The Economist began as a weekly newspaper founded in 1843 by James Wilson.

Wilson,

a member of the Free Trade Movement, created this paper as a means to promote free trade and

support the repeal of the corn laws in England, a debate that centered on globalization and

protection rights of London grain farmers, who typically had held positions in the British

Parliament. Originally titled, The Economist or Political, Commercial, Agricultural, and Free

Trade Journal, demonstrates that the paper held explicit motives to promote free trade and foster

the opinions of its founder. The company’s prospectus supports this assumption by outlining

principles that each weekly issue would contain, “original leading articles in which free trade

principles [would] be most rigidly applied to all the important questions of the day”. 1 In addition,

the prospectus also hints towards the promotion of exposing those who may be corrupting the

free trade agenda. Furthermore, the paper would serve as a source for weekly statistical data,

including diamond share prices from various exchanges around the world. The Economist

intended to educate its readers so that they could make well informed decisions about the nature

of the economy.

From 1880-1890, The Economist published the activity in the South African diamond

mining companies in articles that highlighted the “Kaffir Circus”. 2 The terms “kaffir” and

“circus” were derived from derogatory slang that referred to a black person in Africa, and to

refer to highly speculative trading activity on stock trading floors, respectfully. The Circus was

synonymous with mania, high price fluctuations, and unruly gains in South African diamond

shares. These shares became the spectacle of the markets, moving more than other companies,

and capitalizing returns of nearly 400 percent for the period; a result that did not support value of

diamonds alone. The Economist often published frequently that diamonds, “are not necessaries of

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life, but are merely luxuries subject to the vagaries of fashion and to the financial changes which

are constantly taking place”.3

The diamond mining boom, “kaffir boom”, was built upon speculation of mining

companies. The De Beers Company in particular, was hailed as a “ring master”, who

manipulated its stock through its monopoly on the diamond industry. Cecil Rhodes, a London

businessman and founder of the De Beers Company, used his business savvy and political pull to

enact laws in South Africa that would maintain his control of the diamond industry, and

influence the market supply of diamonds. For example, as an influential member of the Cape

Colony’s governing body, Rhodes was able to pass laws that would essentially eliminate African

ownership of mining claims, such that only white land owners were allowed to seek claims on a

particular mine. In addition, for those who did seek claims to mine, they were indebted with high

payments to the De Beers Company that would render their mining efforts useless. Although

owned by Rhodes and other influential London businessmen, shares in the De Beers mining

company, like other South African mining companies, were not formally traded on the London

Stock Exchange, but in the unregulated Kaffir Circus. This arrangement allowed the company’s

directors to operate in ways that could not be regulated by the exchange. For example, the laws

protecting investors in normally traded shares were not protected from insider investment deals,

and political ties in South Africa, all of which influenced the market, and were common in the

Circus.

Works Cited:
The Economist. August 5, 1843. http://www.economist.com/node/1873493?story_id=1873493
(accessed March 31, 2011).

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The Economist. "Diamonds." March 10, 1888: 310.

The Economist. "The Mining Market." September 19, 1891: 1201.