General
of South Africa), became Minister of Mines. As a personal friend and
political associate of General Smuts, Ernest Oppenheimer might
legitimately have hoped for easier relations with the Government.
Nevertheless, it took another year before finality was at last reached.
♦ XVII ♦
Almost
immediately after the February discussions with Mr. Fourie Ernest
Oppenheimer went to London. On his return in early May, he immediately
got in touch with the new Minister of Mines. As he wrote on 12 May, he
had
in
London . . . discussed with all the interested parties the last draft
of the pooling arrangement drawn up by Sir Robert Kotze and Mr.
McNeight as a result of the conversations that took place with the late
Minister of Mines, and I am glad to say that they have all agreed in
principle to the proposals contained in this draft. The chief question
was, of course, whether the Diamond Corporation could agree to be
treated as a producer with regard to its stock. In order to make this
possible it was essential first of all to arrange for the prolongation
of the Diamond Corporation debentures, the cancellation of all
guarantees and the funding of the internal liabilities of the Diamond
Corporation to the producers and the debenture holders. On these
questions, which I hope to explain to you fully, unanimous agreement
was obtained.
Sir Robert Kotze and I are now in a position and most anxious to continue the negotiations with you as soon as possible. . . .
In
this same letter, he drew attention to one of the two difficulties
which were to hold up the final settlement for a further considerable
period. At that time, the arrangement contemplated was that the Diamond
Corporation, though it was intended that it should be treated as a
producer as regards its large accumulated stocks and its current
purchases of outside diamonds under the various contracts which it had
entered into and therefore become a member of the association or pool,
should also act as selling agent on behalf of all the
producers. The question at once arose of the nature of the liability
incurred under the United Kingdom income tax laws. He wrote to Duncan:
I must point out that the question of English income tax is one that calls for the most careful consideration, not with the object of avoiding income tax on the profits made by the sales organization in England, but so as to avoid making
