Sir Ernest Oppenheimer

My father formed the Anglo American Corporation on the 25th September, 1917, and remained Chairman until his death 40 years later. For all that time he was in full control of policy and up till the end had an astonishingly detailed grip of its affairs. The whole organisation is still marked with his ideas and his personality.

Like a number of the other Johannesburg mining finance houses, Anglo American had its roots in the diamond trade. As a boy of 16 my father came to London from Germany to join his brother Louis, who was ten years his senior, in the office of A Dunkelsbuhler & Company, one of the smaller of the diamond firms which made up the syndicate through which the De Beers company’s production was marketed. His first salary, so he told me, was 17s. 6d. per week and he used to enjoy enlarging on his humble start in business. However, his poverty at this time was, I suspect, relative only, for his family in Germany, though anything but rich, was certainly not destitute, and his brother was already well established in London.

He must very quickly have acquired an expert knowledge of diamonds and generally shown himself to be an unusually bright young man, for in 1902, the year of Rhodes’ death, when he was just 22 years old he was sent to South Africa to take charge of the firm’s office in Kimberley. The wild pioneering days in Kimberley were over, but Kimberley was still a cheerful, lively place. A certain Mr Sutro had previously been in charge of the office. He appeared old to my father, as middle-aged people do when you are 22. Sutro, very naturally, was put out at being superseded by an unknown youth from London and had expressed himself pretty freely on this subject to his office staff. However, when the time came he decided, since he was a kindly man, to make the best of the situation and sent my father a warmly expressed telegram of welcome when his ship docked in Cape Town. He was not best pleased to receive, as a result of the machinations of his junior staff, a reply reading: ‘Your telegram received; meet me at station to look after luggage’. This, and many such stories of his early years in Kimberley, my father delighted to tell, laughing uproariously and infectiously at his own jokes. It must have been a pleasant time for a young man fresh from Europe. The work was certainly not arduous; the country was fascinating; the economy was recovering from the Anglo Boer war, and everywhere there was hope and growth. There were many parties and my father learnt to drink champagne. Indeed, he liked it so much that he resolved that when he could afford it, he would drink nothing else. It was one of his sadnesses that by the time he could afford it he had already come to prefer whisky and soda.

These were carefree times, but my father soon began to show his quality. To begin with, after a short time in Kimberley, he decided to stay permanently in South Africa and that South Africa was to be his country. This was very unusual at the time in the circle in which he lived. He travelled to Johannesburg and the other big centres, of course, but also to Bechuanaland and Rhodesia. He was accepted as an outstanding judge of diamonds. He visited the Premier diamond mine which had just been discovered, reported on no adequate evidence that this was a major discovery and urged his firm to buy shares. He turned out to be right, and since his firm had bravely taken his advice, his reputation rose. He began, after a few years, to learn about the gold mining industry, in which his firm was interested through the Consolidated Mines Selection, one of the companies that is now merged into Charter Consolidated. He married happily and built himself a house in Kimberley. He became a partner in his firm and more and more began to take the lead in its affairs. He entered municipal politics – as he said because he had nothing else to do, but actually with the idea of training himself for public life in a wider sphere. He became Mayor of Kimberley and in that capacity rather typically brought about an amalgamation of the adjoining municipalities of Kimberley and Beaconsfield. For these services he was presented with a portrait of himself in mayoral robes, so appalling that even my deep filial piety could not persuade me to preserve it.

The outbreak of war in 1914 brought about fundamental changes in my father’s life in Kimberley. The diamond mines were temporarily closed and he began to take a bigger part in social and public work. However, the sinking of the Lusitania in May of 1915 sparked off anti-German riots in a number of South African towns, including Kimberley. Anyone with a German name was under attack. Threats, which in the event came to nothing, were made to burn down my father’s house and he felt obliged to resign as Mayor of the town. He was at the time filled with deep depression by these events. He sent my mother with my brother and me to England where we stayed for the rest of the war, and resolved that we would never live in Kimberley again. I am inclined to believe, however, that what took place acted as a catalyst only, and was not the basic cause of his decision. Temperamentally, my father needed an emotional spur for decisive action and he would work one up for himself even when his underlying motives were really intellectually based. The fact was that the Kimberley phase of his life was over and he knew that in order to realise his ambitions he needed a new and wider field of action. This he sought in Johannesburg.

