Hamilton Smith: Mining Millionaire, the icon that reaped the rewards of imperialistic conquest

 

DURHAM – The name Hamilton Smith is iconic throughout the University of New Hampshire. But who was the man of mystery behind the recently renovated building?

 

Smith was regarded as a philanthropist to most, and a dog lover to some. Yet the man behind the title could be seen as one of the most influential figures in the conquest for gold and diamonds in the late 19th century. Smith gained his capital from the imperialistic exploitation of black South African labor by means of indentured servitude. These funds have been used within the University system – now we title buildings after this very fellow. 

 

Dr. Funso Afolayan, associate professor of history at the University of New Hampshire said, “If they [capitalists] did not have Hamilton Smith, they still would have done it [deep level mine]. He, [Hamilton Smith,] was a facilitator who came in at the right time when they were in need.”

 

On May 15, 1906, the Manchester Union reported Mrs. Smith’s estate at more than $600,000; with adjusted inflation this is roughly $16 million. However, the financial records of Hamilton Smith seem to have disappeared, or else, have been destroyed.

 

 

As found in archives in the University of New Hampshire’s Dimond Library, a memorandum of the death of Hamilton Smith reads: 

 

“Directly or indirectly, the University has profited from H.B.S.’s fortune as follows:

1. Valentine Smith scholarships- gift of $10,000.

2. Smith Hall- $16,000 from his stepdaughter Mrs. Edith Congreve Onderdonk.

3. Bequest of $10,000 in his will- left in trust to his partner, Henry C. Perkins, became $12,888 before    used for library (Hamilton Smith Hall).

4. Part of his estate, by will of his widow, and after the death of his stepdaughter (Mrs. Onderdonk).    This became available by 1920 and the UNH Trustees used the sum of about $120,000 to construct     the first unit of Congreve hall.

 P.M. Marston. February 15, 1960”

 

Born in Kentucky on July 5, 1840, Hamilton Smith married in 1886, in London to Mrs. Alice Congreve. Smith had no biological heirs. He was the son of Hamilton Smith Senior and the grandson of Judge Valentine Smith.

 

Smith had no formal education, yet was an expert of deep level mining. He practiced his trade under his mining father for the duration of his adolescence; Smith had the capacity and intuition to survey uncharted land and to locate precious metals deep within the ground. He was the truffle pig of valuable minerals. 

 

One of Smith’s associates and close friends, Henry C. Perkins, revealed in Interviews with Mining Engineers, by Thomas Arthur Rickard, that, “he [Smith] had trained himself by practical work in his father’s coal mines in Indiana. He was a masterful character, he had a powerful intellect, a great grasp of the controlling factors in any undertaking, and a genius for thoroughness.”

 

 

 

The Rothschilds & Their Money

 

Smith met the wealthy benefactor, Lord Rothschild while inspecting hydraulic mines at the North Bloomfield Company. He then became the consulting engineer for the Rothschild family, according to Perkins. 

“Hamilton Smith was instrumental in introducing abroad the greater number of those American mining engineers who have brought so much credit to the profession,” said Perkins.

 

Smith was particularly fond of South Africa for his mining endeavors as referenced by Dr. Gary Brechin, the author of Imperial San Francisco: Urban Power, Earthy Ruin. At the time South Africa was considered the “El Dorado,” of mining. Smith founded the Exploration Company of London in 1885, along with Lord Rothschild, a British financier, similar to a modern day venture capitalist. Rothschild played an instrumental role as financial benefactor to exploit the resources in the South African region.

 

According to Robert I. Rotberg in his book The Founder: Cecil Rhodes and the Pursuit of Power, the purpose of this London based enterprise was as an “investment fund, specializing in overseas mining properties.” The role of Smith and Lord Rothschild’s company was to survey and appraise untapped ore deposits or advise current mining operations. This was done on land that was taken by imperialists from the native South Africans.

 

Following the Napoleonic Wars, many imperialists left their homelands in search of land and resources around the world. South Africa was highly contested during this time of competition. During the Napoleonic Wars, the Cape Colony of South Africa was taken by the British. The war to take South Africa was almost entirely funded by the Rothschild family.

In Niall Ferguson’s book, The Ascent of Money: A Financial History of the World, he says, “N.M. Rothschild [Lord Rothschild’s grandfather] was instrumental in almost single-handedly financing the British war effort, organizing the shipment of bullion to the Duke of Wellington’s armies across Europe, as well as arranging the payment of British financial subsidies to their continental allies.”

 

Rothschild’s family aided worldwide imperialism; Lord Rothschild continued this pattern of subsequent domination through mining in South Africa.

 

 

Cecil Rhodes & His Influence

“I contend that we [white British] are the first race in the world, and that the more of the world that we inhabit, the better it is for the human race.”

