Barney Barnato

(21 February 1851 – 14 June 1897)

Barney Barnato claimed he had the same birthday as Cecil Rhodes (5 July 1853) however, his birth certificate shows he was born Barnet Isaacs in Aldgate, London on 21 February 1851, the son of Isaac and Leah Isaacs.

Barnato’s mother Leah died a year after his birth. He was educated by Moses Angel at the Jews’ Free School in Preston, England. Barnato grew up in Whitechapel, the very poor East End of London in an area that was predominantly a Jewish neighborhood.

His father, Isaac Isaacs, made a living from selling second hand clothing and fabric remnants, and Barnato was known to frequently beg pass-outs from theatre-leavers at the Garrick Theatre to resell them to others for a halfpenny.

Kate, the oldest of the siblings, helped raise the boys – Barney and Harry – and two sisters Sarah and Elizabeth.

When they were in their teens, Barney and Harry liked to perform on stage in the Music Halls of the area, of which there were many. When each boy reached the age of 14, they left school to perform full time for minimal wages. They adopted the stage name “Ba Na Two” which they later changed to Bar-na-to.

Barnato had a talent for boxing, and fought many amateur boxing bouts around London. He made money from his bouts, mainly by placing bets with the bookies. Reportedly, Barnato was not afraid of anyone, and often boxed against much larger opponents.

In 1873, Barney joined his brother Harry in the Cape Colony during the diamond rush following the discovery of diamonds at Kimberley. Harry had arrived in 1871. Barney saved up enough money to pay for his steerage passage.

He left England and when he arrived in South Africa, he could not afford the coach to get to where the diamonds had been found. He ended up walking all the way with a bullock cart that was delivering supplies to the miners. It took him more than three months to walk there. He arrived in Kimberley to find that Harry was not doing very well. The older sibling wasn’t making money from diamonds at all, but from performances on stage and doing odd jobs around the town.

Barney spent his first year learning about diamonds, buying a stone here or there and selling at a small profit and then buying more. It was a slow, frustrating process. Eventually, the opportunity to buy four adjacent claims in Kimberley opened to Barney and Harry. The brothers only just managed to scrape together enough money to purchase the claims, which they consolidated into 1.

Initially, almost 3600 claims were staked. As most of these proved unproductive, the claims eventually dwindled down to less than a hundred, of which Barney and Harry held onto theirs.

Having used the name “Barnato” in all their dealings, they dropped the surname “Isaacs”, and became known as the Barnato Brothers. Due to erratic production, especially related to the dangers of mining at the time where many miners died and mines were often shut down due to flooding and cave ins, the price of diamonds fluctuated wildly.

Barney Barnato conceived of the idea that keeping supply as close to production as possible by stockpiling during busier production times and releasing stock during leaner times would help stabilise, and likely help drive up market prices over time. To enable this notion, Barney Barnato concentrated on consolidating claims, and focused on buying out as many competing miners as possible. Cecil John Rhodes, then president of the De Beers Mining Company had a similar idea, and worked tirelessly to undercut Barnato and consolidate more mines.

The two rivals, Rhodes and Barnato, raced to consolidate their holdings but it was Rhodes, with the big financial backing of the Rothschild family and other wealthy people, who succeeded first. With De Beers consolidated claims now the majority in Kimberley, only one other major player besides Barnato held significant claims: French mining company, Compagnie Française des Mines de Diamants du Cap de Bonne Espérance, held a large block of claims that split Kimberley mine in two.

Rhodes and Barnato entered a momentary bidding war for the French company’s claims. To ensure the sale and to convince Barnato to withdraw his bid, Rhodes offered Barnato the Compagnie Française des Mines de Diamants du Cap de Bonne Espérance’s block of claims for £300 000 and 20 percent of Barnato’s Kimberley Central Diamond Mining Company (Kimberley Central DMC).

Barnato, after several days of deliberation, accepted the offer, giving him in effect control of the diamonds in Kimberley. However, Rhodes ultimately gained control of Kimberley Central DMC a few months later.

During this time, the price of diamonds hit record lows. Rhodes, having now grown more interested in the gold rush happening north of the country in Johannesburg, proposed merging De Beers and Kimberley Central Diamond Mining Company. Barnato agreed, and after consolidating all shares, Barnato emerged as the largest shareholder with 6,658 shares in the new company, De Beers Consolidated. However, the merger was short-lived, as the Supreme Court of the Cape overruled the merger, forcing Kimberley Central DMC to liquidate. De Beers Consolidated bought the company, ultimately paying the Barnato Brothers the princely sum of £5,338,650 in 1889.

By 1888, after the consolidation of diamond mining had taken place, the Barnatos were late in coming to the mining town being called Johannesburg. Despite this, they had brimming warchests and were ready to invest in anything from claims to property and machinery.

The price of gold did not fluctuate, unlike diamonds. It was therefore possible to calculate the exact amount of profit that could be made from a single gold mine.

MacArthur and Forrest, two doctors in England, invented a new process for extracting gold from ore using cyanide. Using this method, it was possible to extract up to ninety-six percent of the gold from the ore. Barnato ordered the necessary equipment to be shipped from England to set up a cyanide plant for each of his mines.

Barnato invested heavily in infrastructure that he knew would be needed for the future growth of Johannesburg and the gold mining industry. He purchased land in the new town to build offices, shops and market stalls, including a new stock exchange.

Early in 1889, Barney floated his first gold mining company on the London and Johannesburg stock exchanges. The New Primrose Gold Mining Company was a combination of a number of claims he had purchased on two adjacent properties.

After the formation of his Johannesburg Consolidated Investment Company that year, he went on a major acquisition drive and invested in multiple businesses: building materials, transport, food wagons and liquor. He more than doubled his fortune during the boom in South African gold mining shares of 1894–95 before losing most of it in the 1896 share collapse.

Barnato was instrumental as a financier in the gold mining industry, as well as the establishment of the infrastructure of the town.
In 1897 on 14 June, Barnato died in mysterious circumstances, having fallen overboard near the island of Madeira, whilst on a passage home to England. Although there were several claims that he committed suicide, these were debunked by his family.

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