The second half of the 1880s was the most crucial period yet in Julius Wernher's life. It included, among other things, his marriage, the firm's involvement in Cecil Rhodes's amalgamation schemes at Kimberley, and the discovery of gold on the Witwatersrand in the Transvaal.

On his return to England he again took control of the ever-increasing empire of Jules Porgès and Company. He would hold a key position in the London Diamond Syndicate. Often it was rumoured he would be in the office until near midnight, even on Sundays. For, by 1885, the diamond trade was in deep crisis, with prices as low as they had ever been. As always, overproduction and reckless competition between producers were the problem.

But the basic mining costs were heavy, and there was conflict between the industrialists and the workers.

The Syndicate was not to be formalized finally for some years, and there were stormy arguments meanwhile with Kimberley over prices, quality and profit sharing. Percy FitzPatrick, a future colleague of Wernher and Beit, summed it up in conveniently simple terms as a 'sort of balancing reservoir which could receive and hold diamonds for a period if the demand and supply did not balance'. But by 1885 only the De Beers Company was showing any reasonable profit, 70 per cent of its output being taken up by some dozen London firms, in particular Porgès and Mosenthal, both of which had directors on the De Beers board.

From the comments of the time one has an impression of Julius sitting in his city fastness like some benign if awesome Buddha, inscrutable, wise, imperturbable. He had gained a reputation for being hard, a man "who did not suffer fools gladly", but colleagues denied this and said he was always ready with sympathetic advice. To such people he was a "splendid and loyal friend", whose very strength lay in his stubbornness; once he had made up his mind he could rarely be deflected. When faced with some individual's problems, his particular mannerism was to take out his gold pince-nez, wipe it slowly with a silk handkerchief, and then rise to his feet and lay a hand on a shoulder. "My dear boy..." he would begin, like some old uncle, even though still in his mid-thirties. He detested any form of public speaking, but when forced to take the platform his speeches were witty if terse.

Julius met his future wife very soon after his return to London. Her name was Alice Sedgwick Mankiewicz, known as Birdie. The introduction came through one of the great friends of his Frankfurt boyhood, Alex Marc, living now in England and married to Birdie's sister Daisy. The two young women were remarkably alike, though Birdie was prettier. Born in 1862, she was bright-eyed, fair-haired and small, barely reaching up to Julius's shoulder. Intelligent and musical - she had obtained a diploma in pianoforte from the Royal College of Music - she also spoke German, which helped to please Frau Wernher, who seemed doubtful at first about the liaison. Birdie's father, Jacob James Mankiewicz, had died in 1879, aged forty-nine; his background was obscure, but he originally came from Danzig, the son of Joel Mankiewicz, a merchant, and given the fact that he had a brother called Samuel (who changed his name to Danby), it seems probable that he was of Jewish origin. He had been a stock jobber with Messrs Ansell and Tallermann, who became leading dealers in shares at Kimberley. Evidently Mankiewicz had been reasonably well off, for he could afford to send his two sons, George and Franz, to school at Rugby. Mrs Mankiewicz had been born Ada Susan Pigott. Her family came from Colchester, and she had a brother who was a general. She and Birdie lived in part of a big mid-Victorian house in Bayswater, 15a Pembridge Square.

Julius was living at 56 St James's Street. His correspondence with Birdie began in December 1886, ostensibly in connection with the resetting of some jewellery. But in February she was being elusive, and he wrote that he was "grieved that you have made up your mind not to see me again". In any case soon after this letter she caught chickenpox and was per force invisible. A present of a diamond made all the difference, and after her recovery she invited him to tea tête-à-tête in her boudoir. Julius had to refuse not only this invitation but the succeeding one. His explanation was written at the time of some momentous developments in his business life - developments, it could fairly be said, that affected the future of South Africa.

Not long afterwards there was another enforced separation, for a reason that overrode even his partner's absence. On 13 May 1887 Julius's father died from a "seizure" in Frankfurt. The old man had been complaining of giddiness for some while, and had been increasingly troubled by his deafness. Six years before, on his retirement, the family had moved back to Frankfurt. It was always said that his greatest joy had been his son's success, and fortunately Julius had been at the death-bed. But Julius had been unable to stay long with his family. In that same month the firm was establishing an office in the new township of Johannesburg on the Witwatersrand, while at Kimberley Rhodes was completing the amalgamation of the holdings in the De Beers Mine.

