Popular Posts

Follow by Email

Friday, December 30, 2011

The Erleigh and Milne Fraud, 1946

Monument of the "Aaandenk" borehole, Allanridge. 
(close to Odendaalsrus)

The Erleigh and Milne Saga  

THE ERLEIGH AND MILNE fraud involved salting of assay results from a borehole commissioned by Harry Oppenheimer of the Anglo American Corporation. Evidently the fraud was not something mine owners and engineers wished to crow about and very little is known about where exactly the borehole was sunk. The names of Messrs. Early and Milne are nowhere mentioned in glossy mine brochures but according to my own researches many years ago at least one of these gentleman crooks made a comeback and name for himself in mining in the Free State. Other than that, the fraud itself is scrubbed from institutional memory and one certainly will finds reference in the history records of the various mining houses involved.  Not least those published by the Anglo American Corporation.

Many people are of the opinion that the famous borehole sunk on the farm Aandenk, close to Allanridge was the borehole in question where this magnificent fraud was perpetrated. But this is due to oral history being recalled with shifting intentions and substance. The Aandenk borehole was sunk in 1933. The Erleigh and Milne borehole was sunk in 1946. The importance of the Aandenk borehole was that it was the first to strike gold bearing reefs of the Witwatersrand system in the Free State. After a spate of more boreholes the first productive result was the development of a mine close to Welkom, St. Helena, already in operation before World War II. But the fraud was not the first event to have triggered massive prospecting for gold in the old Orange Free State and Zuid Afrikaansche Republiek. In the late 1880s, concurrent to the discovery of the Witwatersrand outcrop in Johannesburg, gold bearing outcrops were discovered in the Klerksdorp area which drew prospectors and small scale miners from all over the world. To give an idea of the scale of the gold rushes, one could count the number of taverns close to any place where miners were housed, digging for nothing on their own account, or who could drink up wages as small diggings merged into major operations controlled by the mining corporations.

After World War II there already was a hive of activity by 1946. This was a time when Wicks Bubble Gum, Ford motor vehicles and Cracker Jax came on the market as  imports from the USA. As kids we would chant, “nothing bigger than in Texas except gold mining and road building!” Like the earlier city of Johannesburg, the early Free Styate had much of the veneer of an American pioneer mining villages and towns around the sprouting gold mines. The Free State, and Odendaalsrus as initial hub, was bustling with activity, the building of roads, erecting of huge modern shaft towers, water trucked in from any close by river source, and of course housing for workers.  The fight between human greed and nature was on. As the gold mining industry became big and powerful with financial anchoring in the London Stock Exchange Rand Lords emerged bigger and stronger and had their head quarters and clubs in Johannesburg. Men of the ilk of Cecil John Rhodes, Barney Barnato, as well as mercenaries like Leander Starr Jameson, hireling of Rhodes left deep tracks in the development of South Africa. After Rhodes’ attempt to steal the entire Witwatersrand with the Jameson Raid the British went into all-out war against the two Boer Republics and in the end exhausted their Empire from undertaking any more such aggressive adventures.  

So these times, the mid 1940s, were interesting times for a youngster and two bothers to play around with adventures of a gold mine, a world which seemed to make little sense at face value. The huge rock dumps arising led to speculation and long chats among us kids after being put to bed. Discussing questions like: “how big must that hole be to make such a huge dump of broken rock!?.” I was six, my brother Odiel a year older than I, and Jerry then still an unwelcome toddler who had to be looked after on our adventures climbing mine dumps, explorations of the wilds between Odendaalsrus and Welkom. Poor little guy. He was barely four years old and had to enlist the aid of our mother to enforce the older brothers to take him along to wherever and not be nasty to him. That was then okay, but then the arguments about who had to piggy back him on the way back home after a whole day adventure in the open veldt invariably led to fights between the two brothers and a bawling little Jerry Schuitema.

Moving on from, Blyvooruitzicht where my father previously worked, we lived in a small village made up of about 300 matchbox-type cottages close to Odendaalsrus, in the mining camp called Freddies. My father was hardly visible most of the day and when he did pitch for dinner after an long shift underground, mostly totally worn out and wishing only to go to sleep. But to our delight other times time he was off to a prearranged drinking party in one or other underground colleague’s cottage. We tagged along and remarkably were tolerated. As long as we kept our mouths shut and told mother no stories. Here we only needed to listen to learn by stealth about the workings underground, gory details of fatal accidents, and best of all, listening to heated political discussions. My father was often the subject of these discussions because he had “joined up” to fight with the British against the Germans in World War II. All sorts of language peppered meaning to new words we were hearing. My father was often tackled by his Afrikaner mates as a “Bloed Sap”, (a JC Smuts adherent), sometimes called just plain stupid and a “volks verraaier” (“people's traitor”). But the contradiction was that even as my father defended himself against these acrimonious attacks, he was elected the Mine workers Union's (all white at that time) as a shaft steward.

