330
SIR ERNEST OPPENHEIMER
'overcome by Dicorp making the outside contracts sir the benefit or loss of all members of
the association according to their respective quotas'. He so wrote to
Harry Oppenheimer on 27 January 1942: by that time formal discussions
with the Government had begun.
♦ VII ♦
Under
the alterations to the deed of constitution of the Diamond Producers'
Association, which became effective on 1 January 1939, it was provided
that the agreement 'shall continue until the expiration of twelve (12)
months' notice in writing of intention to terminate same. Such notice
shall be given so as to operate from 1 January in any year, but shall
not be given so as to operate prior to 1 January 1942.' On 6 January
1941, the Minister of Mines intimated to Ernest Oppenheimer that
Government was not prepared at that juncture to renew the association
agreement beyond December 1942. Formal twelve months' notice was given
on 30 September 1941. But by that time much discussion had already
taken place.
Before
dealing with the negotiations it is as well to take account of the
position as it was prior to their taking place. Under the original
agreement the Diamond Corporation and the South African producers
(including the Union Government) had all been given quotas, but the
Diamond Corporation had been given two quotas: one in respect
of current contracts with the outside producers, one in respect of its
stock—the 'stock quota'. But, under arrangements made in 1935-6 with
the Mines Department, the Diamond Corporation had been given preference
in sales as far as the outside contracts were concerned (it had to find
funds to meet the outstanding debenture charges for interest and
sinking funds); against this concession, however, the corporation had
agreed to limitations: namely, until the expiration of the then
contracts, that 'only enough outside diamonds are sold by the Diamond
Corporation to reimburse itself for the cost of the goods purchased,
together with the expenses incurred in respect to them', as Ernest
Oppenheimer pointed out to the Hon. Patrick Duncan on 23 December 1935,
in discussing the possibility of reopening of the Bultfontein and
Dutoitspan mines at Kimberley. This implied that the cash income
of the Diamond Corporation was definitely restricted; in 1937 it was
further agreed that, in the event of sales reaching .£8 million, a 5
per cent profit on the cost of the outside goods would be