It was not quite the moment for love letters, even if the relationship with Miss Birdie was still on a fairly formal level. Julius did begin to write at greater length, though his sentiments were hardly passionate and usually on mourning paper edged with black. Visits to the boudoir had often to be postponed. Nevertheless Birdie was advised by her brother-in-law Alex Marc that it would be worth her while to be patient, and such advice must have been appreciated when Julius gave her a pearl pendant for her birthday.

In 1885 "Little Alfred", as Beit was usually known, had arranged for two trusted colleagues, Hermann Eckstein and Jim Taylor, to represent both his and the firm's interests in the Barberton and De Kaap goldfields, in which there had been a heavy investment. Taylor sent such a gloomy report that it had brought Porgès speeding out to Africa, and both he and Beit consequently decided to pullout. There was a loss, but they were just in time. The usual cycle of avarice was in progress: rush, boom, soaring shares, disillusion, plummet, bankruptcies. However, before the collapse there had been the sensational discovery of potentially huge deposits of gold on the Witwatersrand ("The Ridge of White Water"), forty miles south of Pretoria. Rumours of the new find had reached Porgès and Beit whilst they were visiting the seat of the Boer government in Pretoria with Rhodes and Sigismund Neumann; but at that time they had been discounted, no doubt to the relief of Julius, to whom risks were an anathema.

Meanwhile Rhodes had been nearing the final stage of mopping up the remaining companies in the De Beers Mine, where he found himself baulked by Francis Oats, a rough-mannered Cornishman in charge of the large and strategically placed Victoria Company. In secret collaboration with Porgès and Co. (in this case Julius Wernher), Rhodes set about acquiring shares in the Victoria on the London Stock Exchange. At last he was triumphantly able to announce victory over Oats, in that he was now the majority shareholder of 60 per cent. As a result of this coup de main, Rhodes's reliance on the financial brilliance of Beit became common knowledge. "Ask Little Alfred" was the standard joke when Rhodes found himself faced with an abstruse problem.

The two would be seen walking together in deep discussion: Rhodes striding along, tall and moody-looking, with pale glowering eyes, and the diminutive, bald-headed Beit scampering beside him, trying to keep up. But it was not only the Porgès firm that made a satisfactory profit out of the Victoria deal; Beit did well out of it too, and doubled his personal wealth.

So the battle was set for the greatest prize, the control of the Kimberley Mine.

A main loser as a result of Rhodes's machinations was the notoriously ill-tempered J. B. Robinson, who was facing financial ruin. Forever afterwards he had a fierce hatred of Rhodes. Beit was always said to have a soft heart when old-time rivals were in trouble, so perhaps partly out of pity, or perhaps to calm JBR's fury, but chiefly because he realized that Robinson still had a worthwhile portfolio by way of security, in the summer of 1886 he lent him £20,000 (some said more) of his own money with which to acquire properties on the Rand - in which fortunately he still had a certain faith. A syndicate was therefore set up, Beit to receive a third of the proceeds. Porgès, in consultation with Julius, who knew Robinson's limitations only too well, declined to lend money or at that stage take part in the syndicate. Robinson bought heavily on the Main Reef of the Rand: properties, if he but knew, that would turn out to be some of the richest and most productive gold fields in the world. These included Langlaagte, another known as Langlaagte Block B, Randfontein and Bantjes.

Rhodes felt uneasy about investing in gold, and at the time only obtained a minor stake on the Rand. The reefs were hard to value; he was short of funds and too preoccupied with De Beers, although he later claimed to Lord Rothschild that he had proposed to Beit that they should buy the whole ridge in that first year. To him only diamonds really led to the magic path of glory, which included political power in the Cape and the wherewithal to plant the British flag further in central Africa. "This I cannot do with your gold reefs" , he told his colleague Sauer. The future site of Johannesburg, already being pegged out, might have a more reasonable climate than Kimberley, being 6,000 feet up, but it seemed no land of Ophir, simply a desolate, snake-ridden waste,the haunt of baboons in eroded, treeless valleys, and the prospect of corrugated-iron shacks, drunks, and ox-wagons churning up the so-called roads, the stench of uncollected refuse and the shortage of water, were enough to sink the heart of anyone who had endured the early days at Kimberley. Not that Rhodes was at all reluctant to rough it if need be; but he did enjoy the comforts of the Kimberley Club.

