Ethnic Business & Economic Empowerment

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ETHNIC BUSINESS AND ECONOMIC EMPOWERMENT:

THE AFRIKANER CASE, 1915-1970

hermann giliomee *

Abstract The struggle for racial or ethnic group worth is an important socio-political issue in societies wherea minority ethnic group, like the English-speaking whites in South Africa or the Chinese inMalaysia, dominates the economy but not the political system.

There are two routes to the empowerment of an economically backward group. In the Afrikanercase, economic mobilisation formed part of a general ethnic mobilisation. While the Afrikaner-controlled state after 1948 massively aided all whites, Afrikaner business increased its market sharethrough serving a niche market. It received little ethnic patronage from the state or assistance from

English corporations. A quite different from of advancement is that driven by the state, whichimposes on large corporations the obligation to promote the economic empowerment of a racialgroup. While the rst form facilitated the rise of the ethnic group as a whole, the latter onebeneted mainly a business and middle class elite that may remain dependent on continuing statesupport.JEL Classication: N17, N37, N97 Keywords: Afrikaner business, entrepreneurship, economic empowerment

Asked just before his death whether he knew of any cases of an Afrikaans business beingempowered by an English corporation, the entrepreneur Anton Rupert replied: “I cannotthink of any, and I am very grateful for that.”1 Fred du Plessis, executive chairman of Sanlam, the corporation that once dominated Afrikaans business, denied that politicalpower helped Afrikaans business to succeed. “The Afrikaner can look back not because hewas privileged to receive state grants, but because he was capable of putting himself forward and ghting for his economic position” (Cape Times , 8 July 1986). An academicstudy of the Afrikaner economic advance paints a completely different picture. Itattributes the Afrikaner’s strong economic upsurge after 1948 mainly to the decision of the agglomerate Anglo American Corporation to sell a mining house under its control“at a fraction of its value” to a subsidiary of an Afrikaans insurance company (O’Meara,1996:120, 141). A recent history of the political economy stated that the NationalParty government gave “massive handouts” to Afrikaner farmers, nancial capitalists,small traders and workers (Fineet al., 1996:148). Neither the business leaders nor theacademics substantiated their claims.

This article is not concerned with the massive preferential treatment that whitesreceived from government for most of the twentieth century as part of a policy, endorsedby virtually all whites, to establish a secure white dominant group. State aid specically to Afrikaner-dominated commercial agriculture is left out of consideration, although

* Hermann Giliomee is Extraordinary Professor, Dept of History, University of Stellenbosch,Stellenbosch 7600,[email protected] author gratefully acknowledges comments by Joubert

Botha, David Meades, Deirdre McCloskey and Grietjie Verhoef but is solely responsible for theviews expressed here.1 Interview by author, 3 May 1999.

South African Journal of Economics Vol. 76:4 December 2008

© 2008 The Author.Journal compilation © 2008 Economic Society of South Africa. Published by Blackwell Publishing Ltd, 9600 GarsingtonRoad, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.

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farmers provided much of the capital for some of the Afrikaans businesses discussed here.Instead the article concentrates on the ethnic nature of Afrikaner entrepreneurship andon the question whether English corporations or the state tried to assist Afrikanercorporations. While English speakers were a minority within the white minority andlargely excluded from political power, in 1910 they dominated the economy, thebureaucracy and the professions.

1. A SPECIAL KIND OF ENTREPRENEUR

Joseph Schumpeter’s great insight was that entrepreneurs, driven by the gift to innovateand possessed by the dream and will to found a private kingdom, constitute the drivingforce of economic progress (McGraw, 2007). In the case of entrepreneurs belonging to aneconomically “backward” group there is an additional spur: to demonstrate to their owngroup and the economically dominant group that they could succeed. The Afrikaner

entrepreneurs not only wanted to get rich, but also desired to help advance their peopleto develop economically and promote a general sense of Afrikaner self-worth.In his path-breaking study,Ethnic Groups in Conict , Donald Horowitz (1985:185-

228) stressed that the struggle in multi-ethnic societies is primarily between groups overrelative group worth and capacity. He writes: “If the need to feel worthy is a fundamentalhuman requirement, it is satised in considerable measure by belonging to groups that arein turn regarded as worthy. Like individual self-esteem, collective self-esteem is achievedlargely by social recognition” (Horowitz, 1985:185).

There are two routes to the empowerment of a relatively backward group. In theAfrikaner case there was a general ethnic mobilisation in which the economic

advancement of the group was inextricably linked to the pursuit of political power andthe promotion of Dutch (and later Afrikaans) as a language. This economic mobilisationdid not receive much direct state aid and did not impose serious burdens on theeconomically dominant group. Afrikaner entrepreneurs like M.S. Louw, Anton Rupertand Andreas Wassenaar took as much pride in their individual success as in theircorporations managing to capture a larger share of the market for the Afrikaners as agroup.

The other form of economic advancement is state-driven. President Thabo Mbeki of South Africa stated that the experience of the Malaysian government was of “criticalimportance” to the efforts of the African National Congress-led government to promoteblack economic empowerment (Mbeki, 2003). Beneciaries of the New Economic Policy of Malaysia, introduced in 1971, considered it as “a form of governance that helpedto create a stable political culture and a thriving, open economy” (Emsley, 1996). Thebusiness elite of the dominant group proted mainly through close ties with the stateand large corporations. For Malay beneciaries with state contracts there was, initially atleast, not nearly the same risk of failure as for other businesses. Invariably, some of thebusinesses came to grief in economic downturns, causing dissension within the rulingparty. For Chinese business the trade-off between political stability and economicconstraints and impositions was sustainable in periods of strong growth (Van derWesthuizen, 2002).

James Jesudason (1989:11) explains in detail how the leadership of a group like theMalays can enhance group capacity and group worth by expanding state enterprises andoffering better jobs or limiting the enterprises and job opportunities of ethnic outsiders.


© 2008 The Author.Journal compilation © Economic Society of South Africa 2008.



The policy of ethnic preferment provides new opportunities to the politically dominantgroup for generating wealth, income and employment. It bolsters the support of ethnicleaders, even from those who are not beneting from the policies. “From visible evidencethat some members of the community have become better off, the individual can hopethat his time or his children’s will come.”

For Mahathir bin Mohamad, architect and driver of the NEP, group pride was at stakeas much as economic advancement. In his book The Malay Dilemma(1970:44) hedefended the appointment of a small number of Malay company directors in the 1960sunder the laissez-faire policy that preceded the NEP: “The poor themselves have notgained one iota. But if these few Malays are not enriched, the poor Malays will not gaineither. It is the Chinese who will continue to live in huge houses and regard the Malaysas only t to drive their cars.”

When Mahathir retired as Prime Minister after serving for more than twenty years, henoted the considerable Malay economic advancement, but also questioned whether the

objective of bolstering group pride had been realised. The NEP’s intention, he stated, was“to give a head start to the Malays so that they could compete with the other races, as wellas not to be too dependent on the government.” After more than 30 years of the NEP themajority of Malay businessmen were still not able to stand independently. “They only want government contracts, but if there are no government contracts they will fail.”

Mahathir regretted that the Malays had not dispensed with “the crutch” to freethemselves from reliance on others. The main message that the Malays as “majority race”should have understood was to work harder and depend less on handouts. “I feeldisappointed because I achieved too little of my principal task of making my race asuccessful race, a race that is respected” (The Strait Times , 29 March 2003; See alsoAsia

Week , 17 March 2000 and 29 February 2002). Mahathir failed to recognise that the rootsof the failure lay in his policy of managing Malay advancement through the state, settingup a small elite dependent on state patronage.

