an
even greater extent, of the diamond industry. But there was (and there
remains to this day) a fundamental difference between these two great
branches of the mineral industry. Because gold had, and continues to
have, an unlimited market for any quantity that can be produced, there
was no need, and there is no need to attempt to limit the
supply in accordance with market conditions. The same was not the case
with diamonds, the demand for which has always been, and continues to
be, extremely sensitive to variations in the level of world activity.
(This, it may be noted, is true both of gem stones and of industrial
diamonds, the latter of which, however, at the turn of the century
played a much more subordinate role than is the case today.) In the
case of the gold-mining industry (and the activities of the pioneering
generation soon spread into other directions) what was evolving at the
beginning of the twentieth century was the mining group: what emerged
in the diamond industry in the first instance was a 'bilateral'
monopoly, that is, the difficult relationship between a single producer
and a single buyer, which had, nevertheless, through the circumstance
that some of the members of the Diamond Syndicate had large share
interests in the producing unit, some of the aspects also of a
'vertical integration'. Nor was the world of gold separated from the
world of diamonds: there were lateral as well as vertical connexions
through share-ownerships and interlocking directorships and
partnerships between leading personalities in both directions.17
It must be understood, however, that at the beginning of the century
the number of separate mining groups was still large; the partnership
form of organization dominated the member firms of the Diamond
Syndicate and was destined to do so for many years to come. The
relation between the Syndicate and De Beers had not attained the degree
of permanency that it was subsequently to assume, and in any case the
monopolistic element concerned only the production of the major mines
in the Kimberley area. There was bilateral and vertical integration up
to a point, but the monopolistic element did not affect alluvial
production at all. It was, in fact, one of the major concerns of Ernest
Oppenheimer's
17 The complementary volume to J. A. Hohson's Imperialism is his equally well-known Evolution of Modern Capitalism, the
first edition of which appeared in 1894. South Africa and the United
States of America were the chosen 'models' for exhibiting the
tendencies towards integration and monopoly, chapter X of the work,
entitled 'The Financier', contains an analysis of the degree of
integration as represented by interlocking directorships in South
Africa as it was shortly after the death of C. J. Rhodes. This
illustrative material continued to be incorporated in successive
editions, including the 12th impression of 1954. (It may be added that
in tone this chapter, in so far as it refers to South Africa, closely
parallels Hobson's attitude in the first-named book.)