Rumours of fabulous returns of gold from the outcrops soon precipitated yet another rush. The landlocked republic of the Boers, with its small indigenous population, was faced with an influx of hard-faced foreigners, "Uitlanders", in a desperate search for yet another El Dorado, and apparently assuming that they were a law unto themselves. Beit visited the Rand and saw at once that it was unwise to leave Robinson in control of the syndicate, in which Porgès and Co., after some adjustments, were by now investing. He also saw scope for other lucrative acquisitions. His enthusiasm alarmed Rhodes. Jim Taylor wrote how Rhodes once woke him in the middle of the night to tell him how important De Beers was, and that Beit must be persuaded to curtail his financial obligations on the Rand. He also wrote a letter to Beit urging that he should retire from Porgès and Co. altogether, or at least should leave the gold side of the business to Porgès and Wernher, and "simply remain their partner in diamond transactions". After all, Beit would still have a sufficient number of founder shares in Porgès and Co. Rhodes also suggested that the hard conditions in Johannesburg would be bad for Beit's health.

This last point was worth considering, as Beit was not physically strong. In any case Beit decided to appoint Hermann Eckstein, whom Julius knew well and liked from the days at the Old German Mess, to represent the firm at Johannesburg. Eckstein was ambitious and he realized that this could be a great chance to improve his personal fortune. Even so he needed some persuading, not being altogether convinced about gold after his experience at Barberton. He already had a good job at Kimberley; more important, he was engaged to be married, and he doubted whether conditions at Johannesburg would be suitable for a married woman. He knew all about Robinson's rages and bullying, and certainly after his arrival found it hard to get on with him.

In due course the equally reluctant Taylor was persuaded to join Eckstein. "So began," we are told, "the great adventure of their lives." And so began, it could be added; the foundation of an enormous fortune for Alfred Beit and Julius Wernher.

But back to Kimberley. The duel between Rhodes and Barnato has often been described in dramatic terms. Who would be the matador and administer the fatal thrust? New evidence has proved that it was not quite a fight to the death, and as the historian Robert Turrell has shown, it was Barnato, not Rhodes, who "laughed all the way to the bank". Through a series of manoeuvres and take-overs Barnato - once unable to "tell a diamond from a glass eye" - was already among the wealthiest shareholders in the diamond fields. In the early stages there was indeed a struggle with Rhodes, due to Barnato's commanding position in the Central Company, managed by the less flamboyant but exceedingly stubborn Francis Baring-Gould, who was essential to either side for victory. The problem was raising enough money to tempt the owners. The French Company had been making a loss, but the number of its claims and its size made it a valuable property.

Here Beit's influence and contacts became paramount for Rhodes. He was able not only to interest Porgès but to provide, indirectly, an introduction to Lord Rothschild of N. M. Rothschild in London. The connection came about in atypical string-pulling, roundabout way.

[Jules Porgès's sister-in-law, Mathilde, the wife of Julius Wernher's first employer, Théodore Porgès, had been born a Weisweiller, related to the wife of Baron Henri de Rothschild, and she in turn was "Natty" (Lord) Rothschild's niece by marriage. Madame Théodore Porgès's father, Baron de Weisweiller, represented Rothschilds in Madrid. In the great Jewish cousinhood there were other connections through the Ephrussis, the Cohens and the Helberts. The Weisweillers had originally put up money for Théodore Porgès's firm, and perhaps Jules Porgès's diamond business. Mathilde married Théodore in 1876 and died in the famous Bazaar de la Charité fire in Paris. Théodore died, aged sixty-five, in 1907.]

Rhodes paid a flying visit to London, and succeeded in charming, or at least convincing, Lord Rothschild, who apparently said: "Well, Mr Rhodes, you go to Paris and see what you can do [buying the French Company]...and in the meantime I shall see if I can raise the million pounds that you require." Two days later, in Paris, a deal for acquiring the French Company appeared to be virtually complete, and Rhodes's London representative, Philipson-Stow, gleefully said to him: "We have the Kimberley crowd by the throat."