During the war years he travelled frequently between England and South Africa – he was one of the survivors when the Galway Castle was torpedoed and sunk – and gradually, his ideas for the formation of a new Johannesburg mining finance house were worked out. It was a continuation of the line of development which had been followed long before by the leading diamond firms, Johannesburg Consolidated Investment Company had been formed by the Barnato Brothers, the Central Mining/Rand Mines Group had been established by Wernher, Beit & Company, and his own firm, A Dunkelsbuhler & Company, had formed Consolidated Mines Selection. In 1917 the opening up of the East Rand basin offered great opportunities for gold mining development, and for this purpose the Consolidated Mines Selection on account of its existing holdings was strategically well placed. Obviously my father first thought of expanding Consolidated Mines Selection itself to take advantage of the situation, but to this there were two objections: firstly, the majority of the board, old in age and conservative in temperament, was in no mood for adventure, and, as the chairman at the time put it, ‘was not prepared to monkey about with the capital of the company’; secondly, my father was convinced, being in this ahead of the thinking of his time, that the major South African mining finance houses should be managed and controlled in South Africa.

Through the efforts of an American mining engineer, WL Honnold, financial support was obtained in the United States from JP Morgan and Company and the Newmont Mining Corporation and on the 25th September, 1917, the Anglo American Corporation of South Africa was launched with an initial capital of £1 million, of which half was subscribed in America and half in England and South Africa. This capital was substantial at the time and from the beginning the Corporation was planned as a major new mining house. On the East Rand the new company found itself in sharp competition – with varying fortunes – with the JCI Group. It was able to expand the Brakpan and Springs mines. It tendered, unsuccessfully in competition with JCI, for the new State Areas Lease. It obtained, again in competition with JCI, a lease over the West Springs Area – then erroneously described as ‘the jewel box of the Far East Rand’. It re-opened, expanded and eventually, after much tribulation, made a great success of the Daggafontein mine.

This gold mining development was the immediate purpose for which the Corporation had been formed, but my father had always envisaged a leading position for his company in the diamond industry. This did not appear easy of realisation. The two important firms of Barnato Brothers and L Breitmeyer & Company (successors to Wernher, Beit & Company), were firmly established at the head of the diamond syndicate and exercised a large measure of control over De Beers. The diamond syndicate was not always a very happy association and my father certainly felt that A Dunkelsbuhler & Company, a comparatively small firm, was pushed around and its share of the business unfairly limited by its larger and richer partners. No doubt there were two sides to this question, and I can quite imagine that an extremely active, able, pushing young man, as my father certainly was at this stage, may well have been a bit abrasive in his relations with his older, better established, more comfortable associates. In this situation it was obvious to my father that the key to securing and expanding his interest in the diamond syndicate was to obtain control of a major diamond producer. In 1919 his chance came. HC Hull (who had been Minister of Finance in the first government of the Union of South Africa) approached him to ask whether Anglo American would be interested in securing control of an undisclosed diamond producer. My father knew that if he did so it would be likely to infuriate his partners in the diamond syndicate. He therefore replied that he should be interested if the diamond producer in question were big enough. Hull said that, potentially, it was very big indeed, and this could only mean that he was referring to the diamond fields of South West Africa. In South West Africa before the war there had been a considerable number of independent German diamond producers whose assets had been taken over during the war by the Custodian for Enemy Property. It was clear that for technical as well as marketing reasons, an amalgamation of these interests ought to be brought about. The De Beers company was, of course, aware of this situation, but De Beers in those days had become a very sleepy organisation. Very complicated negotiations were involved with the South African government as well as with the German owners of the mining rights. Hull had been working quietly in this matter with Sir David Graaff and these two, together with my father, eventually succeeded in bringing all these German interests together to form the Consolidated Diamond Mines of South-West Africa, under the general control of the Anglo American Corporation. CDM is now the largest producer of gem diamonds in the world, and even though in those days the rich beach terraces stretching north from the Orange River had not been discovered, it was a large scale producer and as a result of this transaction Anglo American’s position as an important factor in the diamond industry had been firmly established.

My father, to begin with anyhow – he may have modified his views at the time of Federation – looked on Northern Rhodesia in quite a different way from South Africa and Southern Rhodesia. He used to think that white men could not settle permanently to the north of the Zambezi and for that reason he regretted that on the Copperbelt we had, as he put it, drifted into an organisation of labour similar to that to which we were accustomed in the Witwatersrand. White men should, he thought, have been employed in Northern Rhodesia on contract only in supervisory capacities or for skilled work for which competent Africans were not available. Since he did not believe that white men would make Northern Rhodesia their permanent home, he thought that the employment of Europeans on a daily paid basis was entirely inappropriate. Today in Zambia we have moved close to the system he envisaged. I remember walking with him through the gardens in Cape Town where there is a statue of Rhodes pointing to the north with the inscription ‘Your hinterland is there’. He said there should be a similar statue on the Zambezi, only in this case Rhodes should be pointing south because the Zambezi was the boundary between two different systems. He may well prove to have been right.