2. A PEOPLE LAGGING BEHIND

Largely descended from Dutch, German and French Huguenot immigrants, theAfrikaners entered the twentieth century as largely a farming people. Wheat and winefarming in the South-West and wool farming in the East offered opportunities for capitalaccumulation. Most farmers, however, engaged in largely subsistence farming. Withmany ngers burnt through the collapse of some thirty district banks between 1862 and1899, most of the capital was invested in trust companies. It was the British settlers inSouth Africa who seized most of the new opportunities with the freeing up of trade andindustry in the eighteenth century. Along with Jews from Eastern Europe, they took overtrading. It was they, rather than the Afrikaners, who rst saw the potential of large-scaleland speculation. During the 1830s they introduced wool farming in the eastern part of the Cape Colony, and they founded export-import rms in Port Elizabeth and CapeTown that would soon ease out the rms founded by the Afrikaners. The entrepreneurswho founded sophisticated industrial and nancial companies were of British origin andeastern European Jews.

The South African War (1899-1902) dealt a crushing blow to Afrikaner economicprogress in the Transvaal and the Free State. Three-quarters of the livestock in the formerand two-thirds of the livestock in the latter were destroyed. In the Cape Colony many

767South African Journal of Economics Vol. 76:4 December 2008




Afrikaners suspected of sympathy with the republican cause were ruined economically.A erce hatred of British capitalism, seen as the moving force in the destruction of thetwo republics, was born. An Afrikaner nationalist movement was forged out of anti-imperialist sentiments, a common commitment to preserve racial privileges, and aninsistence that Dutch (and later Afrikaans) be treated as an ofcial language, along withEnglish, as a symbol of group worth.

The rst proper census, taken in 1904, showed 556,000 Afrikaners, representing 58%of the white population. These gures grew to 2,270,300 or 58.5% of the whitecommunity by 1970. The number of Afrikaners living in towns and cities rose from105,100 (18.9%) in 1904 to 536,200 (47.8%) in 1936 and to 1,853,260 (81.6%) in1970 (Sadie, 2002:30-33).

Many of the Afrikaners who became urbanised in the rst four decades of thetwentieth century were forced off the land through war, over-stocking and under-capitalisation. They lacked skills and other resources and could barely speak English, the

language of commerce and industry. An Afrikaner underclass was already evident by 1910, when the four British-controlled territories formed the Union of South Africa. In1917 Afrikaners were estimated to have contributed only 13% to the Gross DomesticProduct and only 3% to the non-agricultural sector (Sadie, 1966:92). At the start of the1930s one out of four Afrikaners was deemed to be part of the category of poor whites –white people deemed to be so destitute that they could not maintain a so-called whitestandard of living. Educational standards were low. Out of a hundred who started school,only eight completed the twelfth or nal year, called Matric. Fewer than three went on touniversity.

Afrikaners were poorly represented in many of the white-collar occupations; in 1939

only 3% of people in the professional category with the most prestige (owners of companies, directors and self-employed manufacturers) were Afrikaners. Of the whitepopulation, Afrikaners made up 3% of the engineers, 4% of accountants, 11% of lawyers,15% of the medical doctors and 21% of the journalists. Less than a quarter of senior civilservants spoke Afrikaans as a rst language (Pauw, 1946:235-243). Only a quarter of apprentices in skilled trades were Afrikaners.

A 1947 study presented this portrait of the urbanised Afrikaner poor: “His poverty,servitude and desperate search for work feeds a sense of dependency and inferiority.Feeling himself unwelcome, he presents himself poorly, he is timid, walks hat in hand andlacks the greater self-condence of the English work-seeker. He wields no inuence andno one intercedes on his behalf; hisvolk is small and subordinate to a world power thatbacks up the English work-seeker. He is despised and treated as an inferior by othernations” (Albertynet al., 1947:46).

3. EARLY AFRIKANER ENTREPRENEURS

When the company Nationale Pers was founded in 1914 (the same year as the NationalParty), the main objective was to publish a newspaper to oppose the government’sdecision to enter into the war in Europe on Britain’s side. Jannie de Waal, the only Nationalist MP with newspaper experience, was convinced that the paper would fail.Cape Town had a small Dutch newspaper readership and almost all the advertisers wereEnglish speakers ercely supportive of South Africa’s participation in the war. Jannie





Marais, the main nancial backer, wanted a newspaper which would “in the rst placeinquire about the wishes and rights of our own land and volk, and not the wishes andinstructions of Johannesburg and elsewhere” (Pretorius, 1959:62). The company’s rstdividend was paid out only in 1928 (Muller, 1990:730).

The establishment of the rst insurance companies occurred in the aftermath of theRebellion of 1914-1915, waged by some 11,500 northern Afrikaners against SouthAfrica’s participation in the war. Nationalists across the country launched a majorfund-raising drive to pay the rebels’ nes and crippling civil claims for damages. By theend of 1917 it was clear that the various Helpmekaar (Mutual Aid) associations would beable to pay all nes and settle all claims. As important as the funds that were collectedwas the development of an enormous sense of self-empowerment and achievement.The Helpmekaar associations dramatically revealed the accumulation of considerableAfrikaner savings. Afrikaner capital started owing to Afrikaner institutions. Between1914 and 1922 26 Afrikaans trust companies and boards of executors were

established (Ehlers, 1986).W.A. (Willie) Hofmeyr, a Cape Town lawyer who combined his business initiativeswith an ethnic commitment, played a leading role in the founding of an insurancecompany. He often said that Afrikaans as language would only get due recognition onceit had acquired commercial value. He was one of the founders of Nationale Pers in 1914and in the following year resigned as a partner in a ourishing law rm to becomeorganising secretary of the Cape National Party. In 1918 he became chairman of theSuid-Afrikaanse Nasionale Trust en Assuransie Maatskappy (Santam), whose offer of £200,000 worth of shares was quickly taken up. In the same year the company foundedthe Suid-Afrikaanse Nasionale Lewens Assuransie Maatskappy (Sanlam) with issued share

capital of £25,000. By the end of the First World War 60% of the life insurance policieswas written by South African companies. Sanlam was the rst who targeted the whiteAfrikaans-speaking market as its niche market.

Hofmeyr and M.S. (Tinie) Louw, who would play a major innovating role as a seniorSanlam manager, were both well-qualied men with a sense of social responsibility forthe poorer Afrikaners. They challenged the prevailing consensus that English was thelanguage of business, that government should not intervene in the labour market, andthat, as The Cape , a Cape Town weekly, phrased it, “making party politics a commercialbusiness” would “perpetuate racialism and ill-feeling”. (Koen, 1986:63). Sadie (1974:96)speaks of a conict situation within white society between English-speakers “whodominated socially and economically, and Afrikaners, who perceived themselves to bedespised as an inferior race or out-group”.

Hofmeyr and Louw iresolved to build Sanlam on Afrikaner customers. In his 1922chairman’s address Hofmeyr said: “Sanlam is a genuine Afrikaner people’s institution.As Afrikaners we will naturally give preference to an Afrikaans institution” (Welsh,1974:253). Nationalist commitment rather than entrepreneurial daring was decisive inthe founding of the rst Afrikaner corporations.

Louw, was not an entrepreneur in the Schumpeterian sense, but a man with apioneering vision of Sanlam’s place in society. A committed nationalist, he saw himself as a creator serving his ethnic community. “I am committed to create job opportunitiesfor the Afrikaner to enable him to use his talents to secure for himself in this sunny land” (Sadie, 1974:96). This corporate philosophy also made business sense. Sanlam’sprospective clients were not very knowledgeable about business and nance. They were





more likely to trust a Sanlam agent speaking their own language. Twenty years after itsestablishment more than 90% of its policies was written in Afrikaans.

The bank Volkskas was founded in 1933 in Pretoria as a mixture of cultural andbusiness considerations. In 1933 the Executive Council of the Afrikaner Broederbond, asecret Afrikaans cultural organisation, started a savings bank to mobilise Afrikaner capitalto nance Afrikaner enterprises and employ the Afrikaner poor. When the governmentrefused permission for the registration of a commercial bank, the Bond’s treasurer, J.J.Bosman, and some sixty Broeders founded a co-operative bank. Bosman wanted tochannel the savings that the bank attracted into loans to small businesses that wouldemploy Afrikaners and help solve the poor white problem. Using the anti-capitalistrhetoric of many northern Afrikaners, the rst chief accountant declared that the bank would have crashed at an early stage, “if honour and selsh motive were the drivingforces”. Volkskas became a commercial bank in 1942, but other banks fully recognised itonly in 1947 (Anonymous, 1978).