In London the diamond world was "at fever heat". The French Company's shares soared up in price. Philipson-Stow had warned Rhodes of Porgès's cynicism and his "impertinent" attitude; Porgès was no special friend of Rhodes. Soon the sum required rose to £1,400,000. Julius's summary in his "Notes" of an extremely intricate series of deals was as always laconic, avoiding any of his own misgivings. "The two largest concerns [in the Kimberley Mine], the French Company and the Central, could not come to terms owing to the unreasonable pretensions of the Central. Mr Rhodes boldly bought the French Company, and this in a short time brought the Central people to their knees."

It was by no means the finish of the story. "The Central's only hesitation", he added, "was caused by the fear of their votes and influence being swamped by the compact vote of the De Beers as the largest holder in an amalgamated company." So Rhodes actually resold the French Company to the Central, for a large sum in cash and a number of Central shares. "Now," continued Julius, "the old jealousies came to the surface again." Rhodes, through Porgès and Co., and through Beit, who lent him £250,000 without security, duly set about acquiring yet more shares in the Central, though failing to reach a majority holding. "Thus," said Julius, "the balance of power really lay in the hands of Messrs Barnato, who finally sided with Rhodes and the De Beers [Company]. All the very large financial arrangements were initiated, carried out or assisted by our firm."

He made it sound so simple. There was a bidding war, with shares oscillating up and down, and moments of near panic on either side. Porgès, Barnato and Rothschild, and also Mosenthal, waited to buy at bottom prices. Barnato now had to be "squared" by Rhodes, and made a collaborator, and once this had been actually done, he worked on behalf of De Beers, buying or selling Central shares, whichever happened to be more lucrative. In this way he increased his fortune vastly. But the greatest bait was a perpetual income as a Life-Governor of the new De Beers Consolidated. Five Life-Governors were provided for. After a dividend of 36 per cent to shareholders (it was to have been 30, but Lord Rothschild objected), the rest of the profits would be divided between them. As it happened, only four Life-Governors were appointed, and these were Rhodes, Barnato, Beit and Philipson-Stow. By rights the fifth Life-Governor should have been Baring-Gould, but because of his previously obstructionist attitude Rhodes had him excluded. Rhodes of course became Chairman of De Beers Consolidated.

As he told a meeting of shareholders, in his peculiar, high-pitched voice, it was now "the richest, the greatest, the most powerful Company the world has ever seen". Barnato owned 6,658 of the shares; the other three Life-Governors 4,439 each. It was essential, Rhodes explained, to have wealthy men as Life-Governors as they would plan for the long term and not merely be interested in short-term profits. After a few years Julius Wernher, already a director, was also to be elected a Life-Governor.

Rhodes had promised to help Barnato to be elected to the Cape Assembly and become a member of the Kimberley Club, where it was subsequently said that there were more millionaires to the square yard than anywhere in the world. Both these came to pass. Turrell makes the point that the De Beers directors deliberately fostered the story about the share struggle to the bitter end, in order to conceal from shareholders the huge debts to the bank and the extent to which Barnato had been bribed. The real point at issue had been to convince Barnato that money from De Beers Consolidated could be used not only for acquiring territories in Central Africa, but also - somewhat alarmingly - to "govern them and if so desired to maintain a standing army". The terms of the Trust Deed went even further than that, and included the possibility of engaging in "any" business enterprises. Barnato needed no reminding of Rhodes's part in obtaining a British protectorate over northern Bechuanaland and his plans for sending a mission to the land of the Zambezi. A meeting between Barnato and Rhodes took place in Dr Jameson's house, with Barnato determined that the income from De Beers should be restricted to diamond mining. The argument continued into the small hours. At last, exhausted, Barnato had to say: "You have a fancy for building an Empire in the North, and I suppose you must have your way."

There was, needless to say, the tantalizing factor of possibly finding precious minerals up there, which could far outweigh any reduction in profits for the Life-Governors. Time was short, with the Germans already installed in South West Africa and backed by the Transvaalers under their stubborn old President, Paul Kruger, perennially suspicious of the British, and of Rhodes in particular.

