CARTELS: Back In the Pack

Ever since he quit teaching geology at Canada’s McGill University in 1933, John Thorburn Williamson has been a lone wolf. He went to Africa, and for seven years despite jeers at his “crazy” search, grubbed his way around the veldt in search of diamonds. But when he found them, the jeers stopped—especially those from the diamond cartel run by Sir Ernest Oppenheimer, head of the famed De Beers syndicate. Oppenheimer & friends-were scared. Williamson had discovered one of the world’s richest mines and could easily crack the cartel wide open. He turned down offers from the cartel, and started selling diamonds on his own. But, in 1947, when the diamond market hit the skids, Williamson joined the cartel.

Two years ago, dissatisfied with his 10% cut of the market, Williamson had a change of heart. He took his diamonds off the market, threatened to sell them independently when his contract with the cartel expired in 1951. Boasted he: “I could sell my diamonds at 10% under the syndicate’s fixed price and still make a profit.” Williamson started installing new machinery to double output. Said he: “I’ve only been scraping the surface with bulldozers so far.”

Last April, Williamson tried to sell 12,000 carats on the open market. The trade said he had only one big offer. The trouble was that Williamson wanted to auction his diamonds, instead of setting fixed prices as the cartel does. Furthermore, dealers were afraid that the cartel might freeze them out entirely if they bought Williamson’s stones.

Nevertheless, knowing that Williamson’s increase in production to an estimated $24 million a year (12% of all diamond sales) would be a real threat, the cartelists thought it time to get the lone wolf back into the pack. Another rumored reason: the cartel had been pouring capital into gold mines, and might well have been short of cash to support the diamond market in a price break. Sir Ernest Oppenheimer’s son Harry flew to Williamson’s mine in Tanganyika to lure him back. But Williamson, a diamond-hard bargainer, could not be cracked. So tough old Sir Ernest himself took charge. In Johannesburg last week, Sir Ernest announced the result: Williamson had agreed to start selling through the cartel again. The terms of the new agreement were secret, but it was a good bet that Williamson had come out all right.