Albert Wessels (1987:40), a member of the second generation of Afrikanerentrepreneurs, reected on his entry into the world of business during the mid-1930s inthe following terms: “I felt obliged towards my own conscience to succeed economically in order to demonstrate to my fellow-Afrikaners that we could become the equals amongmy English-speaking fellow-citizens. The precondition was that we had to prepareourselves and to work hard. Only once there was complete equality in the economic eldcould there be true co-operation among all language groups”.

Anton Rupert, the most successful Afrikaner entrepreneur, also expressed himself inthe classic terms of the Afrikaners’ economic mobilisation. He declared that he did not see“free enterprise as a means of creating wealth for its own sake”. He dened the purpose

of his business as that of furthering “our nation’s progress and to help Afrikaners to gaintheir rightful place in industry and their future as employers and employees”. Dirk Hertzog, co-founder of Rembrandt, stated: “Our overriding concern was to prove that, by standing together, we [the Afrikaners] could take our place in the business world withdignity and honour” (Esterhuyse, 1986:24-25, 55).

But sentiment was not enough to grow ethnic businesses. In 1939, a full threedecades after Union, Afrikaners controlled a mere 1% of mining in the entrepreneurialfunction, and 3% of industry and construction. Well over 80% of these industrialundertakings were one-man operations. In commerce some 2,400 enterprises(mostly garages, retail shops and butcheries) were in Afrikaner hands, giving them 8%share of the sector. In the nancial sector the share was 5%. Afrikaners owned ormanaged no large industrial undertaking, no major commercial enterprise, no nancehouse, no building society and no consumer associations.) Afrikaner personal incomewas 60% of that of English-speaking whites (Giliomee, 1979; Steenekamp, 1989,1990).

The lack of Afrikaner success in the corporate world raises the question of why thenationalists accepted it, despite their domination of cabinets for more than half of the fty years of Union. O’Dowd pointed out that South Africa (like the USA) was almost uniquein that no nationalisation occurred in an economy that had originally largely beendeveloped by foreign capital. To him the main reasons were the control over economicpolicy the country gained in the Act of Union, the acquisition by South African Englishspeakers of a large part of the British-controlled companies, and the policy of secondary industrialisation. O’Dowd (1976:149) writes: “The latter] was a decision taken by the





Pact government. The primary credit for this belongs to the Afrikaners, and it was ineffect opposed by many, although not all, English-speaking South Africans”.

The parastatal corporations, managed mainly by Afrikaners, became an importantpart of secondary industry. Conceding the almost complete absence of Afrikanerentrepreneurial achievements in the manufacturing sector, Schumann (1940:118), aStellenbosch economic historian, pointed to Iron and Steel Industrial Corporation (Iscor)in Pretoria as proof of his claim that it was possible for “Afrikaners, with the right kindof training, to make a success of large-scale industry”. Iscor provided a training schoolwhere Afrikaner entrepreneurs, managers and scientists could acquire technical andmanagerial skills.

4. THE “ECONOMIC MOVEMENT”

The Depression and the prolonged drought of the early 1930s focused the attention of

the white political leadership on the poor white issue, which was the theme of a majorresearch project and a conference held in 1932. The dramatic rise in the price gold andthe prolonged boom starting in 1933 changed the country’s economic prospectsprofoundly. The projects of saving the Afrikaner poor and raising Afrikaner capital forinvestment purposes now became even more entangled than before.

During the centenary celebrations of the Great Trek in 1938 the Rev. J.D. (“Father”)Kestell of Bloemfontein called for a mighty reddingsdaad or “rescue action” to save thedescendants of the Voortrekkers, “living in hopeless poverty, sunken materially, morally and spiritually”. No government charity or outside help would help them; the answer lay in collective effort by the Afrikaners: “A people is an integrated whole – the poor and rich”,

Kestell said. His call “n Volk red homself ” – a people rescue itself – became a leading themein the ideology of the Nationalist movement (Sadie, 2002; Giliomee, 2003:352-353).In 1939 the Broederbond’s Executive Council accepted a plan for using Afrikaner

savings and capital in enterprises that would “save” the Afrikaner poor by employingthem. It hoped that along this route the Afrikaners could also become “autonomouseconomically”. At this time senior executives at Sanlam had concluded that it was time toescape from the narrow limits of insurance and agricultural credit to which the company was subjected. The board wanted to establish its own nance house to centralise efforts toattract Afrikaner savings for investment in promising enterprises.

Afrikaner saving by the end of the 1930s was estimated at about £100 million and theAfrikaners’ purchasing power was at about the same level. Yet mobilising some of thatcapital for risk investment was a daunting challenge. Hendrik Verwoerd said thatthe Afrikaners “were almost over-organised on the cultural terrain and unorganised foreconomic purposes” (Du Plessis, 1964:95,121; Verhoef, 1995:93-94). Farmers tended tore-invest their prots in their farms, and most of the other Afrikaners put their savingsinto safe investment havens such as banks, building societies and trust companies. T.E.Dönges observed that Afrikaner capital was mainly in bonds; in his view it could havebeen much better invested. Speakers commented on the phenomenon that the Afrikanerstrusted their fellow Afrikaners with their political fate but not with their money (DuPlessis, 1964:112-13; Sadie, 1974:88-97).

In 1939 Afrikaner economic and cultural leaders met in Bloemfontein to discussa comprehensive plan for Afrikaner economic “salvation”. Rejecting any element of charity, the plan was to mobilise purchasing power and capital to enable the Afrikaners





to become economically independent. The speakers at this “Eerste EkonomieseVolkskongres” (First Economic People’s Congress) read like a “Who’s Who” of futureAfrikaner entrepreneurs. The Volkskongres acted as the catalyst for Sanlam and theBroederbond to join hands in an attempt to bridge the acute North-South rivalry in theAfrikaner nationalist movement. The Transvaal-based Broederbond offered the culturalentrepreneurs and Sanlam the business expertise. Several Sanlam senior executives now accepted invitations to become members of the Bond.

In the opening address of the Volkskongres L.J du Plessis, a Potchefstroom academicwho played a leading role in the establishment of Volkskas, dened the goal as mobilising“the volk to conquer the capitalist system and to transform it so that it ts our ethnicnature”. The message was that free enterprise was not intended primarily to create wealthfor individuals for their own sake, or for a handful of individuals, but to help the Afrikanersas a people to acquire a legitimate share of the economy (Du Plessis, 1964:104-112).

The economic mobilisers took the listed nance houses on the JSE as their model, but

they wanted their nance houses to marry three quite different objectives: make prot forits shareholders; promote the collective advancement of the Afrikaners; and help poorAfrikaners by offering them respectable jobs. Tinie Louw’s proposal to the Sanlam boardfor a nance house captured the spirit of Afrikaner entrepreneurship at that time. AnAfrikaner nance house would have to observe sound business principles and the protmotive would not be excluded, but his proposal added: “While management would try tomake the greatest possible prots for its shareholders, the main purpose will always beto enhance the Afrikaner position in trade and industry” (Scannell, 1968:46).