Rhodes's "fancy" was to create a new company with powers that would emulate the East India Company of the Raj. Soon, such were his extraordinary powers of persuasion, he managed to convince the Prime Minister Lord Salisbury and the Foreign Secretary Lord Knutsford (against their better judgement, it may be said) of the necessity for a royal charter for the formation of the British South Africa Company, usually referred to as the Chartered Company. Rhodes's magnetic personality carried the day in all the preliminary discussions and meetings, but by his side would be Beit with his invaluable, "shrewd grasp of detail". Rhodes and Beit, and their immediate associates such as Rothschild, held half the authorized capital in the Chartered Company (Beit himself had put in half a million). By 1895 the Empire in the north was designated Rhodesia, and Rhodes now had his eye on taking over Delagoa Bay, the Transvaal's access to the sea.

De Beers Consolidated was registered in Kimberley in March 1888. There was a last-minute hitch when a minority of share-holders objected to the merger of the Central with De Beers, and they went to law. Rhodes's solution to counteract this was for the Central to go into liquidation. On 28 September 1889 a cheque for £5,338,650 was deposited by the Central liquidators for their credit on De Beers Consolidated, and on the same day they drew in favour of De Beers for £5,326,260. This was an historic deal, the largest financial transaction in South African history, and the cheque was framed and hung in the De Beers offices.

A further reason for Rhodes's failure in 1886 to take more interest in the gold fields of the Rand had been the death of his secretary and particular friend Neville Pickering at Kimberley. His tremendous grief and preference for male companionship throughout his life have led to speculation that he was homosexually inclined. It was also a fact that many of his closest friends, Beit included, were not married. Nothing has been proved, or probably will ever be proved, in spite of some quite ridiculous "evidence" produced by modern psychiatrists. One could argue that Rhodes's drive for power and money was a substitute for sex, in whatever direction. It was said that he enjoyed the company of women "very much as a moderate drinker enjoyed an occasional glass of good port". Some of his terrific energy was obviously due to his knowing that he suffered from heart disease and that his life could be short (as indeed it was). It is known that Beit had an illegitimate daughter called Queenie by a Mrs Elizabeth Bennett of Kimberley, and that later he contemplated marrying the sister of his brother Otto's wife. If there is any truth in the suggestion that he also was bisexual, it could also explain the affinity with such a dissimilar character as Rhodes: not for any reason of sexual attraction, but because in the homosexual world, as in any minority group, there is a community of understanding, a kind of instinctive comradeship.

If Rhodes was homosexual it could also explain, in part, why Julius Wernher was prejudiced against him and why men such as Percy FitzPatrick and Hermann Eckstein did not get on with or actually disliked him (and in the latter case the feeling was mutual). The friendship between Wernher and Beit was deep, based originally on their common nationality and appreciation of each other's business abilities, and maybe interest in art. Jim Taylor said of Beit: "Of all men he ever met in the course of his very active life Rhodes and Julius Wernher were the only two he admired to the point of affection. And of all men with whom he dealt Rhodes was the only one who really knew how warm was Beit's heart and how generous his nature. They were poles apart in upbringing, outlook and habits, yet they were drawn together from the day that they met." Beit's dual and conflicting loyalties were to prove important. One also speculates whether Wernher, as a German still, did not share the enchantment of Rhodes's expansionist schemes.

Here the often repeated story, not necessarily true, about the beginning of Rhodes's friendship with Beit had better be inserted. Rhodes had called at the Porgès office late one night, and found Beit sitting on a stool in front of his weighing scales.

"Do you never take a rest?" he asked.

"Not often," was the reply.

"Well, what's your game?"

"I'm going to control the whole diamond business before I am much older."

Rhodes said: "That's funny. I have made up my mind to do the same. We had better join hands."

Lionel Phillips said in his autobiography Some Reminiscences that Rhodes's relations with Beit were "those of affectionate comradeship", whereas "Wernher he respected". Rhodes's dreams of imperial destiny, his backstairs manoeuvres and social manipulations, and his chasing after the will-o'-the-wisp of gold in Matabeleland are reminiscent of the ambitions of Sir Walter Raleigh in Guiana, but, unlike Raleigh's, it is hard now to appreciate the glamour of Rhodes. Photographs of his flaccid, humourless face in his later years do not help, though the strength and relentless will are obvious. Beit on the other hand looks puckish and it is easy to accept that he had charm. Rhodes said that all Beit wanted was to be able to give his mother f1OOO pounds a month.

