♦ XXIII ♦
Experience
had reinforced the lesson that there were three methods of dealing with
the threat of increased outside production, actual or potential. So far
as British territory was concerned—it was a policy which goes back to
the days of C. J. Rhodes—there was the possibility of acquiring from
the local government exclusive or preferent prospecting and mining
rights, so far as diamonds were concerned. Otherwise it was possible,
as in the case of outside producers in non-British
40 At
the eleventh annual meeting of the Anglo American Investment Trust, he
said: 'Last year record sales of diamonds of nearly .£30,000,000 were
effected, and all the
companies
in which we are interested had a very good year. These large sales
were, however, almost all made in the first three-quarters of the year.
. . . This falling off followed on the severe fall of prices on the New
York Stock Exchange and undoubtedly found many diamond merchants with
unduly high stocks. The diamond producers and the central selling
organization had, however, foreseen the possibility of such a set-back
and had prepared for it by following a conservative dividend policy and
husbanding their cash resources. As a result the market remains
fundamentally sound and the Diamond Trading Company is able to maintain
its fixed prices and assortment.'
41 Thus in 1953, to the shareholders of De Beers:
'The
industrial sales for 1951 and 1952 included very considerable
quantities of diamonds which were purchased by the United States and
other governments for stockpiling either from the industrial company
direct, or second-hand from our customers. Purchases for stock-piling
(with the exception of fragmented bort) practically ceased at the end
of last year and this accounts to a considerable extent for the falling
off in our sales. Our sales of one class of industrial diamonds, namely
"diamonds suitable for drilling purposes", were adversely affected by
the increase of the Gold Coast African chiefs' production. This output
consists of small diamonds, and approximately 75 per cent of these are
suitable only for drilling purposes. There is, for the time being, an
over-supply of this material and the system of disposal by tender
without regard to market needs has led perforce to even lower and now
uneconomic prices for the West African output. As we have, up to now,
abstained from following this downward spiral of prices, our sales have
naturally suffered'.
Again, reporting in the year 1955 :
'The
long-term forecast of industrial diamond sales is, to a great extent,
influenced by the stock-piling purchases by the United States
authorities, and as these will continue anyhow during 1956, I therefore
foresee satisfactory sales. But I must repeat once again that when
stock-piling purchases cease we will be faced with over-production and
additional outlets must be found. It is with this in view that your
company continues to take the lead in the research field in its efforts
to find additional outlets for industrial diamonds.'
