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SIR ERNEST OPPENHEIMER
diamonds of the Hans Merensky Association . . . allowing for export tax, amounts to between ^7,000,000 and ^8,000,000.'
From
the standpoint of security (illicit diamond buying was rampant) a
speedy working out of the Merensky claims was desirable, but this
involved, of course, a corresponding financial burden in 'carrying' the
stock so accumulated, for it could not be expected that tins great
output of immensely valuable stones could be sold en bloc to
the market without wrecking it, and so doing immeasurable damage to the
older as well as the newer producers. In any case, the contract entered
into by Ernest Oppenheimer with the Hans Merensky Association on 7
January 1928 (at a time, be it noted, when the Oppenheimer-Barnato
group were not yet the dominant owners in the association), provided
for the purchase of 'all the diamonds produced by the association from
the claims owned or controlled by it', but took account of the various
turns which Government policy might take. The basic intention of the
agreement was to provide for purchases over a two-year period, with an
undertaking that at the end of the two years, calculated from the date
of the first delivery, Ernest Oppenheimer undertook to buy the stock of
diamonds then on hand. If a sales quota were fixed, then the quota
would be purchased: if that quota were less than f 600,000 for the
first year, then he was obligated, subject to Government approval, to
buy diamonds to the extent of the difference between -£600,000 and the
sales quota. If the Government objected to the sale to Ernest
Oppenheimer of the stock remaining at the end of the two-year period,
he was willing to advance two-thirds of the value of such stock
'subject to the consent of the Government being obtained if such
consent is necessary'.
In
the early months of 1928 negotiations took place with Government,
complicated by the fact that the ministerial attitude was changed in
the course of discussion. Originally a sales quota of f 600,000 per
annum was proposed, as suggested by the Minister himself; when this was
refused, a figure of -£500,000 was put forward: this also led to no
result. What finally emerged was the so-called 'memorandum of
undertaking', signed on 7 March 1928. The undertaking imposed on the
association an obligation to employ only European labour 'recruited as
far as possible from the district of Namaqualand': obligated it to
regulate operations 'as far as may be practicable so as to extend them
over a period of five years calculated from the date of this
undertaking' and gave the association no sales quota at all. On the
contrary, all diamonds won were to be deposited by the association
