It
would be both easy and misleading to discuss the issue merely in terms
of the self-interest of diamond producers and distributors. Had the
market collapsed—as it threatened to do at times, particularly when the
great depression shook the economy of the entire world— shareholders
and diamond merchants would have suffered immense losses, and so would
the owners of diamonds. But the social consequences in the areas of
actual or potential production would have been equally serious and
would have involved grave political consequences. These adverse
consequences would have been gravest in the Union and in South West
Africa, but the economic development of Angola, of the Congo and of
West Africa would also have been seriously affected.
It
was Ernest Oppenheimer who was destined to solve the problems involved:
they were immense. It was necessary to reconcile the divergent
interests of different producing areas; they had a common interest in
preventing the destruction of the market; but in the apportionment of
production and/or sales quotas, each area, naturally, desired to expand
at the expense of others, and, in this desire, they were backed by
governments anxious to sustain the level of employment and to maintain
or increase tax revenues from diamond mining. In South Africa, the
Government was not only a tax-gatherer, but in the course of time it
became a producer on its own account; it was not only anxious to
maintain, or if possible expand, South Africa's share of the market,
but to encourage diamond cutting in South Africa, which was against the
interests of the traditional producers of cut stones, especially
Antwerp and Amsterdam. It was also necessary to reconcile the interests
of the producers with the interests of the distributors and to
reconcile the interests of the distributors inter se: at the
commencement, the Diamond Syndicate handled only Kimberley diamonds,
but in 1914 the outbreak of World War I prevented the inauguration of
an attempt to widen the international control of diamond sales; just
before that war broke out |the Syndicate and the official Regie in
German South West Africa had come to terms. When production expanded in
Angola, Congo and West Africa the problem became, obviously, much more
acute. More disparate interests were involved; above all, more finance
was required to buy up and, if necessary, hold indefinitely the
quantities produced. The larger the output, the greater the finance
involved, but, with the growth of scale, also grew the financial risk
of great loss if the market finally collapsed. The issue, at bottom,
was a simple one: if the distributors, to hmit their risks, insisted on a limitation
