of surprise that the inhabitants of a place, depending on a somewhat precarious industry and one of which the proceeds are so liable to fluctuation, should be more or less imbued with the spirit of gambling, nor is there anything unusual in the digger deserting his mining operations to endeavor to gain wealth in a more rapid manner by speculation. Such circumstances have been of frequent occurrence in America and Australia, where many a man who had been unlucky as a digger, using his acquired knowledge has realized a fortune by speculating in shares or claims.
In the case of the sudden rise of the share mania in Kimberley, the most extraordinary point was to be found in the fact that the place had long thrown off the habits and appearance of a digging camp, and had assumed the customs of a settled town, while all matters connected with share transactions were conducted in so systematic a manner that the event bore a close resemblance to one of those speculative fevers which occasionally seize the home Stock Exchange. Kimberley was not alone in this novel excitement; the infection spread throughout the whole of South Africa, share transactions were eagerly carried on in all the coast towns, and companies with large capitals were also formed to work the diamond mines in the Free State, at Jagersfontein, Koffyfontein and Oliphansfontein, and half a dozen others of which it can now only be said
“Gaudet cognomine terra.”
It is no easy matter to fully trace why the cause of this wild desire for speculation seized upon the community. It has often been stated that it was simply an endeavor on the part of interested persons on the diamond fields to defraud the outside public and get rid of their worthless property. This, however, was not the case, although it must be admitted that in many instances the actions of promoters of companies were far from honorable. A more feasible answer to the question will be found in the fact that for some time past there had existed in Kimberley, companies which, although registered under the limited liability act, were of a semi-private nature; for instance, the “Compagnie Française” (French Diamond Mining Company) and the Cape Diamond Mining Company, both of which had been formed in 1879, some three years after the “ten claim clause” had been abolished. These undertakings were believed to be most successful, and the general public on the Fields were eager to participate in the profits of similar enterprises. When this desire became apparent there were many claim-holders who were desirous of realizing some ready money, or paying off some existing mortgage, by the sale of a share in their diamond operations, and hence the creation of new joint-stock undertakings.
That the first companies on the Fields, the British and Central, were formed with a most legitimate object, it is quite impossible to deny, and the reason for their formation is most easily to be seen. As the mine attained a greater depth, the expenses of working naturally became larger; elaborate machinery had to be erected, and more European labor was therefore required. Under such circumstances it is not strange that many diggers found it to their advantage to amalgamate with their neighbors; moreover, it often occurred that those who formerly had been actively employed in the mine were desirous of entering into other pursuits, and yet were not willing to abandon all interest in digging operations; consequently the formation of joint-stock companies naturally suggested itself as a convenient way of meeting the requirements of the case. It was under such circumstances that the first companies in Kimberley were formed. The shares in these undertakings very seldom passed out of the hands of the original holders and the system gave every promise of success; it is true that there were prophets of evil, who were ready even in those days to declare that this step was one on the road to ruin, so far as the prosperity of Kimberley was concerned, yet for a time the results of these companies in most cases proved to be unmistakably satisfactory, and it was this bona fide success which encouraged the promotion of numerous other schemes which were shortly afterward introduced.
In the early part of the year 1881 there existed about a dozen companies in the Kimberley mine, the total capital of which amounted roundly to two millions and a half, and the shares in these undertakings were in the hands of the most successful diggers on the Fields. These shares had not, of course, been purchased with cash, but every claim-holder who put his claim ground into a company received a certain amount of scrip for his property. It is impossible to dispute the fact that claim property had risen enormously in value during the few years previous to the establishment of the first joint-stock undertaking, and it is manifest that if claims were incorporated in a company at a price on which they could yield a fair dividend, that price was a perfectly fair one. The non-success of many of the subsequent undertakings was mainly due to the fact that the promoters were blind to this very simple truth, and had forgotten, or had never known, the first principles which should govern joint-stock undertakings. In fact people who would never have dreamed of buying a share in a business at £1,000, which would only secure a return on five hundred, invested freely in shares in companies, the claims in which would have given an admirable return on a small capital, but a very poor one, if any at all, on the enormous sums at which they were put in.
When once the idea that the joint-stock system was the most advantageous method for working the mines gained a hold upon the community, the excitement became intense, company after company was formed, and the shares in every case were eagerly taken up by the public. When the formation of a new undertaking was announced, the applications universally doubled and trebled the number of shares proposed to be allotted, and in fact a premium was invariably offered to a successful applicant for the chance he had secured of obtaining a share in any new venture.
The different lists for share applications were filled with marvelous rapidity, and remained open but a very short time. Ebden Street, the “Rue Quincampoix”[[52]] of Kimberley, was filled from morning to night with a tumultuous and maddened crowd. The various offices of companies in formation were simply stormed, and those who could not get in at the door from the pressure of the crowd, threw their applications for shares (to which were attached cheques and bank notes) through the windows, trusting to chance that they might be picked up. It is difficult to picture the eagerness, the plots, the rage of the excited multitude bent on securing this, the magic scrip, which was to make the needy rich and the embarrassed free.
It was astonishing how the mania seized on all classes in Kimberley, from the highest to the lowest, just as Law’s scheme and the South Sea bubble did during the previous century; how every one, doctors and lawyers, masters and servants, shop-keepers and workmen, men of the pen and men of the sword, magistrates and I. D. B.’s, Englishmen and foreigners, rushed wildly into the wonderful game of speculation.