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SIR ERNEST OPPENHEIMER
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itself, in its corporate capacity, had much to say on the whole attitude of Government.
The
producers' offer was drafted with an eye to the elimination of the
Diamond Corporation's stock quota; to the future handling of the
outside contracts; and, since the corporation had outstanding f 5
million of debentures, to placing it in a position to discharge its
liabilities. The scheme contemplated the distribution to all other
members of the association of its stock quota and the sale to De Beers
and Consolidated Diamond Mines of -£5,000,000 of diamonds at book
cost, payable by these two companies in annual instalments, such annual
instalment being 'not less than the amount required to enable the
Diamond Corporation to meet debenture redemption charges'. But the two
companies would also pay interest on any outstanding balance due to the
Diamond Corporation and 'would guarantee the interest on, and repayment
of, the Diamond Corporation debentures'. The diamonds so purchased from
the Diamond Corporation could be utilized to meet the quota of the two
buying companies, in addition to their own production (which was at the
time insufficient to satisfy their full quotas); moreover, the diamonds
so transferred were to be at book cost, and 'it is an essential of the
scheme that on this transaction the Diamond Corporation, De Beers and
Consolidated Diamond Mines shall in no way be liable for excess profits
duty'. As regards the outside purchases, they were henceforward to be
on account of the other members of the association, 'the corporation
merely acting as agent', and the corporation was to have the right to
recoup its overhead expenses and the cost of the diamonds, exclusive,
however, of debenture interest, which was payable, under the scheme, by
De Beers and the Consolidated Diamond Mines.
Since
the Diamond Corporation was owned by De Beers and Consolidated, since
the corporation was in future to be an agent and not a principal in the
negotiations with the outside producers, since a large part of its
stock and its principal outstanding obligation were now to be taken
over by the two large South African producers, the possibilities of
conflict were, obviously, greatly reduced under the scheme. But it did
not provide, in express terms, for the separation of gem from
industrial diamonds and it left the marketing arrangements unchanged.
The
Diamond Corporation's memorandum was critical of the proposal for a
separate Producers' Association sorting office: 'The arrangements at
present in force regarding staff and office accommodation
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