allowed. But, as this was not permitted to be a cash profit, it simply implied that the Diamond Corporation was thereby required to retain that much more of its stocks, for the more it made on the sale of diamonds emanating from its current contracts,
the less it could sell of other diamonds, including the diamonds it had
taken over from South African producers. The corporation went a good
deal further, for to quote from a Diamond Corporation memorandum
prepared in connexion with the 1942 negotiations:
The
corporation, during the first few years, voluntarily accepted a
reduction by surrendering portion of its stock quota, first of all to
De Beers and C.D.M., and, latterly, to all producers. It has completely
divested itself of the priority in respect of that portion of
deliveries allotted to outside contracts. The Diamond Corporation now
participates, in respect of stock quota, pro rata with the
other members in the balance of trade, after outside contracts have
been satisfied. Last year, the corporation was substantially short of
cash.
In
surrendering portion of its stock quota to De Beers and C.D.M., the
Diamond Corporation did so to provide the two companies with a larger
share of the trade, to which they were entitled, being the sole owners
of the corporation's issued capital.
This
surrendering of portion of [the] stock quota does not imply that that
quota is on a too generous scale, as otherwise the accumulated stocks
would have disappeared by now.
The
equity in the Diamond Corporation had, by 1939, passed into the hands
of De Beers and the Consolidated Diamond Mines. So far as the mere
question of profitability was concerned, it would not therefore have
mattered whether the income of the group would have been derived from
the profits on the sale of South African diamonds, or from the profits
derived from the sale of diamonds out of the stocks of the Diamond
Corporation, or from the profit derived from sales out of the running
agreements with the outside producers. The issues were partly social,
namely, the continuance of South African production and the degree of
employment connected therewith, and, from the standpoint of the Union
Government (apart from its sales quota) and of the Administrator of
South West Africa, financial (the receipt of revenue), and these
aspects were obviously interrelated. Nevertheless, at that particular moment, namely
1941-2, there was no employment problem to be taken into account. The
closure of the South African mines did not imply any social problem: on
the contrary, by postponing the reopening of the mines for the moment,
the