In 1924 he was elected Member of Parliament for Kimberley and from the beginning he sat on the front bench. He remained a Member until 1938, though for the last four or five years he rarely spoke in Parliament and had half withdrawn from politics. As a speaker he was courteous, lucid and persuasive and always very carefully prepared. He had a charm in private conversation which came through also when he spoke in public. His weaknesses were a certain lack of power – which contrasted with his forcefulness in business negotiations – a perhaps excessive attention to detail and an unwillingness to move outside an important but specialised field. His contributions to financial debates and on mining and industrial subjects held the House and his influence was increased by his skill in negotiations behind the scenes. Though he limited his public statements to economic subjects of which he had special knowledge, he felt strongly about the issues of race and colour which are the basic stuff of South African politics. He regarded himself as a liberal and, indeed, when he entered Parliament he had obtained from his leader, General Smuts, a special dispensation to express himself, if necessary, in a liberal sense which went beyond the party line. Yet his views were certainly not in accordance with what a great many people mean by ‘liberalism’ in this context today. He saw South Africa as a multi-racial country and thought that this fact must determine national policy. He would however have regarded the phrase ‘a non-racial policy’, if he ever heard it, as absurd, because it seemed plain to him that racial differences exist, are extremely important and must be taken into account. He would certainly not have contemplated transferring political power to the African majority. Indeed in relation to the Africans, what he called ‘a liberal policy’ did not imply any belief that they were then ripe for self-government. On the contrary, it was because he was convinced that they could not be allowed to exercise power that he felt a special moral duty lay on the whites to govern them wisely, justly, humanely and unselfishly. And in this duty he thought white South Africa was failing. He was never doctrinaire and always open to new ideas. He was, in particular, conscious that races and communities are made up of individuals who may not conform with the standards of their environment, and the idea that any man should be shut off by his race from educational opportunities or the chance of exercising his natural talents to the full was utterly repugnant to him. In individual contacts he was quite devoid of race prejudice and felt it to be of great importance that people of different races, especially young people, should get to know one another as individuals. Rigid adherence to political doctrine he regarded as arrogance, and where it involved human suffering as a crime.

During the ‘20s, Anglo American grew in strength and through much storm and stress, my father’s leading position in the diamond industry was built and consolidated. Anglo American bought De Beers’ shares in the market until it had become the largest individual shareholder. The diamond syndicate in a series of changes which involved bitter quarrels between old business associates was reconstituted with my father’s group, together with Barnato Brothers, in the lead. In 1929 my father, who had become a director of De Beers in 1926, became chairman and so attained what had, since his youth, been a major business ambition. All seemed set fair when the Wall Street crash and the great depression that followed involved the diamond industry, and my father personally, in an unforeseen ordeal of exceptional severity. The diamond industry was in no way prepared for this disaster. Major new discoveries had recently been made in Lichtenburg and in Namaqualand. In 1927 alone, the syndicate had bought about £7 million of diamonds in Lichtenburg, the equivalent today of at least £35 million, in order to protect the market, and of these a great part was still unsold. Huge quantities of Namaqualand diamonds were also in stock. The Nationalist government in South Africa, which for historical reasons was then antagonistic to De Beers – regarded as an imperialist creation of the arch-enemy Rhodes – seized the opportunity of establishing a State Diamond Diggings in Namaqualand, and with the main object of encouraging the growth of a South African diamond cutting industry, sold the production outside the syndicate in a manner which further disorganised a deeply depressed market. Nor were De Beers, and still less the diamond syndicate, adequately financed to protect the trade. Our Group, in particular, in its rapid assumption of leadership had bitten off a great deal more than it could comfortably chew. Diamond sales fell to a level which, after making due allowance for the change in the value of money, was still by present standards virtually negligible. All the diamond mines in South Africa had to be closed down, but the major producers outside South Africa continued to produce and sell normally since long-term contracts existed with the Diamond Corporation (which had taken over the business of the old syndicate), in terms of which substantial minimum annual purchases had to be made without regard to the state of the market. The financing of these obligations was no easy matter. It was at this time that I started in business and I used to study anxiously the weekly statement of the assets and liabilities of the Diamond Corporation. The only ‘asset’ which seemed of value was the unexpired portion of £750,000 of overdraft facilities.

