Photo of Johannesburg, South Africa 1886 where gold was first discovered by unknown photographer is in the public domain
In 1886, the largest goldfields in the world were discovered on the Witwatersrand, which was a 40-mile reef located in the Transvaal province of southern Africa. This discovery completely revolutionized the economy. The industry of agriculture that had dominated southern Africa for hundreds of years was now becoming urbanized and industrialized, instigating Africa’s transformation into a chief supplier of precious minerals to the rest of the world. This also led to surges in capital investment and immigration for labor (The Editors of Encyclopædia Britannica, n.d.). Cecil Rhodes feared that the already successful gold industry in southern Africa was strengthening the Transvaal’s independence, which would make it more difficult for Rhodes to achieve his goal of unifying this area under British rule. Pursuing this fear, Rhodes funded an invasion to overthrow the government of the Transvaal Province, which was led by British colonial statesman Leander Starr Jameson, known as the Jameson Raid. This 1895 raid of the Transvaal Republic was designed to overthrow the president, Paul Kruger (Parkinson). Even though the government and the people did not resist this overthrowing, Jameson still ordered his army to invade. Although Rhodes was horrified at this fact, it devastated his reputation with the Africans in the area (Rotberg, 1988). The raid resulted in the Second Boer War, which killed thousands of Africans through 1902 (Parkinson 2015).
The British South African Company (photo below) had expected their efforts in gold mining to be so lucrative that they would be creating a “second Rand,” which was the currency in this region of Africa (Konczacki, Parpar & Shaw, 2011). Rhodes searched the region of Southern Africa for mines that he could acquire to create a monopoly in the gold industry, similar to De Beers's strategy in diamond industry. Rhodes had a nearly irrational devotion to finding success in the gold mining industry. After one year, Rhodes had purchased 10% of the mines in the Witwatersrand from existing companies (Rotberg, 1988). In doing this, he received a substantial amount of capital from British investors and chartered the trading company The Gold Fields of South Africa, Ltd. by 1887. Although gold mining was undoubtedly profitable, it was not as successful as Rhodes had anticipated. The BSAC’s extremely high administrative expenses from recruiting labor and purchasing capital to extract gold from the mines were not covered significantly by the profits from selling the gold. Therefore, the workers were forced to begin commercial farming as well to cover the expenses (Rotberg, 1988).
Additionally, Rhodes had been very preoccupied with his diamond business, which was booming. He followed some bad advice about where to focus his gold mining efforts, as he was not educated on the topic of gold mining. He unwisely opted to mine in an area of the Witwatersrand that quickly ran out of gold by 1889. The remaining competition profited much more than The Gold Fields of South Africa, which only earned enough to recompense the stockholders (Rotberg, 1988).
Other gold mining companies were so successful that by 1899 this region was producing almost three-tenths of the gold worldwide by utilizing labor from over 100,000 primarily black migrant workers. Extremely difficult working conditions came along with this prosperity, however (The Editors of Encyclopædia Britannica, n.d.). The gold was buried very deeply within the reef and required intensive mining to be extracted, necessitating sizeable amounts of capital and technology. Approximately 100 trading companies colluded in order to pay for these expenses and diminish outside competition (The Editors of Encyclopædia Britannica, n.d.).
Flag of the British South Africa Company of Cecil Rhodes by user Mangwanani is in the public domain
The technology used to mine gold during this time was considered very advanced and expensive. The video below demonstrates the modern technology and processes used to mine gold in southern Africa.
Header Photo: Lavinsky, R. (n.d.). Gold [Photograph]. Retrieved from https://commons.wikimedia.org/wiki/Commons:Robert_Lavinsky. Available under CC-BY-SA-3.0. Photo: (1886). Johannesburg, South Africa. [Photograph]. Retrieved from https://en.wikipedia.org/wiki/Witwatersrand_Gold_Rush. Available under the Public Domain. Photo: Mangwanani. (2008). Flag of the British South Africa Company of Cecil Rhodes. [Flag]. Retrieved from https://commons.wikimedia.org/wiki/File:Flag_of_BSAC_edit.svg. Available under the Public Domain.