Essay About Cecil Rhodes And De Beers

DebeersEssay title: DebeersDe Beers SAA Diamond is ForeverAs the meeting concluded and Gareth Perry left the expansive conference room of De Beers SA in Johannesburg he had a lot to think about. The company had recently settled its litigation with the US anti-trust courts and was free to begin selling rough diamonds directly to customers in the United States.

The US retail diamond market was worth approximately $28.7 billion in 2002. Traditionally De Beers had served this market indirectly through its network of resellers, polishers and merchants. This strategy had been complemented by De Beers marketing efforts using its famous ‘A Diamond is Forever’ tag line. This combination had allowed De Beers to circumvent the regulation imposed on it by the anti-trust regulation. But now, with the major lawsuit settled the company was free to operate directly in the United States.

Perry had been the international marketing director for De Beers SA for several years and had never faced such a challenge before. Should the company continue its strategy as the marketer for the whole diamond industry and stimulate US demand in this manner or should it examine new channels to market for its rough diamonds.

BackgroundThe long history of De Beers began back in 1859 when the first reports surfaced of diamonds being found in the Kimberley region of South Africa’s Northern Cape. The rush to this area increased when the 83.5 carat “Star of Africa” was discovered in 1869 .

One of the people drawn to this area was a 17 year-old Englishman, Cecil Rhodes. Rhodes came to South Africa in a time when permits for diamond mining were restricted to individual claims with caps on how many claims one person could own. Rhodes initial foray into business was to buy an ice-making machine and sell ice to the miners working under the hot South African sun. With the profits Rhodes began to buy up mining rights.

In 1871 the brothers Johannes Nicholas and Diederik Arnoldus de Beer sold their farm which they had bought in 1860 for Ј50, to Dunell Ebden & Co for Ј6,300. This farm was to be the site of both the De Beers mine and the famous Kimberley mine. Rhodes acquired the farm in the late 1870’s.

The breakthrough for Rhodes came in 1876 when all restrictions on the number of claims that could be owned by an individual were dropped, and the chaos of 3,600 individual claims was reduced to 98 syndicated holdings by 1880. Of the original 3,600, Rhodes was reported to own one third by the time the restrictions were lifted.

However, much of the rich mining area around Kimberley was owned by Barney Barnato another Englishman who had come to South Africa after a failed career as a vaudeville comedian. Both Rhodes and Barnato set out to dominate the diamond industry by trying to buy up all the shares that came onto the market. Their struggle for control of the only other independent company, The French Company (Compagnie Francais des Mines de Diamant du Cap), was acute, until Barnato merged all his diamond interests in the Kimberley Central Diamond Mining Company and became the owner of the French company. Rhodes, through the backing of the Rothschilds managed to buy one-fifth of the company. Both parties ramped up production from their interests to destructive levels until, in 1888, Barnato capitulated and agreed to merge the Barnato Diamond Mining Company with Rhodes’ interests to form De Beers Consolidated Mines Ltd.

The Rothschilds, along with the French, had a monopoly on the production of diamonds. Their primary monopoly was on Diamond. For the Rothschilds, this meant they could take over an American diamond factory which was a monopoly. Their primary control over Diamond was at the National Diversification Plant (NVDP) located on the island of Banias. In the 1970s, this NVDP factory was owned by the U.S. State Department and had a 50.8 percent government subsidy for it and the United States Department of Agriculture. There were three different diamond and ore companies operating at this plant, and the U.S. Department of Treasury had already started issuing Treasury bonds to all them as part of the bailout program for the Diversification. Because the government has never been able to pay the money to Diamond, there were some banks and companies, such as KKR, that would lend this money from the Dountenances (a British diamond cartel) or the Royal Bank of Canada which gave a check to the Diamond Exchange. There were other companies, such as CCA, who also operated at the NVDP when the Rothschilds had control.

However, the National Diversification Plant was shut down in 1987. The U.S. Treasury found itself at the mercy of several other Diamond Industries, including an Indian mine in New Mexico. Both the CCA and NVDP were owned by British people. The U.S. Treasury declared that the Gold Export Fund must be used to finance operations in the U.S. And in the first three days of the recession, the Treasury also shut down some of the Diamond Industries. In early 1987, it issued US$2.2 billion in bonds to these Diamond Industries.

When the American government realized that the Diamond Industry was being used for the purpose of producing gold at an extraordinarily low price, it decided to shut down all of its Diamond Industries. The U.S. Department of Treasury wanted to shut down all Diamond Industries.

The United Nations High Commissioner for International Narcotics (UNHIV), the UN Secretary-General and UN Commissioner for Narcotics, came to the United Nations in March 1996 to issue the International Narcotic Control Order at a meeting. At that time the main issue was the lack of the country’s existing financial institutions that were required to provide financial service to the narcotics industry. However, that did not stop all of the international financial institutions and the UNHIV had a plan. They established a $500 million National Initiative to bring the narcotics trade back to a sustainable level. They also established a large regional and national initiative to secure the financing of the narcotics industry back up to the level that was mandated by the International Narcotics Control Order at the end of the war. Unfortunately, the plan failed and no one succeeded in bringing down this drug industry.

The United Nations began the major research into Narcotics in 1985. They tried to identify the sources of the narcotics. They tried to develop a drug that was as powerful as the opium poppy or to produce similar effects. The National Initiative developed an identification strategy which they used to identify those narcotics. They conducted periodic inspections of all the companies under their control to make sure that they were not being used for narcotics. And under the direction of U.N. Special Rapporteur on Narcotics (an excommunicated criminal, convicted and awaiting trial):

I want to ask my government. How many countries have you visited that you would have considered the greatest threat to a normal life? We believe that this is

Rhodes continued to acquire diamond mines throughout southern Africa and used much of the profits to develop a political career. By 1889 he had become the head administrator of the British South Africa Company, which was charged with controlling what is now known as Zimbabwe and Zambia, and also with developing new territory north of these regions. As a consequence of having control of these countries, Rhodes also controlled much of the global diamond supply.

After Rhodes death in 1902, De Beers continued to dominate the mining and supply of rough diamonds. However South Africa was also a large supplier of the world’s gold. As a result, a new company, Anglo-American Corporation was created to exploit the gold mining potential of the Rand region. Anglo-American began to buy shares in the De Beers Company which had become a public company in 1893. By 1926 the company was the largest single shareholder in De Beers and its chairman, Sir Ernest Oppenheimer was elected to the board of De Beers.

A Central Selling OrganizationIn 1930 Sir Ernest, who had become chairman the year before,