The Congress established the nance house, Federale Volksbeleggings (FVB), whichwould be controlled by Sanlam. Afrikaners were asked to engage in conventional

investment in shares in sound Afrikaans enterprises. In a secret circular to its divisionsacross the country, the Broederbond encouraged its members to support Afrikanerenterprises (Giliomee, 2003:439). In 1941 it listed ten economic duties for all “proper”Afrikaners, among them the following:

(1) Every Afrikaner must, even if takes great sacrices, become a shareholder in anAfrikaans credit institution. We mention specically Federale Volksbeleggings. [Theaddress was given.](2) Every Afrikaner must be a policyholder of an Afrikaans insurance company.(3) Every Afrikaner must save and invest his savings in an Afrikaans institution. [The

names of Sasbank and Volkskas were mentioned].By 1943 more than £2,000,000 of new investment had gone into buying shares in

Afrikaner companies, mostly in FVB. By the end of the Second World War FVB hadmajor investments in shing, wood, steel, chemicals and agricultural implements.In 1946 it paid a 6% dividend on its ordinary shares. In 1948 Bonuskor, an investmentcorporation in the Sanlam group, was the rst Afrikaans company to be listed on theJohannesburg Stock Exchange.

One of FVB’s rst steps was to acquire a stake in a small company belonging to ayoung entrepreneur, Anton Rupert. In the nal years of the Second World War he took to the road to sell shares to wine and tobacco farmers. He would later recount: “I showedthem a few wine labels and sold them my ideas. I sold them a dream” (Dommisse,2005:89). In 1948 Rupert’s Distillers Corporation was listed. Within two decades theRembrandt group of companies became a world-scale conglomerate.





Afrikaans business was no monolith. The southern-based Sanlam saw the way of Afrikaner advancement as going through the investment of savings in sound enterprises.It embraced private enterprise and saw nothing wrong in co-operation with Englishbusiness. It looked with considerable scepticism at the establishment of Volkskas asa co-operative bank and initially did little to promote it. By contrast the northernAfrikaners tended to prefer the co-operative system as one that did not exploit theconsumer, but served thevolk . They were descendants of people seared by the SouthAfrican War and the excesses of the capitalist system.

The 1939 Volkskongres responded to this sentiment by establishing theReddingsdaadbond (RDB) or Rescue Act Society. The idea was that Afrikaners would pay membership fees (children were asked to pay sixpence each month) in joining branches(343 were formed in the rst four years). By 1946 an amount of £149,000 had beenraised. Part of the fund was used for loans to small Afrikaner enterprises. Some wereinvested in FVB shares, some going to Afrikaner organisations and the rest for study

loans. The RDB’s most important contribution was encouraging Afrikaners to patroniseAfrikaner enterprises. When war broke out almost all the enterprises in rural towns werein the hands of South Africans of British, Jewish or Indian descent; by the end of the warAfrikaners had taken over many of these (Carter, 1958:259).

The English-dominated private sector generally saw no need for assisting Afrikanereconomic advancement. The broad-based United Party government instilled a sense of security about the prospects of the market economy. With the manufacturing sector of the 1930s and 1940s characterised by low productivity and efciency, there was nolargesse that could be redistributed (Feinstein, 2005:127-350. Some inuential voices inthe English-speaking community deplored any Afrikaner efforts to mobilise economically

on an ethnic basis.The Star (14 July 1941) called it a “politically inspired movement”wrote that “the sponsors of economic segregation in trade and industry cannot ultimately avoid the charge that they are fanning the ames of racial bitterness in South Africa”.W.H. Hutt, perhaps the most prominent economist of his time, called it a “war” againstthe British section of the community and part of “the half-century-old ght against theUitlanders ” (The Cape Argus. 15 August, 1946). By contrast, J.L. Gray, an academic atthe University of the Witwatersrand, observed that nothing could be more damaging toan understanding of the conicts in the white community “than the complacent belief that the Afrikaans-speaking population have no legitimate and serious economicgrievances” (Scholtz, 1984:61-65).

Taking this opposition into account, Afrikaners active in promoting economicmobilisation went out of their way to give assurances to the business world. T.E. Dönges,later a cabinet minister, said that the Afrikaners were intent on increasing their economicshare fairly and peacefully. They felt that they had no right to expect others to help themand were too proud to ask others for assistance in working out their economic salvation.Neither did they intend to embark on a boycott of English rms. However, they imploredEnglish speakers to maintain a “benign neutrality while the Afrikaners as a people werending their economic feet” (Volksraad-Debatte, 1941:6367-6368).

The North-South divisions in Afrikaner business ranks continued. In 1950 TinieLouw, now Sanlam’s managing director, would stress that new Afrikaner businesses “canonly evolve under the protection of an old, strong company or with the support of themost inuential organisation” (O’Meara, 1996:122). In effect, Afrikaners were asked topool all their savings in Sanlam for investment purposes rather than to spread such savings





among Afrikaner small businesses across the country. Afrikaner nationalists in theTransvaal would bitterly resent the centralisation of Afrikaner savings by Sanlam whoselife assured fund quadrupled between 1940 and 1949 (O’Meara, 1983:194).

Even in the ranks of Sanlam there were disagreements. There were those like W.B.Coetzer, who wanted FVB to shed nationalist sentiments in embarking on mining andindustrial investment, and those like C.B. Brink, FVB secretary, who was supportive of the ideas of the northern Afrikaners to assist small Afrikaner businesses in need of capitaland know-how (Verhoef, 1991:6). The dominant trends favoured Coetzer’s approach.The economist W.H. Hutt remarked in 1946 that the Afrikaners struggled to makeheadway, not because of discrimination but because of their participation in small andmedium-level businesses and not having the right contacts (The Cape Argus , 15 August1946).

5. WINNING POLITICAL POWER

The NP victory in the 1948 election shocked foreign investors and political leaders.Winston Churchill expressed the view of many when he expressed regret at the defeat of Jan Smuts’s United Party in the following terms: “A great world statesman has fallen andhis country will undergo a period of anxiety and perhaps temporary eclipse” (The Cape Argus , 29 May 1948). Apart from an abhorrence of apartheid, there were fears of aprompt South African withdrawal from the British Commonwealth, a purge of the civilservice and the nationalisation of the mines, which was still a plank in the NP’s platform.

The new government made it clear that it did not intend to change the country’sconstitutional status abruptly or without broad white support. It stressed the need for

continuity, also in maintaining a stable and professional service. Continuity and theretention of expertise in the civil service for eighty years after Union was an importantreason for South Africa’s economic success. The rise of Afrikaners to the upper ranks of the civil service since 1910 was exceptionally slow. Although the Union constitution of 1909 had decreed the equal status to two ofcial languages, by 1931 half of the senior civilservants were unable to communicate with the public in any language but English (Pauw,1946:188-189). In many state departments there was only a sprinkling of Afrikaners inthe senior ranks. One of the problems was a lack of Afrikaans candidates. As late as 1939less than a third of all white students at universities were Afrikaners.

The replacement of approximately 120,000 predominantly white civil servantsbetween 1994 and 2001 as part of the regime change has been justied by the assertionthat after the 1948 election the NP established the precedent for this by dismissing largenumbers of English-speaking civil servants (Owen, 1999). Shaw (2008) wrote that theNP government crippled the “principle of an independent and professional civil service”by making political appointments to key posts.

Writing in 1949 in a book that went through four editions in the next twenty yearsMarquard (1949, 1969), a respected liberal commentator, painted a very different picture.He noted that the Smuts government during the war years broke with the policy of aprofessional civil service because it could not risk appointing Afrikaner nationalists to key positions. The NP government in fact reintroduced the policy of a professional civilservice. As Marquard (1969:105), looking back in 1969 at the preceding two decades,noted: “There has not been a great deal of nepotism in the public sphere”. Appointmentsand particularly promotions of civil servants occurred without regard for party-political





afliations, “except when there is a fundamental policy difference”. The NP governmentdid, however, expressed itself clearly on the need for a fully bilingual civil service, and italso announced steps to recompense those who had been denied promotion during thewar. A Grievances Commission heard evidence from some 2,875 railway employees whoalleged that they were dismissed unfairly (Davies, 1979:298).

