This Day in Jewish History

1897: A Diamond Magnate Drowns Under Mysterious Circumstances

Barney Barnato, boxer, bouncer and father of the diamond syndicate, invented the concept of keeping the market hungry.

African Library, Kimberley / Wikimedia Commons

On June 14, 1897, the South African diamond magnate Barney Barnato, who was for some time one of the world’s wealthiest men, drowned after falling – or jumping – from a boat into the Atlantic, off the island of Madeira. The circumstances of his death have never been satisfactorily resolved.

Barnett Isaacs, as he was called at birth, was born in London on February 21, 1851, although he himself often claimed to have the same birthday as his rival and friend Cecil Rhodes – July 5, 1853. He was fourth of five children of Isaac Isaacs, a seller of secondhand clothes and fabric fragments, and Leah Isaacs, who died giving birth to her last child when Barnett was 1.

The Isaacs lived in Aldgate, in London’s Whitechapel district, where so many Jewish immigrant families resided. Barnett attended the Jews’ Free School, under its legendary headmaster Moses Angel, until age 14.

Boxing for money

Barnett was scrappy and full of confidence. He boxed for money, worked as a bouncer at a brother-in-law’s pub, and, together with his older brother Harry, was part of a music hall act. The pair were introduced as “The Great Henry Isaacs, and Barnett too,” and, liking the ring of those last two words, they began referring to themselves the “Barnatos.”

In 1871, with the great diamond rush underway in southern Africa, Harry joined several cousins who had already sailed to the Cape Colony seeking their fortune. Two years later, he was joined by Barney, who arrived in the colony with little more than the 40 boxes of cigars he intended to sell to miners once he was in the diamond fields.

Barney spent the next year learning all he could about diamonds, and came to the conclusion that there were far too many separate and tiny claims being mined by too many owners. He hurriedly began buying up claims, and in short time, he had brought the number down from 3,600 to 100.

Eventually, Barnato and Rhodes, between them, owned nearly all of the Kimberley and De Beers mines. And after some scheming on the part of Rhodes left Barnato little choice, they became partners.

The original price manipulator

Barney then traveled back to London to arrange for the consolidation of the diamond trade as well. It was he who had the idea of keeping the supply of diamonds on the market linked to world demand, in order to keep the price high. That required coordination by the people controlling the flow of rough diamonds to the cutters in Europe and the merchants at the end of the process. To that end, he organized the raw diamond producers into a syndicate, a model of trade that still largely characterizes the gem market today.

In 1886, when gold was discovered in Witwatersrand, that became another priority for Barnato.

Mining gold required a greater investment than digging up diamonds, but it was also a safer bet as gold was in steady demand worldwide. Together with other family members, Barney poured vast amounts of money into creating the urban infrastructure of Johannesburg. He funded his endeavors by selling shares of both his mines and a real-estate development company on the London and Johannesburg exchanges.

Death at sea

No one knows whether Barney Barnato’s death at sea, on June 14, 1897, was accidental or not.

He was sailing with his family – his wife, the former Fanny Bees, and their three children – on the RMS Scot from Cape Town to Southampton, England, where he intended to attend the festivities surrounding Queen Victoria’s Diamond Jubilee celebration, when he drowned.

The year before, 1896, had been a traumatic one for Barnato. He had lost much of his fortune in a collapse of gold shares that year and seen a plot, planned in part by Rhodes, to overthrow the Boer regime of President Paul Kruger – the so-called Jameson Raid – fail. There were reports that he had been in a delicate emotional condition before his death.

The British coroner’s jury that ruled on his death after his body was brought to England declared it was caused by “suicide by temporary insanity” – a verdict that many people close to him felt to be highly unlikely.