My father bore the brunt of this economic blizzard. Desperately worried for money to finance the huge accumulation of diamond stocks and carry out the Diamond Corporation’s contractual obligations, he stood virtually alone. Many of his colleagues had lost faith and talked of the diamond mining industry going the same way as ostrich farming. Men who had opposed his rapid assumption of leadership now openly attacked him or murmured that they had always known how it would be. The government harassed him, since they believed or affected to believe that he had closed the South African mines for the advantage of the foreign producers who were able to continue with their normal operations. All this he endured with unfailing patience and unbroken faith in the outcome, meeting each problem as it came along with infinite ingenuity and resource. In the end, out of much tribulation, the diamond industry attained a new stature and strength. The co-operation of the government was at length obtained, and the Diamond Producers’ Association formed. This organisation has stood the test of time and still directs the policy of the trade. All the major producers in Southern Africa were brought under the direct control of De Beers. The sales organisation was re-modelled on a co-operative basis and gradually the stocks which had been financed with such difficulty and risk were sold at a large profit and the finances of the industry established on a solid and conservative basis such as it had never known before. My father’s work for the diamond industry during these black depression years was, in my opinion, his greatest business achievement, and by his success here he made possible Anglo American’s spectacular growth in the years that followed.

It was in 1931 that I joined my father in business and began to follow in intimate detail the struggles of these years. Technically, I was quite untrained for business, but I had heard a great deal from him over a long period about the Anglo American Corporation and De Beers. When I was a child my father used to take me for walks and tell me stories which a good many years later I recognised to have been suitably edited extracts from Voltaire’s ‘Zadig’ and ‘Candide’. Soon, however, as I grew a little older, he took to telling me in very considerable detail of his business problems and ambitions. He was fascinating to children and young people and in the last years of his life the old magic was directed with undiminished power to my own children. He loved to talk to them as he had to me a generation before, developing and clarifying his own ideas as he went along. I, myself, as a boy and a young man was certainly outrageously spoilt and I really do not remember my father ever saying ‘No’ to me. He would say that it was impossible to spoil anyone who was, as he put it, ‘naturally any good’, and if I was not ‘naturally any good’ it did not seem important to him whether I was spoiled or not. He imposed no positive discipline on me whatsoever but the tacit underlying assumption that, for no other reason than that I was his son, I must be reasonably intelligent, hard-working and responsible, amounted to a pretty effective moral suasion. He not only did not encourage, but actually discouraged me from acquiring any technical business training, something that I have often regretted. He realised very well, of course, that detailed knowledge of business methods and procedures was necessary down the line but not, so he thought, in top positions. Major decisions were, he thought, best taken by some intuitive process, though he realised that these intuitions came only after you had been deeply immersed in the stream of affairs and had worked hard to understand them. He was, of course, rationalising from his own experience and while there is no doubt some sense in what he said, there is a great deal more nonsense. His business judgments often looked like pure intuitions to others, just as Sherlock Holmes’ judgments looked to Dr Watson, because the reasoning that led to them was not disclosed. Businessmen, like all men of action, must be prepared to act on incomplete evidence and on what appears to them to be the balance of probabilities. This, it seems to me, is what distinguishes the man of action from the scientist. What my father called intuition was really an ability to make up his mind quickly about the probabilities of a case and to act unhesitatingly on his judgment. He liked to say, ‘If the wise man thinks too long, the fool does some thinking too’.

Gradually the worst of the economic storm of the early ‘30s blew itself out. The diamond industry, though far from prosperous, had passed and survived the crisis. In December, 1932, South Africa tardily followed the British in abandoning the old gold standard, and in doing so sparked off a new gold mining boom on the Far East Rand in which Anglo American took an important part. It was at this time that my father was struck with a series of grievous domestic misfortunes. My mother died suddenly early in 1934 and before the end of the year my uncle, Leslie Pollak, who was deputy chairman of Anglo American and my father’s closest collaborator, was also dead. The following year my brother Frank was drowned bathing while on holiday in Madeira. My father was deeply affected by these tragedies. It was fortunate that he was able to find happiness and encouragement in a second marriage. My stepmother, Ina Oppenheimer, was beautiful and talented, as indeed she still is, and my father was devoted to her and very proud of her. She gave him the strength and the will to continue with his work and to realise the possibilities that had been opened up by his success in meeting the challenge of the depression years.