There were a few prominent English-speaking casualties in the change of government.The most striking case was that of W. Marshall Clark, General Manager of the SA Railways and Harbours; he had been promoted during the war over the heads of twomore senior Afrikaner civil servants, and was asked after the election to retire on pension.Frans Erasmus, Minister for Defence, transferred Major-General Evered Poole, rst inline to succeed General Sir Pierre van Ryneveld as Chief of General Staff, to an obscurepost as head of South Africa’s military mission in Berlin. Several other senior military ofcers, both English and Afrikaners, were demoted or refused promotion. On a lowerlevel a

large number of pilots resigned on account of perceived discrimination. Van den Bos(1978:155) noted that Erasmus’s successors “scrupulously avoided even the slightestsemblance of political favouritism in the appointments and promotions they haveauthorised”.

In the Department of Native Affairs an Afrikaner, Werner Eiselen, was appointedSecretary for Native Affairs in 1948 over the heads of two-English-speaking Under-Secretaries.

But there was no purge of English speakers. Evans, 1997:87) notes:

A perusal of the Public Service List from 1940-1954, which provides complete lists of all civil servants in thevarious departments of the state, provides no help in tracing the Afrikanerization of the [Native Affairs]Department. Although the list does break down the department’s personnel on the basis of grade and rank,Afrikaner names already heavily dominated the lists for 1947 and 1948, making it difcult to see any markedchanges.

A study of Berridge (1989) of the “ethnic agent in place” (English civil servants inSouth Africa well disposed towards the former imperial power) concludes that that thevast majority of senior English-speaking servants retained their posts, despite the fact thattheir loyalties were to the British Commonwealth rather than the new government.

Between 1936 and 1970 the civil service in general became steadily Afrikanerized(Table 1). Large numbers of Afrikaners entered the lowers level, while English speakers

opted in growing numbers to join the private sector, fearing discrimination (Posel1999:104-107). On the upper levels, however, the process was slow. An analysis of the1960 census found that the top levels of the public administration reected the whitepopulation’s composition, with 57.2% Afrikaners and 37.5% English speakers. Theposition was reversed in the private sector. Here only 25% of Afrikaners were in the upperechelons of the job market as directors, managers and self-employed owners as against

Table 1. Proportion of Afrikaners employed in the public sector

1936 1960 1970Afrikaners as a % of white public sector 58.9% 68.2% 70.7%Afrikaners in public sector as % Afrikaner labour force 12.9% 13.0% 13.2%

Source:Sadie, 2002:54.





66% of English speakers. By 1977 one quarter of English speakers worked in the publicsector, but they occupied less than 10% of the top positions in the central civil service(Van Wyk, 1967; Giliomee, 1979:165).

6. A QUESTION OF QUOTAS

Two years after the NP had won power in 1948 and eleven years after the rst economicVolkskongres , another congress was held. The mood was buoyant. The Afrikaner share inmining still stood at 1%. In the nancial sector it had increased from 5% to 6%, but only 20% of potential Afrikaner capital was invested in Afrikaans nancial institutions (FAK,1950:8). However, the Afrikaner share of manufacturing and construction between 1939and 1951 grew from 3% to 6%, while that in trade and commerce jumped from 8% to25%.

D.F. Malan, the Prime Minister, addressed the Congress to spell out his government’s

approach to assisting Afrikaner empowerment. “For many years the Afrikaners werevirtually completely excluded from the commercial, industrial and general economic lifeof the country. They now want – and who could criticise them? – to get a place in theeconomic sun, not by pushing others out or being carried on the shoulders of others, butin their own right and relying on their own strength” (FAK, 1950:8). This statement didnot take into account the massive destruction of economic opportunities for blacks, butreferred only to the two white communities. Nic Diedrichs, an employee of Rembrandtat the time, remarked that, with one or two exceptions, no help was received from Englishspeakers. Although the Afrikaner quest to succeed in business “was not aimed againstanyone”, there was an inability of the part of the English community to understand it

(Lombard, 1968:130).As an entrepreneur like Anton Rupert discovered, the NP government did not offerany special deals to Afrikaans businesses or new-comers to industry in general. TheBroederbond, however, still considered quotas as a way of expediting the closing of thelarge income gap between the two white communities. In 1937 Hendrik Verwoerd, aseditor of the Johannesburg daily,Die Transvaler , published a long article on the “JewishQuestion”. Arguing that Jews held a disproportionate share of the wholesale and retailtrade, he called for legislation that would “gradually ensure that each white section[Afrikaners, English speakers of British descent and Jewish South Africans] enjoy a shareof the major occupations according to its share of the white population”. Governmentshould refuse trading licenses to Jews until the Jewish share was brought into line withtheir proportion of the white population (it was popularly estimated at 4%). Verwoerddescribed this asewewigtige verspreiding , or balanced distribution, but added that “this hasalso been called a quota system” (Die Transvaler , I September 1937).

During the 1950s the Broederbond’s Bondsraad (a national meeting attended by delegates from all Bond branches) considered similar proposals on at least two occasions.Some members argued that a quota system was a “powerful instrument” to give youngand emerging Afrikaner businesses a toehold. They asked the Broederbond to enter intodiscussions with cabinet ministers to “nd a basis on which Afrikaner enterprises could toa larger extent be favoured through quotas”.

But these proposals failed to win support from two prominent Afrikaner businessmen,whose respective companies had a record of successful entrepreneurship. At the 1956Bondsraad meeting Anton Rupert emphasised the essential elements for entrepreneurial





The deal did not represent a handout at all. All the share deals were done in strictly commercial terms. In

retrospect the deal can be seen as a success all round.The one main reason was that through Sanlam therewas enough centralised Afrikaner capital available to acquire General Mining entirely out of their ownresources. Another reason was that there already existed a stratum of Afrikaner managers with at least tenyears of experience in mining. These factors were missing in most of the high-prole post-1994 black empowerment deals. (Interview by author, 14 May 1999).

Later Anglo American sold enough shares to General Mining to enable it to assumecontrol. In 1974 General Mining bought control of the mining house UnionCorporation to form Gencor. It was the second largest mining house in the country witha large spread of mining and industrial interests (Financial Mail , 17 June 1983,Supplement).

Table 2 reveals that between 1948/1949 and 1954/1955 the Afrikaner share of thenon-agricultural private sector increased by nearly 40% from 9.6% to 13.4%, and itwould grow to 18% in 1963/1964.

8. A BROAD-BASED ADVANCE

Between 1946 and 1976 there was a broad-based increase increase in the per capitaincome of all population groups, which in the case of black groups occurred from a very low base (Table 3).

Urbanisation and high economic growth provided the keys to the major improvementin the Afrikaners’ income. Until the mid-1940s the Afrikaners as a group had thecharacter of an impoverished labour class, with blue-collar workers and farmers or farmworkers dominant. The proportion of blue-collar workers rose from 31% in 1936 to 41%

Table 2. The Afrikaner share in the private sector in the entrepreneurial function (inpercentages) 1938-1975 Sector 1938-1939 1948-1949 1954-1955 1963-1964 1975Agriculture 87 85 84 83 82Mining 1 1 1 10 18

Manufacture & construction 3 6 6 10 15Trade & commerce 8 25 26 24 16Transport 9 14 14 15Liquor and catering 20 30 30 35Professions 16 20 27 38Finance 5 6 10 21 25Miscellaneous 27 35 36 45Aggregate 24.8 25.4 26.9 27.5Aggregate excluding agriculture 9.6 13.4 18.0 20.8

Source:Sadie, 2002:28.

Table 3. Per capita income (in 1978 Rand) of the various ethnic groups Year 1946 1960 1976Whites 389 831 3150English 561 1050 3587Afrikaners 266 673 2538Asians 77 148 737Coloureds 64 135 623Africans 32 71 304

Source:Giliomee, 1979:173; gures provided by S.J.Terreblanche.





in 1960, and declined to 32% in 1980. The proportion working on farms showed adramatic drop from 41% in 1936 to 16% in 1960 and to 7% in 1980. Many of the

Afrikaners who urbanised had left with few skills. In the cities the NP government gavegreater protection to the unskilled and semi-skilled white workers, who werepredominantly Afrikaners. In 1957 a law was passed to reserve some semi-skilled jobs forwhite workers.

