vitally
affects the finances of the Government, I suggested that in addition to
representatives of the Department of Mines being present at the
conference, representatives of the Department of Finance should also
be present.
My
principal object in suggesting a conference was that it is of the
utmost importance that any inquiry into the diamond industry should be
instituted in such a manner that it will not tend to destroy the
stability of the industry or the confidence of the important financial
houses interested therein.
In
addition, I think the position of the producers outside the Union of
South Africa should be considered and nothing should be done which
would tend to weaken the effective co-operation which now exists
between them and the Union producers, and which has only been achieved
after long and patient negotiations. It would be very unfortunate if
through any step taken in South Africa the foreign producers ceased to
co-operate with the Union producers, and took independent action.
At
the meeting referred to, you asked me to suggest what points I thought
should be discussed at such a conference. I think the main points which
should be discussed are:
(1)
The reasons which forced the producers to adopt the steps they
are taking to restrict operations. (In this connexion I should like to
say that the term 'to restrict operations' perhaps more correctly
describes the proposed procedure than the term 'closing down' which was
used in the public announcement.)
(2)
What steps should be taken to arrive at closer co-operation of
the Union producers and the Government in regard to the production and
disposal of diamonds. This point will include sales to diamond cutters
operating in South Africa.
A
discussion on these two points will I think cover the whole of the
difficulties regarding production and disposal of diamonds which at
present confront the industry and the Government.
He next referred to the prevalence of illicit diamond buying and continued:
I
should like to say here I feel very strongly that the appointment of a
commission to inquire into the carrying on of the diamond industry at
this critical stage in its affairs is very undesirable, and should if
possible be avoided. The appointment of a commission will probably
further depress the diamond industry. Such further depression must only
lead to making financial and banking houses in Europe reluctant to find
new money for South Africa. . . .
In
the next letter he wrote, on the same day, he set out fully the reasons
why the personnel of the proposed commission was unsuitable and made
suggestions for changes:
