L.O. Smith and the South African gold mines
During the latter part of his life, L.O. Smith traveled extensively and got involved in several risky business ventures. One of these was to invest in gold mines in South Africa. His goal was to build up the fortune he had lost in the so-called “vodka war” with Spain.
In the 1890s, L.O. Smith looked for new business opportunities. He was keen to build up a new fortune, following the failed export attempt and the vodka trade war with Spain. This time, he looked further than Europe. One of his new business projects was to earn money by facilitating loans to China, as the country had to pay war damages to Japan.
In 1895, Smith was in South Africa. Gold, silver and diamonds had been found there, attracting a steady stream of investors and opportunists. Despite the suffocating heat and often spartan conditions, Smith traveled around the countryside looking for investment opportunities.
One of his ideas, which was not realized, was to build a railway between the mines in Kimberley and the coast. From there he wanted to create a shipping line that would bring silver and other goods to Cádiz in Spain.
On another occasion, he bought a gold field from an Irishman. The deal turned out to be a scam, but luckily he was able to sell the land to an engineer. Smith was an honest businessman, but in this case he had to act strictly financially.
Around this time, disagreements between the South African farmers and the English colonists started to flare up again. The discovery of precious metals and minerals had attracted large numbers of mainly British gold diggers. Great Britain saw a chance to expand its colonial empire. Smith personally met several people in power, including President Paul Kruger, the mining magnate and the Cape Colonial Prime Minister Cecil Rhodes, and Doctor Leander Starr Jameson.
Smith saw huge potential for trade, prosperity and civilization in the world if the gold industry developed rapidly and effectively. His concern was that the English were trying to gain sole control over the gold assets. Smith was convinced that a balanced mix of international stakeholders would lead to healthy competition.
In 1899, he said in an interview that he was planning to return to the province of Transvaal, where he owned gold mines together with his French business partners. Due to fear of a possible war, the mine workers had left and operations had stopped completely. According to wild rumors, the mines would be blown up if war broke out. There was a risk that Smith would lose all the capital he had placed in the mines. However as he too feared the war, he could not travel there to oversee the dramatic development in person.
As a direct consequence of the uncertain situation, Smith had to put up his belongings for auction again. The furniture he had left from the Bolinderska Palace, his previous Stockholm apartment, was transported from his current home in Paris to Stockholm, where it was sold for insignificant prices.
In October 1899, the Second Boer War over the supremacy of South Africa broke out. The war was fought between the British Empire and two Boer states; the Republic of Transvaal and the Orange Free State.
The war ended in the summer of 1902, and the outcome proved to be a financial disaster for Smith. The English, who had won the war, took over all the companies and mines. According to some sources, Smith lost his entire fortune of about SEK 6 million. For the rest of his life, he lived a modest life, dependent on financial support from his children. However, he would never stop fighting for the money he felt entitled to in various legal proceedings.