INTRODUCTION
23
of the African community: they were practical and they pointed the way to better things still to come.
♦ VII ♦
The
history of the twentieth century, so far as diamonds are concerned, is
a story of revolution: the 'natural' monopoly of diamond production
which South Africa possessed was destined to disappear and with it
disappeared also the predominance of mine diamonds over alluvial
diamonds, for most of the great discoveries—in South West Africa, in
Angola, in the Congo, in West Africa, in the Lichtenburg district of
the Transvaal and in Namaqualand—concerned alluvial deposits, the two
exceptions being the Premier Mine near Pretoria and the Williamson Mine
in Tanganyika. The fundamental economic issue involved in this secular
course of discovery was the possibihty of adjusting supply and demand
in such a manner as not to involve a disastrous fall of prices at
particular moments of time: even if the long-run trend of world
consumption was upwards, there might be, and in fact were, temporary
set-backs. Moreover, though there was an alternative use even for gem
stones in the shape of demand for stones for drilling and cutting
tools, this demand was dependent largely on the prosperity of the
motor-car and mining industries, so that cychcal variations in world
prosperity worked cumulatively:21 when the world was
prosperous, the demand for diamonds both for industrial purposes and
for luxury purposes rose, but both demands fell in times of bad trade.
It is a commonplace that demand, in the short run, falls as
prices fall, and there is the danger that not only will the final
consumer not buy in such circumstances, but that panic sales (in
anticipation of still lower prices) will aggravate the position. Since
gem stones are a 'luxury' product, there was a still more sinister
possibihty— that diamonds would cease to maintain their position as a
'store of value' and that immense quantities of stones, representing
accumulations made in the past, might also be thrown on the market; as
it was, the sale of the Russian hoards by the Soviet Government in the
years after World War I was a serious matter enough in the light of the
discovery of new sources of supply and of trade depression.
21
The enormous growth in the demand for 'industrial' diamonds, primarily
bort, is a phenomenon of the war and post-war period. Before the war
the great accumulations of unsaleable bort was a special problem of the
industry. On all this, see below, chapter VI.
