Introduction

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	INTRODUCTION	25

	of production, they antagonized the producers and encouraged tendencies towards a 'break-away'; if, on the other hand, output was maintained because the producers insisted on it, there was an equal danger of a break-down of the selling organization through insufficiency of financial resources. There was, in reality, only one solution—as complete a vertical integration of the industry as possible. What finally emerged was a structure complex in appearance²² but embodying three simple principles, two old, one new. The old principles were control over production and control of sales through a single channel. The new principle was that the selling organization, in order to overcome the difficulties inherent in 'bilateral' monopoly arrangements, should be owned by the producers: that meant the disappearance of the Diamond Syndicate. A complicating element was that part of southern African production was in the hands of Government, and that both the Union Government and the Administrator of South West Africa were interested in the industry fiscally and possessed important powers of intervention. Possible divergencies of interest were overcome by the creation of a special body, the Diamond Producers' Association: the control over production was secured by

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