The years up to 1939 saw the consolidation of the East Rand gold developments, the beginning of the opening up of the West Witwatersrand line in which Anglo American participated under the leadership of the New Consolidated Gold Fields, the flotation of the Western Reefs mine and the start of the prospecting that was to result eventually in the establishment of the Orange Free State goldfields. The outbreak of war naturally brought most of these activities temporarily to a stop. My father gave his house for use as a hospital and devoted much of his time to working for the Red Cross and other charitable organisations connected with the war effort. Nevertheless, it was during the war that the first step towards securing Anglo American’s leading position in the Free State gold developments was taken through the purchase of a controlling interest in the South African Townships, Mining and Finance Corporation from the Abe Bailey estate. This secured for Anglo American a position in what were to become the St. Helena and Western Holdings mines. South African Townships were also substantial shareholders in the African and European company which, in turn, controlled the key area where the Welkom and President Brand and President Steyn mines are now situated. The purchase of control of South African Townships thus marked the beginning of the series of transactions which culminated in the purchase by Anglo American from the Marks family of a controlling holding in African and European. Later, a deal with the Blinkpoort Gold Syndicate secured control for Anglo American of the area of the Free State Geduld mine.

My father took a close personal interest in all these transactions and was active in devising the corporate structures and securing the funds for opening the new mines. He insisted on the most rapid possible development of the field as a whole when others would have favoured a more cautious policy. He arranged – in spite of much criticism at the time – for the De Beers company to participate substantially in the financing of the Free State mines. Criticism of this action is not heard nowadays and it is generally realised that his policy of diversification of De Beers – a revival really of the policy of Rhodes – has proved itself worth while in practice. In the Orange Free State, Anglo American set standards of town planning, of housing for African employees and of health and recreation services which were new in South Africa at the time. There were many mistakes, but by and large a great step forward was made which did much to change and improve South African thinking in these fields. It had been intended to house a substantial number of African employees and their wives in villages on the mine properties, but the government, for reasons of policy, drastically reduced the scope of these plans. In all this work my father was actively concerned, and without his support and encouragement it would not have gone forward.

Age did not reduce his enterprise, his willingness to take risks or his power of innovation. All these qualities were demonstrated when towards the close of his life he founded South Africa’s first merchant bank, Union Acceptances, and later its first discount house. These were pioneering ventures of considerable significance in the country’s advance towards a sophisticated economy. My father saw the need for a broadly based money market that could speedily and efficiently mobilise the short-term funds which, up to that time, could be deposited only with the National Finance Corporation. His sense of timing was excellent, for both these specialised institutions became an immediate success, and were followed by others. The last major project with which he was concerned was the establishment of the Western Deep Levels mine. The opening of a new mine at depths of 10,000 feet and more below the surface was something new in mining history and Western Deeps was planned, from the start, on an exceptional scale. It was a project which involved risks from which many younger people in our organisation recoiled. But my father, in his early ‘70s, became chairman of the new company, occupied himself with the details of the financial planning involved and looked to the future of the mine with complete confidence and tremendous enthusiasm. He did not, alas, live to see this last and largest of the gold mining ventures he launched reach the production stage.

When my father died in November, 1957, he was in his 78th year. He had been a remarkably strong man, with unusual powers of endurance. Physically, over the last years of his life he had become progressively frailer, but his intellectual vigour did not diminish. I have written of his charm and he was certainly able to command the affection, admiration and devotion of those he worked with. He had a vitality, zest for life and courage which delighted and inspired. He was very perceptive and had few illusions about human character or motives, and yet he was full of affection, liking people for what they were with all their faults and frailties. He was entirely without self-consciousness, speaking what was in his mind with a freedom which was sometimes startling and, on occasion, perhaps ill-timed. He was not witty, but he was wise and he was gay. He had an essential youthfulness of spirit which remained with him till the end, so that it was difficult for those who knew him well to think of him as an old man. He achieved great success and he enjoyed success. He enjoyed money – both making it and spending it – but primarily he enjoyed it as a symbol and measure of achievement. He was often written of as an ‘international financier’, but this was quite wrong. There was nothing international in his thought or outlook, and he saw financial success as a by-product of his part in building up South Africa. The South Africa he thought of did not, however, stand alone but was a member of the Commonwealth, as the Commonwealth used to be but can never be again. I have often wondered how he would have felt about the Commonwealth and Africa today. I do not think that in his old age he would easily have adapted himself to the changes that have come about, and it may be that he was fortunate in his death as in his life. He had successfully met the problems of his times and he left behind him, in Anglo American, an organisation deeply imbued with his spirit, with the strength and flexibility to work and build and serve in circumstances he could not foresee. And that surely is as great a share of immortality as a modest man should ask for on earth.

Published in Optima vol.17, no.3, September 1967, p.94