-Cecil Rhodes, 1877

 

 

“People came from everywhere to stake their fortune in South Africa,” said Dr. Afolayan. “One of the most notable people who came was Cecil Rhodes.”

   

“Cecil Rhodes almost epitomizes this aggressive unscrupulous form of imperialism.”  Said Dr. Afolayan.

 

Cecil Rhodes was an imperialist, a businessman and a politician. He played a pivotal role in southern Africa in the late 19th century. With his foothold as a politician as well as his wealth from his business exploits, Rhodes used his influence to annex large quantities of land to use for personal gains. Rhodes and his company paved the way for the future application of apartheid by working to alter laws on voting and land ownership. The De Beers mines   made use of a segregated compound system that regulated the movement of their workers until the end of their contracts.  

 

Cecil Rhodes was desperately in need of funds to buyout a competing mining firm in timely congruence with Smith’s newly established company.  Through the connection of Smith and mutual associates in the mining industry, Lord Rothschild gave him the finances he sought. Prior to Rhodes’ connection with The Exploration Company, Rhodes founded the De Beers diamond firm which, until recently, controlled the global trade of diamonds. Rothschild became a critical shareholder of the De Beers Firm.

 

The Manipulation of South African Labor

 

According to his research, Dr. Midas Chawane of the University of Johannesburg states that if not for cheap native labor, mining would not have been possible in South Africa. The production costs in the gold mines of South Africa were usually very high due to the depth of the gold bearing reef. Smith’s specialty was to determine the abundance and value of these hidden minerals deep within the earth’s surface. Smith’s decisions were based on the potential for financial gains for his parties of interest such as the Rothschild family, whom he worked for.

 

 

“First, the problem was that the mines were collapsing,” Dr. Afolayan said. “The workers could no longer reach deep enough. Capitalization and mechanization of mines [was necessary] to gain access to deep ore below.”

 

Ore is a naturally occurring solid material from which a metal or valuable mineral can be profitably extracted, like gold, or diamonds.  After all the resources were extracted from the surface, mining firms were in need of reaching valuable ore at deeper levels.

 

The average gold content of the ore is low. The internationally fixed price of gold prevented the mining companies from passing on any increase in production costs to the consumer. In their attempt to seek cost minimizing strategies, the mining companies sought to reduce labor costs due to the difficulty of minimizing capital costs.   Reducing labor cost was not a challenging task for the mining companies. In contrast to white labor, black labor was thought to be unskilled and could therefore be paid less. Deprived of the political rights such as voting or free movement and the right to bargain collectively through trade unions, South African’s were taken advantage of in a form now known as indentured servitude.

 

“By taking their [indigenous people’s] land, they were compelled to be laborers in the mines of the settlers,” said Dr. Afolayan. “Either you work in their [settlers] farms, or you work in their mines, where the workers were subjected to all kinds of indignities.” 

 

It was easy and inexpensive to accommodate black mine workers by housing a number of them in compounds, therefore keeping the expenditure within cost effective limits. 

 

 

The Capital

Smith, through his vast connections within the mining community, middle-manned the business transaction between Rhodes [De Beers] and Lord Rothschild. Rothschild raised £1 million to purchase a competing mine. After purchasing the mine, Smith’s exploration company was used to inject cash into the mines owned by Rhodes. Rothschild became one of the prominent shareholders of De Beers diamond mining firm, founded by Cecil Rhodes. 

 

In 1892, Smith travelled to Witwatersrand, a 56-kilometer stretch in the Gauteng Province, South Africa. Here Smith surveyed and appraised the potential for gold on behalf of the Rothschild’s. Smith came to the conclusion that the land and gold was worth approximately £ 215 million, that could be raised at a rate of £10 million per year. Today, with inflation, this would be approximately £24 billion raised at a rate of approximately over £1 billion per year. An influential article written by Smith ran in The Times on January of 1893, claiming that the Witwatersrand had reserves worth over  £300 million. Now, with inflation, that would approximate to £34 billion.

 

In the book Diamonds, Gold, and War: The British, the Boers, and the Making of South Africa, author Martin Meredith, states that the outcome of Smith’s survey resulted in the formation of a company called Rand Mines.  Nominal capital was worth £400,000 at £1 per share and the Rothschild’s picked up 60,000 shares. Within five years of the formation of Rand Mines, each share was worth £45 a piece.

 

The English Department rests within the newly constructed Hamilton Smith Hall. Hamilton Smith’s legacy was commemorated by his ability to procure precious materials. The legacy of his associates was that of imperialist conquest. Today we celebrate him as a philanthropist whose donations helped build the university. The means by which he came into such funds, though, are of a moral & historic debate. 

 

 

 

 

 

 

 

 

 

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