Randlord's Progress

As an undergraduate at Cambridge, Norbert Stephen Erleigh was in a hurry to make a million pounds, then quit. Said Norby Erleigh: "I think it could be done swiftest in South Africa." A wealthy Rand pioneer's son, Erleigh had the financial backing; he soon picked up the mining experience. In 1933, he helped Abraham Sundel Hersov form the Anglo-Transvaal Investment Co., Ltd., and together they made a killing in Rand mines. But "Bob" Hersov was too cautious for bumptious, erratic Norby Erleigh. By 1935 Erleigh, then 32, had broken away from Anglovaal, and he had made his first million. He had also lost all desire to quit.

Erleigh bought control of the New Union Goldfields Ltd., fixed his attention on the undeveloped Orange Free State, where he bought hundreds of leases and options on mining lands, including the fabulous Rooder and Main Reef Mines. The big money rolled in when other gold houses awoke to the richness of the Free State deposits and had to lease from Erleigh (TIME, April 29, 1946). Erleigh built up a South African empire of 152 companies--gold mines, diamond fields, coal mines, rubber factories, hotels and cinemas--valued at some -L-100,000,000.

Byeways. He lived as befitted a Randlord. He acquired a stable of 30 horses, raced them in England. "Byeways," the Erleigh estate north of Johannesburg, grew along with New Union Goldfields. A swimming pool was built, then a small theater.

As Rooderand's profits increased and its stock (at 52 shillings) led all other "Kaffirs" (gold shares), British investors assumed that New Union, the holding company, promised similar windfall profits. They gobbled up some -L-750,000 worth of New Union stock, soon bid the 5 shilling shares up to 32 shillings. What the investors did not realize was that the bulk of the New Union income no longer came from its operating property, but from the sale of stocks and options. New Union was living on its capital. Last summer the capital began to run out.

Slipways. While Erleigh was entertaining potential backers at champagne parties, his auditors refused to certify New Union's books. New Union owed its associated companies more than -L-5,000,000; Erleigh and a partner owed New Union -L-470,000--and there was no cash to meet the debts. New Union stocks in London plummeted to 6 shillings and threatened to carry the entire gold share market along.

Last month, rather than risk complete collapse, Erleigh gave up. He invited his old partner, conservative Bob Hersov, to take over New Union with the option to buy part of its best properties. Hersov accepted. In order to get a moratorium from New Union's creditors, he threw the company into "judicial management." By taking over New Union, Hersov gave U.S. financiers a major beachhead in South Africa through a comparatively new company, American Anglo-Transvaal Corp. (TIME, Aug. 26, 1946).

Outlanders In. Formed by New York's Ladenburg Thalmann & Co., and Lazard Freres & Co. (Phelps Dodge's Louis Gates, and David Rockefeller, youngest son of John D. Rockefeller Jr., came in later), American Anglo had an option to buy a one-third interest in any projects launched by able Bob Hersov. The Americans had put up $5,000,000, had agreed to ante up more as the need arose.

Last week it looked as if they would soon be called upon to do so. Middle Witwatersrand, an Anglovaal subsidiary, made one of the most promising postwar strikes in the Rand. The new strike was expected to carry Hersov into top rank among the Randlords, and with him the Yanks. Thanks to Norby Erleigh's decline, it looked as if U.S. capital had its first chance to capture a sizable chunk of the South African industry. Jo'burg buzzed with rumors that New Union might yet be bailed out.

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