Evening star., 1932-04-03
DIAMOND VALUES IN JEOPARDY
BY FREDERIC ]. HASKIN.

The value Of every diamond in the
world is in imminent danger of being
impaired. Sir Ernest Oppenheimer,
chairman of the De Beers Consolidated
Mines, the great Kimberley diamond
mines of South Africa, has served no.
tice that unless the government OF the
Union of South Africa takes steps to
stabilize and protect the market. the
deep mines controlled by the De Beers
Syndicate will close this Spring.
The significance OF this is said by
diamond authorities to be the appear
ance in world markets Of an llncon-
trolled supply of inferior stones from
the alluvial deposits. Antwerp and the
merchants of Hatton Gardens. the great
London diamond market. have on hand
several years normal supply of stones,
Appearance OF the inferior stones in
uncontrolled supply, coupled with the
oversupply of stones on hand, will, il
is said, depress the world market.
For the diamond merchants of the
world 10 sell new stones at a price
under the normal market has the effect
OF depressing by just that much the
value OF every stone in the world. no
matter who owns it, The level of
diamond values is universal and gravi-
tates to uniform standard.
Output Restricted.
The De Beers Syndicate which "a con-
trolled largely by British capital, has long
nad an arrangement with the govern
ment OF the Union of South Africa
whereby only certain number of stones
Is released to world markets in any one
period. This has stabilized the price
But ever since the World War the de-
mand Tor diamonds has been declining
This decline has been accelerated in
the last two years of acute depression
american buyers have been practically
out OF the market Another element in
the situation is that many wealthy per-
sons whose securities have stopped
paying dividends temporarily have
placed their jewels, including many
diamonds, with jewelers., under commits
sion to sell them.
1t is true that some people, having
the boarding instinct and being fearful
OF the continuing value of their stocks
and bonds and other investments, have
turned to diamonds as representing an
investment not likely 10 decline. This
has meant, therefore, that diamond
trading has been largely in old rather
than new diamonds. The jewellers who
have been commissioned to sell stones
for their owners are turning them over
to the hoarders because many repre-
sent great bargains. The inevitable re-
suit OF such situation Is the stoppage
Of the demand for fresh stones.
Unusual Situation Obtains.
Even though the new output be held
down in accordance with the De Beers
Syndicate arrangement, there has been
an insufficient fresh demand to absorb
the production. Many banks are
loaded up with diamonds, having made
loans to the operators against the Sc
curity of their stock. In stressful times
banks frequently find 1t necessary to
call loans. There is always the danger
that good many banks may unload
their diamonds to put themselves in
funds, the borrowers being unable to
pay their loans because Of inability to
make diamond sales In sufficient
volume.
1t will be seen that there are several
adverse elements all bearing down on
the diamond. If, on top of this situa-
ton, the Kimberly mines close down