The government also assisted other sectors in which Afrikaners were dominant.Farmers beneted from favourable agricultural prices set by the marketing boards andsome new curbs on the mobility of labour. Nattrass (1981:119) calculated that duringthe second half of the 1960 state aid on average provided one-fth of an average whitefarmer’s income. Conditions and pay for white civil servants improved. By 1960 a sizeableAfrikaner middle class had developed. It took more than 30 years before a visible layer of rich Afrikaners developed, with 8% earning more than R12,000 per year (Table 4).

Income inequality within the Afrikaner group as measured by the Gini-coefcient(Table 5) was at about 0.45, which could be compared with 0.37 for developed countriesin Western Europe during the 1970s and the present 0.64 for South Africa. The incomeinequality among all Afrikaner income earners, expressed in Gini-coefcients, slightly improved between 1946 and 1980, as Table 5 shows.

There was no sharp increase in income inequality among Afrikaners as measured by acomparison of the income of the lowest 40% with the top quintile (Table 6).

The remarkable political solidarity of Afrikaners between 1948 and 1976 had muchto do with the ability of the government to persuade its constituency that all classes inthe ethnic group were doing well, and that no single class had hijacked the nationalistmovement. The broad-based advance made it unnecessary for the government to engagein populist rhetoric or to put pressure on English rms to employ Afrikaners.

Table 4. Distribution (percentages) of Afrikaner income groups in selected years (1980 incomes)Afrikaner income earners (people with no income excluded)Income category 1946 1960 1980R0-6000 89.1 61.9 51.4

R6000-12000 9.1 33.7 36.2R12000-18000 1.3 1.8 8.3

Source:Steenekamp, 1989:193.

Table 5. Gini-coefcients for Afrikaner income earners for selected years Income earners 1946 1960 1980Total 0.464 0.441 0.446Male 0.443 0.398 0.404

Source:Steenekamp, 1989:208

Table 6. Income of the lowest 40% of Afrikaners compared with the top quintile for selected years Income earners 1946 1960 1980Total 0.241 0.277 0.274Male 0.274 0.363 0.349

Source:Steenekamp, 1989:209.





9. A QUESTION OF STATE FAVOURITISM

In dealing with the relationship between large Afrikaner corporations and thegovernment, Brian Bunting, a senior member of the South African Communist Party,remarked that there was “abundant evidence of Nationalist favouritism for Nationalistconcerns”. He pointed to the “considerable interlocking of directorships”, which saw Sanlam directors sit on state corporations, while some of the managers of parastatalcompanies served on the boards of Afrikaner rms. Bunting does not indicate how whathe calls “this mutual aid” was instrumental in developing Afrikaner enterprises. (Bunting,1969:388). O’Meara (1996:140-141) states that Sanlam beneted from “governmentcontracts and subsidies” that assisted its subsidiary Federale Volksbeleggings, but providesno evidence.

This section presents four case studies to investigate these views. It does not considerthe government’s promotion of white business in general, but only cases of specic (andpossibly corrupt) preferment for Afrikaner businesses or for one Afrikaner business overanother one. It also examines the issue of whether English corporations assisted Afrikaneradvancement.

(i) SanlamSanlam long remained an ethnic business at heart. Pepler Scholtz, who became managingdirector in 1968, remarked in an interview: “My greatest problem in talking to Englishnancial journalists was to convince them that Sanlam was not a subsidiary of the NP”.But he added: “Sanlam was never solely prot-driven or solely policy-holder-driven. Wewere an Afrikaans rm, in fact operating almost as a a sectional bureaucracy that tried tostrike a balance between policyholder interests and theAfrikanersaak or Afrikaner cause”.2

The fact that chief executives of state corporations sat on Sanlam’s board of directorsmay create the impression of an ethnic brotherhood open to insider trading. In many ways, however, it made any government patronage more difcult. Favouritism for Sanlamwould almost certainly have led to an outcry from Old Mutual, its major competitor. Half of the latter’s policyholders were Afrikaners. During the rst thirty years of NP ruleAfrikaners often held the post of managing director of Old Mutual or posts just below that rank.

There were two areas of friction between Sanlam and Old Mutual. In the ranks of senior Old Mutual managers there is still resentment in interviews about what they call

Sanlam’s “inside track” to civil servants. Through the Public Service Association, a body very deferential to government, Sanlam negotiated a contract to write group life assurancepolicies for civil servants. It allowed Sanlam agents rst access to government employeesto sell these schemes and also to sell all other Sanlam products.3 Fifteen group life schemeswere introduced, including schemes for teachers, members of the Defence Force and thePolice, and railway workers. These were all optional schemes – a civil servant could choosewhether he or she wanted to join the scheme. The contracts could not be terminatedwithout Sanlam’s consent.

Marinus Daling, Managing Director of Sanlam, did not consider it strange thatSanlam as an Afrikaans company got such a contract from government. He pointed out

that all over the world insurance companies develop certain niche markets according to2 Interview with Pepler Scholtz, 12 March 1999.3 Interview with senior Old Mutual manager, 12 March 1999.





their ethnic prole. The contracts were not money-spinners. Sanlam was forced to liftpremiums and sharply reduce the cover to avoid losing substantial amounts of money.This had quite a negative impact on its business and corporate image.4 While Sanlamindeed proted very little from these group life schemes, the relevant point is that this wasa clear case of preferential treatment being bestowed by government on Afrikaans rm.

An Old Mutual manager also alleged that Sanlam used its political muscle to get a cutin the pension schemes in the independent homelands. Every time he had negotiated thesetting up of a pension scheme, he was forced to split the business halfway with Sanlam.Daling responded, more plausibly than in the former case, that it was normal practiceelsewhere that the risk in pension schemes was spread across two or more companies.

After the mid-1960s, with Sanlam expanding into new markets, management becameanxious to dispel the impression of collusion between it and government, or of any ganging up of Afrikaners against English speakers. Even mild government favouritismwould have made it very difcult to penetrate the English or the black market. Bad

management and poor investment decisions in the nal 15 years of the century dealtSanlam heavy blows, and it entered the new century with a much-reduced stature.

(ii) Rembrandt Rupert’s rst shareholders were primarily Afrikaner tobacco and wine farmers. Atshareholder meetings during the 1940s and early 1950s Rupert expressed himself in theclassic idiom of thevolksbeweging : “We are entering the business world to gain a stand forour own people and to work with others, but not always for others” (Esterhuyse,1986:24-25). Rupert made it a policy to keep a proper distance from government. In aninterview he stated: “I never asked any government department anything special formy company and I only once saw a cabinet minister alone and that was before 1948”(Interview with author, 12 February 1999).

Rupert was shocked to discover after the 1948 election that the new government’ssupport for Afrikaans business did not amount to more than lip service. The governmentwas unwilling to change the wartime system of quotas for chemicals, rubber, parafn anda wide range of other materials. Based on the production level of previous years, it heavily favoured the well-established rms.Tegniek , a trade journal started by Rupert, attackedgovernment policy under the banner headline “Quotas are killing us” (Dommisse,2005:116). Rupert’s persistent pressure eventually led to changes in the quota system.

Rupert frequently reminded Afrikaners that as people who had experienced foreign

domination, they should know that no self-respecting group or nation would work forothers for ever. He proposed partnerships transcending racial or national boundaries.At the 1950 Volkskongres he argued that Afrikaner businessmen had achieved so muchsuccess that they should found a “Bantu Development Corporation” without private gainthat had to help blacks to start enterprises in the reserves (Du Plessis, 1964:182-188. Tenyears later he asked Hendrik Verwoerd, the Prime Minister, for permission to build acigarette factory in the Transkei. Verwoerd refused, arguing that if he approved he wouldalso have to grant requests from other white rms, such as Anglo American Corporation,which did not have the same “noble motives” (Howell, 2001:219).

