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WORLD CRISIS AND WORLD LEADERSHIP 267
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trade,
sales through one channel. The Diamond Corporation having no longer any
stock of those qualities of stones which are in demand by South African
cutters, it was suggested by Mr. Granger that unless the Diamond
Corporation could arrange with the producers that advance deliveries
should be made from their stocks of these qualities, the Government
would invoke the Diamond Cutting Act and force producers to sell to
South African cutters direct irrespective of quota. If this action
contemplated by the Government is taken, the basic principle of sales
through one channel will be destroyed.
(3)
With regard to the lack of close relationship between the Government
and the producers, what I have said under (1) and (2) will show that
this close co-operation is in gravest danger of ceasing to exist.
Though
I have written at some length I think that I am justified in that. You
will sec from the contents of this letter that I am anxious that the
good relations which have been jeopardized between the Government and
the producers should be maintained. That they have been jeopardized is
further illustrated by the letter which I received from the Secretary
for Mines and Industries dated 25th ultimo, the final paragraph of
which reads: 'As it would appear from the correspondence that the
producers may decide to close down, the Government intends to take
steps now with the object of providing work and relieving unemployment
in the event of such a position arising.' I would feel much obliged if
you would enlighten me as to the exact meaning of this paragraph.
The state of the diamond trade gets worse from day to day and only yesterday I received the following messages16 from London directors of
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'Jn view particularly January sales and extremely gloomy prospects
weare strongly of opinion that we should close down all production of
diamonds by all producing companies without further delay. We think
that Angola and Congo should be approached to the same end. . . .
'The
general economic situation at the beginning of 1932 instead of
improving is more difficult. If the endeavours to help Germany do not
succeed, the break-down of Germany will carry away the other countries
of Central Europe and will react disastrously upon all others ruining
the little confidence still existing. International exchanges of goods
and services are being steadily diminished, gold prices are still
falling and recovery is not in sight. The outlook in America is even
more gloomy than in Europe. Everywhere the banks are blocked by the
credits made to industries and trade, and everywhere artificial and
dangerous means are used to allow them to continue the credit necessary
to avoid a liquidation. Budget deficits are increased in every country
and the weight of taxation is so heavy that it does not seem possible
to increase it much. The buying power of everybody is much diminished
and the uncertainty of the near future incites everyone to bring down
expenditure to a minimum. Luxury trades are the most affected; the
sales of jewellers in Paris for Christmas and the New Year have been
very small. The year 1932 begins in very bad condition for the diamond
industry. We cannot hope for 1932 an increase of sales of uncut
diamonds: it would be dangerous to build up programme upon an amount of
sales equal to the sales for 1931 and present prospects are that we
shall sell far less. And being given the importance of the stock of cut
stones and the length of the crisis we must keep in mind that the
recovery of the diamond trade will be slow. It is an absolute necessity
for the mining companies to bring down their expenditure to a minimum;
it will be foolish to continue producing diamonds.'
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