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CHAPTER V
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The Diamond Story
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PART THREE
WORLD CRISIS AND WORLD LEADERSHIP
1930-1935.
Between his fiftieth and his fifty-fifth year, Ernest Oppenheimer had
to deal with the gravest crisis with which the diamond industry was
ever confronted; springing as it did from the collapse of the world
economic order which characterized the half decade with which this
chapter is concerned. The central problem hinged upon the ability of
the diamond trade to carry large stocks at a time of growing financial
stringency and general instability, for sales were collapsing and the
knowledge that large stocks existed (even if no doubts were entertained
as to the ability of the trade to continue to finance such stocks— and
such doubts were entertained) was in itself a deterrent to purchase.
The obvious solution was to prevent further accumulation of stocks by
restricting or, if necessary, ceasing production altogether; but this
solution in itself raised delicate problems of unemployment in the
producing centres, serious loss of revenue to the Government and an
aggravation of economic distress generally. It was not merely necessary
to secure unanimity of policy among the producing units, but also to
secure the agreement of the South African Government to a policy which
was distasteful on more than one ground.
Three
technical changes of great and permanent importance were effected
during these years. The De Beers company became a much more integrated
organization, so far as control over the producing mines in
South Africa was concerned; the Diamond Syndicate was replaced by the
Diamond Corporation and the relations between all diamond producers
(including the Union GovernÂment) were made much easier by the
foundation of the Diamond Producers' Association. Nevertheless, great
efforts had to be made to bring these changes about. But the greatest
problem (though it was a short-term one) was the closure of the mines
and this brought Ernest Oppenheimer into violent collision with the
then Minister of Mines. Throughout the period the question of the
disposal of the huge stocks of the Diamond Corporation continued to be
one of great complexity: it was not until after the end of World War II
that it was finally disposed of. Nevertheless, after 1935 gradual world
recovery eased the position in the diamond world. A change of
Government also made for more cordial relations.
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