During the 1960s Rembrandt embarked on a policy of industrial partnerships inoverseas countries where it operated, including Singapore, Indonesia, Jamaica and

4 Interview with Marinus Daling, 21 March 1999.





Malaysia. The company offered citizens half of the shares, employed local people in seniorpositions and appointed a national as Chairman of the Board.

(iii) Volkskas In its rst three decades of NP rule Volkskas concentrated on business with rural

Afrikaners and farmers in particular. The bank’s strategy was to open a branch in every rural town in the country. In 1967 Fanie Botha, a director, remarked that Volkskas hadalmost completely “blanketed” theplatteland . He warned that it had become necessary to give priority to penetrating the urban areas and in particular the industrial andcommercial sectors (Engelbrecht, 1981:433-434).

This was a timely warning. At a time of rapid economic growth Volkskas was largely absent in the most dynamic sectors of the economy. Pieter Morkel, chief of executive of the bank in the early 1990s, remarked: “The one eld in which Volkskas traditionally was– and still is – over-exposed is in credit to farmers and co-operatives, but this is not aparticularly protable area of business and the NP government did not help to establishthese links between farmers and Volkskas”.5 The popular myth that Volkskas was thecentral state’s banker does not have much substance. Morkel stated: “Most of the businessof departments of central government was done through the Reserve Bank, which also didalmost all the foreign transactions. State business was an insignicant part of the overallbusiness of Volkskas”.

While Volkskas had the accounts of the government of the Transkei, Standard Bank had that of Bophuthatswana and Barclays/First National had that of KwaZulu. Of thelocal authorities, 34% banked with Volkskas in 1994.6 As in the case of the accounts of provincial governments and local authorities, these accounts were – in ofcial bank parlance – “high-intensity” accounts requiring much labour power, but with relatively low interests rates and service charges.7

Of the parastatals, Escom did business with all banks; Armscor and Sasol mainly usedVolkskas, but also banked with the others. In foreign transactions they used the bank thatoffered the best rates. The Bantu Administration Boards used Volkskas in the Afrikaans-speaking areas, but other banks in Natal and Eastern Cape. Some of the big controlboards, such as the Maize and the Wheat Boards, were Volkskas clients, but for thetransactions related to exports, imports and the selling of surpluses, they shopped aroundfor the best deals.8

Volkskas never overcame its predominantly rural and Afrikaans background. It was

absorbed in a merger in 1998 under the name of ABSA.(v) The Afrikaans press companies In the publishing business there were acute tensions between politics and business. TheNP was no centralised monolith, but rather a federation of provincial parties. At timestensions between the Cape NP and Transvaal NP were so acute that political leadersintervened in the rivalry between Afrikaans press groups. The issue was compounded by

5 Interview Pieter Morkel, 9 April 1992. Conrad Strauss, who joined Standard Bank in 1963 andserved as CEO from 1978 to 2000, conrmed these points in two communications to the author,

22 March 1999 and 20 August 2008.6 E-mail communication with Nallie Bosman (CEO of ABSA, 1998-2004), 2 October 2008.7 E-mail communication from Adam Jacobs, senior manager Volkskas, 31 August 2008.8 Communication from Conrad Strauss, 20 August 2008.





the fact that for the rst thirty years of NP rule cabinet ministers served as directors of the Afrikaans press companies in the North (Afrikaanse Pers, Voortrekkerpers andDagbreekpers, which would merge in 1971 to form Perskor) and of Nasionale Pers in theSouth.

The North-South tensions in the party, which started in the 1930s, were aggravatedwhen D.F. Malan, who became Prime Minister in 1948, included only three northernersin the rst NP cabinet. Both J.G. Strijdom, the Transvaal NP leader, and Hendrik Verwoerd, who succeed him as Prime Minister and Transvaal leader in 1958, felt a strongantipathy to what they called the “Keeromstraat clique” (the ofces of both the Cape NPand Nasionale Pers were located in Keerom Street, Cape Town). The long-standingresentment of northern Afrikaners to Sanlam’s success in attracting most of the Afrikanersavings for investment purposes also played a role (Schoeman, 1982:34).

The main source of the conict in newspapers publishing was the determined effortsof northern NP leaders to protect the northern Afrikaans market. For Nasionale Pers this

placed an unacceptable ceiling on its growth prospects. It was more protable than thenorthern companies, but it had no slice of the Transvaal newspaper market – the largestand most dynamic one in the country. Any Nasionale Pers attempt to expand into theTransvaal encountered stiff opposition from the Transvaal Nationalist leadership for bothpolitical and business reasons. Cabinet ministers were quite prepared to intervene againstethnic competitors. In 1953 Eric Louw, Minister for Economic Affairs, rejected aNasionale Pers application for an increased quota for newsprint in order to establish aSunday newspaper in the Transvaal (Richard,1985:73).

When Hendrik Verwoerd became Prime Minister, he gave notice that he would useall means to block an attempt by Nasionale Pers to expand into the Transvaal. In 1965

Verwoerd hosted a meeting of the southern and northern Afrikaans press companies.The meeting had been prompted by the refusal by Nasionale Pers of a request fromDagbreekpers to print its Sunday newspaperDagbreek in Cape Town. Such a stepwould have made it impossible for Nasionale Pers to implement its still secretplan to publish a nation-wide Sunday paper based in Johannesburg. Present were thedirectors of both sides, who were also cabinet ministers, and the top managers of thecompanies.

Verwoerd asked bluntly what Nasionale Pers’s plans were for new titles in the Afrikaansnewspaper market. Nasionale Pers representatives declared that it was not prepared todivulge its plans. It pointed out that Verwoerd was not only party leader, whose task it wasto resolve inter-provincial conicts, but also the chairman of companies with whichNasionale Pers was in competition (Pienaar, 1979:45-46). A few days later Nasionale Persannounced its intention to publish a nation-wide Sunday paper,Die Beeld . Despite beingboycotted unofcially by the Transvaal NP, it quickly posed a severe threat to the Sunday paper of a northern company.

In Verwoerd’s term as Prime Minister much of the state’s printing business wascontracted out to the northern Afrikaans press companies. State printing businessincluded all ofcial forms, receipt books, stationery paper, the ofcial yearbook and statejournals likePanaroma. In 1962 Dagbreekpers was helped by Jan de Klerk, a cabinetminister, to win the contract for printing the Johannesburg telephone directory. Fiveother directories were later added to the Dagbreekpers business. It was as, Richard(1985:180), a northern newspaper editor, called it, “a bonanza which contributedmillions to the coffers of the press”. These contracts were for a period of 10 years. In 1970





the advertisements for new contracts were placed in such an obscure state publication thatonly Dagbreekpers put in tenders.

Apart from directories, school textbooks were the other major source of income forthese companies. The NP-controlled provincial government in the Transvaal allowed only Transvaal-based companies to sell textbooks for white pupils in the province. This hurtNasionale Pers along with others based outside the Transvaal. The plum contracts were forblack school texts, which fell under the Department of Bantu Education. Marius Jooste,managing director of Perskor, used all his political connections to secure contracts.With Verwoerd he had what an Afrikaans editor called a “fruitful business and politicalpartnership” (Richard, 1985:179) and he also got on well with M.C. Botha, Minister forBantu Administration and Development, who was a director of two northern companies.These companies soon dominated the market for black textbooks.

An allusion to lucrative other business deals with the public or the semi-public sectoris to be found in a novel by Richard (1988) The main character, Jansen van Dalsen, is a

thinly disguised version of Marius Jooste. “Noordpers” is the collective name for thenorthern companies. Hendrik Verwoerd gures in his own name. This following quote isa translated paragraph from the novel:

Printing contracts for ofcial publications, especially journals, are coming to Noordpers. The Department of Information is planning a number of glossy journals and the chairman of the Parks Board mentions that itis planning to issue a publication with the name of Custos . Noordpers put in such shrewd tenders that mostof the printing comes its way. From the Government Printer comes ever larger orders. The Railways and theAirways are beginning to divert the stream [to us] from [the English companies] Argus, SAAN and Caxton(Richard, 1988:308).