And also strangely enough on one topic there was total unanimity. Messrs. Erleigh and Milne were regarded as Robin Hood-type heroes. They crooked the rich British and got away with mild jail sentences, were not subjected to “asset forfeiture”, and lived princely lives in prison because they could buy off warders or whoever else mattered. Some rough and soundly drunk miners thought that this fraud by the two gentlemen crooks was vengeance for the planned but failed theft of the Boer Republics instigated by the owner of the JCI, which was also owner of Freddies Gold Mine, Barney Barnoto. One story stronger than the alcohol being consumed, had one miner telling that Barnato was drown at sea after being shoved off a ship by an unknown Afrikaner hero.

It is a truism that each generation writes its own history as perceptions change and the vagaries of history cause new fault lines in social structures, or new institutional dumping of memory as conditions change.  In the end only the perceptions remain and substance gets dissolved along the way. Erleigh and Milne are rubbed out from history and certainly no memoir of whoever would find it opportune to go into ther life stories. It was, however, with the older miners, of my own age whom I incidentally met years, decades later where the Erleigh and Milne story still has traction. My own opinion (nothing more) was that once the Freddies Gold Mine closed down soon after my father could boast of having set a new speed record for sinking of the mine largest shaft on the earth, as a direct consequence of the Erleigh and Milne fraud. They had sent the owners of the mine, Johannesburg Consolidated Investments (JCI) on a wild goose chase, to sink and start developing a mine only to find nothing.   Not so, said another. Freddies was not the victim, but the JCI itself. And, according to this Boer, the trick was played out not by Early and Milne, but the Anglo American who soon after opened hugely profitable mines barely a mile away.

What happened to Early and Milne? When the National Party took power in 1948 they were unconditionally released from prison. Erliegh bought a property in the Karoo and established the largest horse breeding stud in Africa. In this respect he outdid Cecil John Rhodes not by establishing a railway line from Cape to Cairo, but enough riding horses to achieve the same, albeit much slower result! 

Click here to find out more!

From Time Magazine, April 29th 1946:

The greatest gold rush since the Klondike was on last week. But most of the prospectors were the slick, sharp-eyed speculators of the London and Johannesburg stock exchanges. In the "kaffir circuses"—the usually cautious sections of the exchanges where South African gold stocks are traded—the market value of Orange Free State shares zoomed $100,000,000 in 48 hours.
The unprecedented boom grew beanstalk-fast from a 3,022-ft.-deep borehole in a cornfield near the dusty little village of Odendaalsrus, southwest of Johannesburg on the Free State's sandy veld. A Canadian engineer, G. W. Hicks, employed by Diamond Tycoon Sir Ernest Oppenheimer's Western Holdings and Blinkpoort companies, brought up the diamond-drilled ore core. It assayed 62.6 oz. of gold to the ton—33 times as rich as the phenomenally prosperous Blyvooruitzicht mine, 120 times better than Canada's best.
Said the slightly dazed Hicks: "When I took the core from the drill, I could see we had struck something pretty good, but I had no idea it was so fabulously rich." Hicks drilled his golden hole on a farm called "My Annie," owned by 28-year-old Gerhardus Johannes Rheeder, who— like most Boer farmers—had long ago sold his mineral rights for a fraction of today's inflated values.
The strike climaxed years of only moderately successful drilling in the Oden-daalsrus vicinity, may—if the rest of the reef bears out the first core's promise—prove an old geological theory. Geologists have long guessed that Johannesburg's famed, rich Witwatersrand and its wealthy western extension are part of a prehistoric geological basin whose opposite curve cuts beneath the Odendaalsrus district and could produce a similar bonanza.
As Western Holdings shares jumped from 72 to 105 shillings and Blinkpoort from 32 to 80, one thing seemed sure—the strike would produce no influx of motley adventurers, only a brief land boom for Free State farmers. Established companies hold mineral rights or options on almost all of the fertile grainlands, and there are few surface outcrops. If, as some Canadian and London experts warned that it might, the single borehole assay proved a fluke, thousands of speculators and small investors might see millions in paper profits disappear as fast as a summer shower on the parched Orange Free State fields.   

(One can no longer find this article on the 'net)
Gold: A pinch of salt (Time Magazine 3rd October, 1949):

When assayers announced an incredibly rich gold strike in the Orange Free State last June, the shares of Joseph Milne's Free State Gold Areas, Ltd., which had made the drilling, nearly tripled in price on Johannesburg's stock exchange. Milne's paper profits were estimated at from $8 million to $20 million (TIME, June 27) on what was called the richest gold strike in South African history. But the boom collapsed when a police-supervised test showed that the ore was only a fraction as rich as the three previous tests had showed.

The South African government, which was preparing to try Milne...

Gold: Free State Fiasco (Time Magazine June 27 1949)

On Erfdeel farm in the Orange Free State three weeks ago, a mining engineer hauled up a drill-core laden with ore from a 6,000-ft. test borehole. In Johannesburg Essayists announced that on the basis of the sample, the gold ore under Erfdeel ("Inheritance") farm might be worth as much as $18,000 a ton. It was the richest strike in South Africa's golden history, and on South African and London exchanges it touched off the wildest boom in gold shares in years.
No shares soared as fast as those of Free State Gold Areas, Ltd.,...

Read more:,9171,800480,00.html#ixzz1i2u0jvyY