DIAMOND SLUMP

Hokitika Guardian, 24 October 1933, Page 7

DIAMOND SLUMP

VAULTS NOW FULL OF GEMS £15,000,000 WORTH IN LONDON LONDON, October 12. Diamonds to the value of nearly £15,000,000 lie in the strong rooms of London’s diamond dealers, and nobody has any money to buy them. This '.s the astonishing revelation which one of the leading diamond merchants of the world made to the Sunday Chronicle recently.

“The bottom has simply fallen out of the market.” the merchant said. “The world depression his us hard enough when it first happened. People were panicked into not buying precious stones. But the original depression is nothing to t”e cyclone that has hit us now. Ninety per cent of the world’s dealings in diamonds is done in London and ninety per cent of the London dealers don’t know where their next deal is coming from. “Never in the history of the trade have the diamond dealers of London been so rich—on paper. And never have they been, so poor. In an average good year we sell something like £12,090,000 of stones in various branches of the trade. This year we shall bo lucky if we dispose of £1,000,000 worth.”

The poor diamond merchant has wealth in his vaults which would make an oriental potentate pale with envy, and he simply does not know how to realise on it.

'iFhis is how another distinguished authority explains/ the 'extiraotrdinary anomaly:—“lt is the case of a world monopoly, built up by years of untiring labour and astute management, discovering that the demand upon which it existed disappeared almost in a night. .Generations ago diamonds were found only in fabulously wealthy mines of Indian princes or in South America. Then someone made the discovery that the precious stones were lying in enormous profusion in the otherwise barren lands round Kimberley and the Rand.

“So rich were the deposits that the! ■African mine owners wore able to dominate the world’s market. Fantastic fortunes were made by the pioneers ,in the rush. The African mines were able not only to dominate the market, but in collaboration with the South African {Government were able to fix the price at which the stones were sold. Production was limited and prices fixed just as the central banks of. the world stabilised the price of gold. “People indeed bought diamonds as they might buy gold or land. They regarded the stones as a symbol of international value. The world depression changed all that; people . in. Britain ceased to buy diamonds in large quantities. soon after the war; now even the Americans no longer say it with diamonds. They cannot afford it. And -—wllat. is worse from the poiiit of view of the diamond dealer—they ixo longer look upon the stones as things of intrinsic value,” The writer was shown a great stone. It was a lovely flashing thing, The diamond merchant to whom it belongs bought it- five years ago for £SOOO. He would be lucky, he said, to get £SOO for it now. The present slump is the worst the dealers have ever known.

The great companies in Johannesburg are. still endeavouring to maintain the world’s prices. They have set asida millions of pounds to a fund which is called the diamond stabil'iment fund. The dealers are being advised to hang on to their stocks and not to part with them at “knock-out” prices.