"Without Beit," Smuts wrote after both had died, "Rhodes might have been a mere political visionary." Yet all manner of men fell under the spell of Rhodes, and were carried along by his enthusiasm. Lord Rothschild may have scented useful profits out of the De Beers deal, but he developed into a good friend, and was ready to give gentle advice if Rhodes appeared to be straying from the accepted lines of probity. Beit was a gambler, ready for risks, and had an uncanny gift for turning out to be right. Julius was always cautious, acting as a brake. On atypical occasion when Beit had bought and sold rather too heavily, and had to confess that he had made a mistake, Julius merely replied: "Yes, I know. I was selling to you all the time. Don't do it again." It was admitted that without Julius's cooler judgement Beit might have been in some terrible financial trouble.

Both Julius and Beit were to become British subjects. However, in the 188os Julius had his strong feelings of loyalty towards the country of his birth, in spite of German colonial designs and his earlier remarks about Germany in his letters to his parents. This is shown in his sometimes rather awkwardly phrased letters to Birdie, who must have felt that they read like lectures. Their correspondence continued all during 1887. At least for her birth day she was given another jewel, this time a topaz hatpin set in diamonds. When she told him that she read his letters at least four times, he joked that he would try to make them shorter. On 11 March 1888 he wrote a letter, black-edged as usual, saying that he was looking forward to next Sunday "and all the quiet you can give me". He was so weary, he said. Over the past seventeen years he had had plenty of hard work, but the previous three had been the worst.

Some readers of the British press would have raised their eye-brows at such an outpouring.

Julius now turned to a eulogy of Porgès, who had been in London and had written approvingly of Birdie - which letter Julius enclosed. "He gave me his full confidence after the shortest possible acquaintance, and I had the disposal of his whole fortune when only a youngster of twenty-three... I don't think there are many partners with friendship such as ours. My only thought was always -how will it suit and benefit him, and he would sooner lose a great deal than see any injury come to me." Julius was sure that Birdie would also find Porgès a steadfast and "if need be helpful" friend.

The time came to conclude the letter, in slightly warmer terms: "So my dear Fraulein, it is your turn again. Off and on I spent half last Sunday in your charming spiritual company [i.e. thinking of you]. I do not wish for better with the important exception or rather addition of your presence, and that combination I hope to have before many days are over. With kindest regards, Yours faithfully J. Wernher."

But hardly had he posted this, than a letter arrived from Birdie herself, obviously designed to force the pace of this too long- standing romance. He replied at once, and this time he ended:

"Good night, and God bless you, and keep me your love, Ever Yours Julius."

Three days later, on Sunday, in Birdie's boudoir, they became engaged. Birdie dutifully wrote in German to Frau Wernher at her fiancé's dictation.

Letters were now addressed to "My dearest Girl" and signed "Your loving Julius". She wanted more than that, and artfully asked him if he thought her "handsome". His reply could not have been quite as she expected:

Did he think her "stupid"?

Then he gave her the comforting news that his partner Beit would be returning permanently to London during the summer. So in future he would not be quite so oppressed by work.

Perhaps even then Birdie did not quite appreciate the significance of these last words. The wedding took place on 12 June at Christ Church, Lancaster Gate. There were eight bridesmaids and two hundred guests. Only a few hours before Julius had felt constrained to write to his "dearest treasured mother", thanking her for her love over the years and promising that "you will always be to me what you are now and always have been", and that "Birdie will always be a loving daughter to you." The tone of this letter was more intense than any of the letters that he had sent to the bride. A reception was held at Mrs Mankiewicz's house at Pembridge Square. All the presents were laid out upstairs, including a silver canteen of 152 pieces from Alfred Beit, who had disappointingly not yet arrived from Africa. The first week of the honeymoon was spent in the Isle of Wight, and then the couple were off to Paris, guests of Porgès.

Birdie later confessed that she was "dazzled" by the sumptuous houses and art collections of her husband's financial friends, and the smart life of the extremely social and very beautiful Madame Jules Porgès, née Anna Wodianer, of Hungarian descent. It was no doubt Madame Porgès who gave her a taste for Worth dresses. The time would come when people would also be dazzled by Mrs Julius Wernher's style of living.