A
dangerously confused situation was obviously arising. Ernest
Oppenheimer was not the kind of man to risk a head-on collision if it
could be avoided—the world situation was much too dangerous. On 1
February he addressed the Minister as follows:
A
number of letters have been exchanged lately between our respective
secretarial departments dealing with various matters of detail in the
diamond trade. These problems are, no doubt, difficult of solution; but
they are minor matters, and I feel that the main aspects of the
situation have tended to become obscured. I naturally keep myself in
touch as far as possible with conditions in the diamond trade all over
the world, and the prospects for the future are very black. America's
demand for diamonds is quite dead and shows no signs of reviving, and
what little business is done is due to sales to the Dutch East Indies,
to parts of India and to Italy.
At
the present juncture anything which undermines the confidence that at
present exists that production is efficiently controlled, that sales
are through
'It
appears that the Government stock no longer contains the qualities
which cutters in South Africa wish to buy. In view of this the
Government sent Mr. Granger on an expedition to Kimbcrley to see
whether some arrangement could be made with the Diamond Corporation to
supply the qualities they may be asking for. The Government realized
that even if the Diamond Corporation made the suitable qualities
available out of the quota deliveries, it would be quite insufficient
for the needs of the cutters, and they therefore asked whether advance
deliveries could be arranged so as to supply the needs. We made it
clear that the producers objected absolutely to getting any further
shipments, but in order to demonstrate to the Government that we were
not opposed to the diamond-cutting industry, the producers expressed
their agreement to make certain additional quantities available as an
advance delivery, but only on the condition that the Government limited
its sales to cutters to an amount to cover its out-of-pocket expenses
in producing diamonds. The Government spends about £10,000 per month at
the present moment, so that their sales to cutters would be limited to
£60,000 for the present six months. Granger really prefers to sell no
diamonds to cutters at all, but undoubtedly he could not give us the
undertaking we asked for without consulting the Minister.
'He
has left for Cape Town this morning and will telegraph us tomorrow. Mr.
Louis Oppenheimer is familiar with the composition of the Government
goods and will not be surprised at the above information, which really
confirms his own impressions. Granger talked a great deal about the
Government increasing their production so as to have more suitable
goods for cutters and said that the Government would, if necessary,
invoke the aid of the Diamond Cutting Act. With regard to the latter we
made it quite clear that the Diamond Cutting Act meant nothing to us,
and that we were quite indifferent to any action that the Government
might take under that Act because no one could ask the producers to cut
their shipments in order to keep the diamond industry of South Africa
going if the result were an accumulation of unsaleable diamonds.
Further, under the arrangements which we have with the Government,
which arrangements, by the by, have been referred to in correspondence
from the Government as honourable engagements, the Government has
really reserved to themselves the right to sell to cutters by their
special permission. It would therefore be ludicrous to insist on the
one hand as they do that they have the monopoly of sales to cutters,
and, on the other hand, to compel us by selling to cutters to spoil our
shipments.
'This
letter will illustrate to you that we are confronted with continuous
difficulties with the Government, which difficulties are, of course,
chiefly the outcome of the bad times and the Government's anxiety to
protect the cutting industry.'
