Passing the Scepter

GOLD & DIAMONDS

From a massive, block-long building in Johannesburg last week came a discreet announcement that set the trading marts of the world buzzing. Sir Ernest Oppenheimer, the world's king of diamonds and its prime minister of gold, was giving up a bit of his vast suzerainty. At 70, he relinquished directorships in seven of his 30-odd gold-mining companies--a step towards turning over his empire to his son and spit & image, 41-year-old Harry Oppenheimer.

This did not mean that Sir Ernest, last and greatest of South Africa's great "Randlords," was going to take things much easier. In his three-story citadel he would still work his usual 16 hours a day, still sit firmly in the chairmanship of his Anglo American Corp. of South Africa, Ltd., the master holding company through which he has built an economic pyramid of more than 200 companies worth more than $2.5 billion. They control 15% of the Transvaal's gold production, 43% of its coal, 50% of its explosives, 9% of the world's copper, and a bewildering hodgepodge of enterprises ranging from breakfast foods to railways.

Acres of Diamonds. As chairman of De Beers Consolidated Mines, Ltd., a syndicate of seven companies, Sir Ernest also controls 95% of the world's supply of diamonds, and sees to it that the supply is always less than the demand. As always, war and inflation are now swelling the demand for diamonds, and Sir Ernest's cartel has opened up two idle mines to step up production. The wholesale price of gem diamonds has risen 20% in six months, and U.S. rearmament has sent the price of industrial diamonds (vital for cutting tools) soaring 100% since Korea. Not only capitalists buy diamonds; an "unknown buyer" thought to be the Soviet Union has suddenly started buying all it can in the Belgian markets, presumably to build its own stockpile for machine tools for war.

Sir Ernest, who has one of the world's prize collections of rare diamonds, started learning about stones at 16. The son of a middle-class Jewish family in Friedberg, Germany, he went to London to learn the diamond-cutting trade, was sent to South Africa at 22 to look after his London employer's diamond properties. The year was 1902, when Cecil Rhodes, who had formed the De Beers combine out of hundreds of small claims, died murmuring: "So little done, so much to do." Oppenheimer was just the man to do it. He stayed in Kimberley and went into mining on his own.

Shrewd, eager and personable, he was enough of a success by 1912 to be elected Kimberley's mayor at 32 (he was twice reelected, later went to Parliament). In 1917 he teamed up with an American engineer, William Lincoln Honnold, and, with backing from J. P. Morgan and others, formed Anglo American. While everybody else swarmed to the Central Rand, Oppenheimer tried his luck in the Far East Rand and struck it rich, did it again 100 miles away where nobody thought there was any gold.

At the end of World War I, Sir Ernest got a five-year exclusive sales contract covering the rich diamond fields of Germany's former colony in South-West Africa. He used this tremendous lever to pry his way into the clam-tight De Beers syndicate. In 1929, after secretly buying up 20% of De Beers' shares, he took over the syndicate. It keeps its tight control of diamonds by persuading any who find new fields to join the syndicate and reap the benefits of its controlled prices.

New Bonanza. Sir Ernest's biggest interest now is not diamonds, but gold, from which Anglo American last year made -L-11 million ($30.8 million) profit. His Anglo American is the biggest single holder in the immensely rich new fields of the Orange Free State, and has put up more than half of the -L-200 million ($560 million) being spent to develop them. Believing that South Africa must wipe out the disgrace of its mining "kraals," where Bantu workers live like prisoners, he has led the spending of -L-70 million by mine operators to develop a model village to house 100,000 _ people at the new Free State mining center near Odendaalsrust. By July he expects to start taking gold out of his first mine there, open another shortly after. Says Sir Ernest: "This is the most extensive mining development the world has ever known."

In this new venture, Sir Ernest's right-hand man is son Harry, a deputy chairman of Anglo American. Harry, who was educated at Oxford, and captained a company of Britain's "Desert Rats" against Rommel's troops in World War II, lives with his wife and two children in a smaller villa adjoining "Brenthurst," the palatial residence of his father and stepmother, outside Johannesburg. Harry likes fast cars and fast horses (he recently gave his father a prize colt, Ossian, which won Johannesburg's summer handicap the first time out). When Parliament is in session (Harry has succeeded to his father's old seat*), he drives the nearly 1,000 miles to Cape Town at breakneck speed.

Neither Sir Ernest nor his heir needs fear that the prime source of the dynasty's power will ever diminish. One of the first great Randlords, old Barney Barnato, put it tersely, many years before Flapper Lorelei Lee: "Women are born every day, and men will always buy diamonds for women."

*In the party of the late great General Smuts, opposed to fanatically anti-Negro Malan.

This file is automatically generated by a robot program, so reader's discretion is required.