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In 1888 Cecil Rhodes, backed by Rothschild finance, ended a costly share war with Barney Barnato by agreeing to merge Kimberley Central into De Beers Consolidated Mines, whose trust deed allowed profits to fund territorial expansion. The takeover was completed with a liquidation payment of £5,338,650 on 18 July 1889. After further acquisitions, by September 1889 De Beers controlled about 90 percent of the world's diamond output.
Kimberley's mine owners set up closed compounds, where African workers were confined and searched for the length of their contracts. The stated aims were to stop diamond theft and to hold down wages. Combined with pass laws and short-term migrant contracts, this made controlled, low-cost black labour the foundation of mineral profits. The Witwatersrand gold mines copied the system at scale, and it became the institutional precursor of later racial segregation.
At the turn of 1895–96, Leander Starr Jameson led about 500 armed men into Kruger's Transvaal to trigger an uprising among the Uitlanders, the foreign mine workers and settlers. The plan was secretly arranged by Rhodes, then Cape prime minister. The uprising never came, the raiders were forced to surrender, and Rhodes had to resign. The fiasco strengthened Kruger, united Afrikaners across the Cape, Transvaal and Orange Free State against Britain, and made later compromise far harder.
The Witwatersrand gold finds turned the Transvaal from a poor, bankrupt farming republic into the richest state in southern Africa. The deep-level ores needed huge capital investment, which drew in foreign investors and financiers known as the Randlords. British officials, led by Alfred Milner, saw an independent, gold-rich Boer state as a threat to British supremacy in the region. They pressed Uitlander voting rights to force a confrontation, so a dispute over the franchise was really a contest over who would control the gold.