machinery
had been created, and that the money to carry colossal stocks of
diamonds would always be available. These two things will undoubtedly
establish the trade once and for all on a sound basis.
Do
not let us shut our eyes to the fact that there are now producers in
the world whose production is limited under our agreements. These
producers are capable of producing diamonds much more cheaply than the
De Beers company or any other mines. For instance, you have the
Government and the Cape Coast Exploration Company. We know that on
Kleinzee there are 600,000 carats of diamonds and we know that the
adjoining farms are rich. Then you have the north bank of the Orange
River, West Africa and Angola all producing diamonds cheaply.
Under
our proposals £10,000,000 remain available for five years, and then
become redeemable for the next five years, and the producers would have
their own organization and staff to handle the business. . . . We
really attempted to carry out the policy which the De Beers company has
aimed at for years, and there was no intention of being discourteous to
the board. The fact that certain people were induced to leave colossal
sums of money in the trade is surely worth some little sacrifice on the
part of the producers. If we had been told in London of any definite
objections to our proposals we would have dealt with them for we felt
that this thorough rationalization of the diamond trade is the only
thing to be done. I cannot help feeling that the misunderstanding is
due to the unfortunate manner in which we were forced to rush the
thing. . . .
The
scheme was finally accepted, but Ernest Oppenheimer was overruled on
the technical issue of finance. The differences of opinion with regard
to the method of financing the acquisition of these interests were
finally resolved by the issue of debentures.5
The
cession of the Syndicate agreements with the conference producers,
though a matter of urgent importance, could not be implemented without
the assent of the Union Government. But there was, fortunately, nothing
to prevent Ernest Oppenheimer from drawing upon his experience as
chairman of De Beers, and as the head of Anglo
5 The De Beers annual report for the year ending 30 June 1931 summed up the evolution:
'.
. . With reference to the creation of additional deferred shares,
authorized by extraordinary resolution in December last [1930] for the
purpose of acquiring certain shareholdings in other diamond-producing
companies, your directors beg to report that, in view of a strong
feeling expressed against a permanent addition to the share capital of
the company, they decided that it would be advantageous to the company
to issue redeemable debentures rather than deferred shares.
Consequently ^2,500,000 5J per cent sterling debentures have been
created and of this amount ^2,414,600 have been issued, and have been
utilized in completing the acquisition of shareholdings in the New
Jagersfontein Mining and Exploration Company Limited, the Consolidated
Diamond Mines of South West Africa Limited, and the Cape Coast
Exploration Limited. . . .'