When the book was about to appear, the management ordered the destruction of theentire print-run. Increasingly Perskor’s business with the state meant the differencebetween its survival and demise. With P.W. Botha’s rise to power in 1978, Perskor wentinto a swift decline.

The professional management of Nasionale Pers formed a sharp contrast with thenorthern press companies that operated in the hothouse of Transvaal Afrikaner politics.Financial conservatism, careful planning and cautious risk-taking were the watchwords,not the reckless gamble or the quick chance. During the war years Sanlam took a strategicstake in Nasionale Pers. The respective leaderships of Sanlam and Nasionale Pers saw themselves as partners in the same nationalist cause. David de Villiers, who was MD from

1969 to 1984, strongly denied that Nasionale Pers beneted from “crony capitalism”.But while there was always an element of friction between government and Afrikaansbusiness, the press also beneted from the association. It effective lobbied against theintroduction of free school textbooks.

Nasionale Pers critics accuse it of improperly offering shares to homeland ofcials inmarketing its black school texts, but De Villiers rejected this. Nasionale Pers formed jointventures in which 51% of the shares were held by individual members of a black community and 49% by a Nasionale Pers subsidiary. All the offers were public offers andno individual could hold more than 200 shares. No shares were given to individuals.9

Nasionale Pers rst managed to get a slice of the printing of telephone directories after

the Postmaster General, Louis Rive, had alerted it to the closing date for tenders. It putin tenders and won the contracts for Western Cape, Eastern Cape and South-West Africa.9 D.P. de Villiers – author, 28 May 1999 (letter deposited in Naspers Archives).





This represented approximately one tenth of the total telephone directory business.Revenue from this contract amounted to about 3% of the total pre-tax prot of NasionalePers.10

The introduction of state television posed a severe threat to readership and advertisingrevenue. After negotiations between the government and the Afrikaans and English presscompanies, led by Nasionale Pers, an agreement was reached on television advertising andthe introduction of pay television. All the press companies acquired a share in M-Net andmanagement was placed in Nasionale Pers hands with the consent of the other presscompanies. Expansion into pay television and the eld of electronics saw the marketcapitalisation of Naspers exceed that of Sanlam by 2007. It is presently the largest mediacompany in Africa.

10. THE TIES DISSOLVE

A book published in 1964 to commemorate 25 years of progress since the EconomicVolkskongres of 1939 argued that the success of Afrikaans businesses had produced mutualrecognition and respect between the two white communities (Du Plessis, 1964:237).Afrikaans business leaders had developed a sense of self-condence and achievement.As one said in 1968: “We are no longer under the impression that we are other men’sinferiors as far as business acumen is concerned – while we have certainly not beatenthem. I think I am justied in claiming that our inferiority complex is a phenomenon thatno longer plagues the new generation that is now arising” (cited by Welsh, 1969:271).

In 1968, when Sanlam celebrated its half-centenary, Andreas Wassenaar, its MD, wrotea self-congratulatory preface to the book Sanlam: Uit die Volk gebore – Sanlam se eerste 50

jaar (Scannell, 1968): “Sanlam had become the symbol of the Afrikaner’s ability tomaintain himself in the business world through intelligent, honest and hard work. Godgive that it stays that way”. Jan Hurter, of Volkskas, pointed to four corporations withassets of more than R300 million: Volkskas, Trust Bank, Rembrandt and Sanlam, andadded: “They were all built up by our own people, including the less afuent, who havemade a giant contribution” (Engelbrecht, 1981:216).

But while the Afrikaner nationalists had learnt to capture capitalism and was stillusing the symbolic terms of the early stages of ethnic mobilisation, the system was alsocapturing them. By the mid-1960s the close alliance between ruling party and Afrikaansbusiness had started to dissolve. It was part of a broader process set in train by theprosperity of the decade and the rise of consumer values that extended to all sections of Afrikaner society (Grundlingh, 2008). In September 1965 Hendrik Verwoerd warnedthat the growth of Afrikaner capitalism might later be used against the Afrikanersthemselves (Serfontein, 1970:55). Just before his death a year later, he wrote to theBroederbond’s Executive Council that the greater the prosperity and the fewer thepolitical dangers, the more difcult it would be to maintain Afrikaner unity (Stals,1998:405).

By the end of the 1960s Afrikaner business leaders had come to dene the economicgoals of thevolksbeweging in very different terms than those of the 1940s. The goal was

no longer “independence” in each sector, or winning a share of the economic cake roughly proportional to the Afrikaner share of the white population. In 1969 Pepler Scholtz of

10 D.P. de Villiers – author, 28 May 1999 (letter deposited in Naspers Archives).





Sanlam said that, instead of speaking of the Afrikaner “share” of the economy, it wasbetter to speak of the Afrikaner “contribution” to it. He added: “The Afrikaner is notentitled to a share only because he exists. He is only entitled to that share of business thathe conquers through his own abilities and hard work” (Die Volksblad , 22 August1969).

By the end of the 1960s the English business sector was much more prepared thanbefore to recognise Afrikaner achievements in economic policy-making and in the privatesector. In a 1967 supplement entitled “The fabulous years” describing the economic“surge” of the previous ve years, theFinancial Mail singled out the ideas, initiatives andpolicy decisions of twelve decision-makers in the state and semi-state sector. Nine of themwere Afrikaners (Financial Mail Supplement, 14 July 1967). Commemorating thefoundingof Federale Volksbeleggings thirty years before the journal published an editorial inAfrikaans on the theme of Kestell’s motto “n Volk red homself”. It congratulated the

group on an exceptional performance as a widely spread, diversied industrial corporationthat had entered into many successful partnerships with South African and foreign groups(Financial Mail , 19 June 1970).

Whereas building up successful enterprises was for Afrikaner businessmen a means of gaining prestige and esteem from their fellow Afrikaners, they now tended to attach lessvalue to recognition by their fellow ethnics and more by business leaders across thelanguage division (Stokes, 1974; Wassenaar, 1977). It is a phenomenon that tends tooccur often among groups that earlier had displayed an intense hostility to capitalism butsubsequently learnt to accept it as a key of group advancement.

Until the mid-1990s most business leaders were happy to celebrate the Afrikaans roots

of their corporations. Among the Afrikaner people the notion of “n volk red homself ”nevertheless remained part of the Afrikaner folklore. It overlooked the fact that stateintervention was essential for the rehabilitation of the Afrikaner poor in the 1930s. Thisincluded relief measures, the training for the white poor and the superior educationthat whites received. But the rhetoric of “n volk red homself ” also had a positive impact.It prevented Afrikaners from succumbing to the temptation of attributing poverty in theirranks to some conspiracy by employers. It also encouraged middle-class Afrikaners toaccept the rehabilitation of the Afrikaner poor as their responsibility.

11. CONCLUSION

Francis Fukuyama (1995:44) considered the failure of the Calvinist Afrikaners to developa thriving capitalist system until the last quarter of the century an anomaly that needsexplanation. Any explanation would have to point to the obstacles to accumulatingcapital in farming, the late urbanisation, the strength of populism and socialist thinkingamong the northern Afrikaners, the preference for a safe career in the civil service, theabsence of an Afrikaner business class until late in the twentieth century and the long-standing reluctance to utilise risk capital.

With the exception of Anton Rupert, the Afrikaners did not produce an entrepreneurin the Schumpeterian mould. The businessmen considered themselves to be part andparcel of the Afrikaners’ ethnic mobilisation until the 1970s. They all beneted greatly from the massive assistance successive governments provided to white business and towhites in general. But these governments, including the NP government in its rst two





decades in power, bestowed remarkably little ethnic patronage on them, and the Englishbusiness leadership did not considered it necessary to help Afrikaner business at adiscount in order to buy political favours. As a result there developed among Afrikanersa strong sense that the corporate successes were a collective ethnic achievement thatreected well on both the corporation and the community from which they sprang.

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