♦ IX ♦
Between
1902 and the outbreak of World War I the diamond industry was to
experience a series of difficulties which resembled in nature, if not
in magnitude, the crises of the inter-war period. On the production
side, the industry was called upon to deal with the effects of the
discovery of diamonds by Mr. T. M. (later Sir Thomas) Cullinan on the
farm Elandsfontein 85, east of Pretoria, which resulted in the
formation of the Premier (Transvaal) Diamond Mining Company towards the
end of 1902. This was followed by the discovery of diamonds in South
West Africa in April 1908. Between these two events there occurred the
American recession of 1907, which seriously disturbed the relations
between producers and distributors, profoundly affected the market for
diamonds, and led to the reshaping of the Syndicate itself.
Though De Beers had at no time prior to the discovery of the Premier Mine possessed a complete control
over diamond production, it dominated the situation. Completely
outside its control was the alluvial production—the 'River Diggings'
and, in addition, certain minor producing mines. But the control over
the five Kimberley mines; the interlocking relationships through common
elements on the directorates and in the Syndicate, and between the De
Beers and the Jagers-fontein directorates, its 'preferent' rights to
mineral discoveries elsewhere, all these guaranteed effective if not
complete control, even though Pvhodes's original plan to prevent
Koffiefontein from becoming a 'unified' producing mine had (inevitably)
broken down. Moreover, the financial resources of the Syndicate were
adequate to deal with the de facto volume of diamonds. With De Beers able to control the major output of diamonds and the Syndicate financially strong enough to hold back the de facto volume
from the market in case of weakness, there seemed to be nothing to
fear. The obvious line of evolution would have been the estabUshment
from the beginning of intimate relations with the Premier Mine.
The
Premier Mine started its life virtually as a 'joint enterprise' with
the Government. Under the legislation of 1903 the State's share in the
undivided mine was 60 per cent and the company's 40 per cent and even
these proportions represented a concession, since the inquiry of the
Select Committee of the (Transvaal) Legislature, appointed to review
the problem, had recommended that the owners' share should
