Ernest Oppenheimer -Theodore Gregory

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Part One: Sir Ernest Oppenheimer, De Beers and the evolution of central selling, 1920-1950

INTRODUCTION

It is not often that the historian is given the opportunity to expand and revise past work. I would like to thank the Economic History Society of Southern Africa for the opportunity to present a new version of my published account of the rise and performance of De Beers Consolidated Mines Ltd, prior to 1947, against the longer perspective of the company’s structure dowri to the 1990s. The longer perspective alters the interpretation, and it allows one to emphasize some of the more permanent features of diamond marketing and the use of company profits.

The questions requiring interpretation in the long term have not changed either, though the answers, I think, have. Firstly, any history of De Beers in relation to the diamond trade demands a reasoned explanation for the longevity of so-called “single-channel selling”, more usually obscured in that convenient but vague phrase – the “Central SeIling Organisation” – which is repeated in company reports and the financial press as a kind of mantra for the continuation of a profitable brokerage in diamond wholesaling.

Secondly, there is still a tendency to summarise company policies in terms of personalities – Rhodes, or the Oppenheimers – as though biography can be used as a substitute for business history. That tendency has become more difficult, of course, as the company and its subsidiaries have moved through the phases of Alfred D. Chandler’s managerial revolution in which the professionals are supposed to replace the dominant alpha male chairman and create a faceless and efficient bureaucracy.

But the role of the personal entrepreneur on a board or boards as a determinant of policy is still an open question. Finally, there is the question Alfred Chandler avoided in his seminal study of monopoly industrial growth – namely the company’s relationship with the state which in the case of South Africa is a fascinating history of hostility and accommodation; and this ambivalence has important consequences for recent company policies. (1)

Answers to these three questions centre, I believe, on company structure and profitability; and that core theme is best treated as a process of historical evolution to meet changing circumstances in Africa and in the international diamond trade. The stages of that evolution have been divided into two main phases in two papers, the first of which will treat the restructuring of the 1920s and 1930s which enabled the company and the wholesale brokerage to survive the Second World War intact and profit from the extraordinary expansion of diamond production and marketing after 1947.

The second article, to be published in this journal at a later date will deal with the economic and political challenges faced by the company to the present day and will try to come to some conclusions concerning the questions raised above.