306
SIR ERNEST OPPENHEIMER
In
relation to the sales of diamonds, the agreement departed from
tradition in one radical respect. Under the old inter-producers'
agreement the Syndicate (and then its successor the Diamond
Corporation) had normally to take in each period an amount of diamonds
based in a defined manner on sales in a previous period (this was the
'replacement clause'). The association was under no such obligation:
if it required diamonds for sale 'it shall advise each member of the
total quantity in value of the selling parcel it proposes to make up
and of the quantity in value which each member is entitled to supply in
respect thereof. In fact, the deed of agreement between the association
and the Diamond Trading Company provided for the latter buying such an
amount of diamonds 'as will maintain the company's stock of diamonds in
hand . . .' at £i million, South African currency.
The
association and the Diamond Trading Company bound each other to mutual
exclusiveness in diamond transactions: the association could only sell
to the company, and the company could only buy from the association.
(The 'outside' producers' diamonds came into the arrangement through
the Diamond Corporation's two quotas: its then existing stock and its
current contracts.) As far as it was humanly possible, centralization
of buying and selling had been achieved. On the purely technical side,
so far as the physical handling of the output was concerned,
arrangements were made for the establishment in Kimberley of a central
sorting office and for the laying down of a standard assortment. These
arrangements, however, did not apply to the Diamond Corporation's
purchases of outside diamonds, though any arrangements made in London
for the sorting of such diamonds were to satisfy the requirements of
the managing board of the Diamond Producers' Association.
The
permanent reorganization of the diamond industry was comprehended in
these plans: there were, however, aspects of the situation which
concerned more narrowly the financial obligations and servitudes of
the interested parties, and these also had to be provided for in an
agreement dated 23 March 1934. The Diamond Corporation's original
issues of debentures at 5I per cent, issued to take over the stock of
conference producers' diamonds in the hands of the old Syndicate, had
been guaranteed by the conference producers and by the individual
member firms of the Diamond Syndicate. This guarantee, so far as the
producers were concerned, was in effect worthless in the light of their
then financial circumstances. Under the new arrangements, the
guarantors were released from their guarantee as regards principal and
