I move—

I just want to ask the Minister whether he has thought of the case of the Administrator of South-West Africa, and that he shall have the same privileges as our trade commissioners.

In reply to that I may say that he has the privileges by virtue of the Act of 1926. He does not need any qualifications to be registered, because he is not disqualified through absence in South-West.

I should like to ask the Minister whether he is now removing the omission which occurred apparently in the 1926 Act. I had removed from the place where I had lived for 10 or 12 years, and, because I was not there at the time of the framing of the roll, I could not be registered. Will that be obviated by the provision the Minister is now making?

I don’t know what you mean.

The new roll was framed in January, 1927 after the 1926 Act had come into force. On the 15th of January I had been three months in my new residence, but I had removed from my previous residence, where I had lived for 12 years. In consequence, I could not get on to either roll.

This Bill is for that very purpose, to meet that case.

Amendment put and agreed to.

Clause, as amended, put and agreed to.

New clause to follow Clause 4,

I move—

5. Section 45 of the Electoral Act, 1918. Amendment Act, 1926, is hereby repealed.

The hon. member’s amendment is out of order. It is outside the scope of the Bill. It is not relevant to the subject at all.

I would like to shortly engage the attention of the committee. I do not think you have heard the argument I am about to place before the committee showing this does fall within the provisions of the Bill.

The Bill we are considering is entitled to amend further the Electoral Act of 1918. In the 1926 Act certain modifications were made of the 1918 Act, which is called the principal Act.

I do not think there is any use in the hon. member bringing forward this argument at all. It is not relevant to the subject matter of the Bill.

I have the right to submit before you give your final ruling that you should give me the opportunity of placing my case before you.

I have given my final ruling.

Is it fair before having heard what I have to urge to give a ruling against me?

I have studied this question.

But you have not heard my argument.

I do not want to hear the hon. member’s argument.

I am very Sorry you do not wish to hear me. Supposing for one moment you are sitting as judge of a court of inquiry, and I am pleading the case of somebody, surely before you decide you should hear my case.

The hon. member is now questioning my ruling.

No, I am not. I would be the last man in the world to do so, but I submit I ought to be entitled in all reason to put my case. If you rule I should not proceed, I will stop.

I think it will be better if the hon. member does not go on.

Remaining clauses and title having been agreed to,

House Resumed:

Bill reported with an amendment which was considered and agreed to.

New clause to follow Clause 4.

In view of the fact that I did not object to more than one stage of this Bill being taken on one day, I think I should be afforded an opportunity of putting before you, Mr. Speaker, a matter in relation to the amendment I proposed to move in committee.

The hon. member cannot discuss it at the present stage, but may refer to it on the third reading.

I do not want to discuss it. I have given notice of the amendment, and I wish to move it now. In view of the fact that I did not object to more than one stage of the Bill being taken on one day, I have been deprived of the opportunity of tabling this amendment for the report stage. The Deputy-Chairman ruled my amendment out of order, and I do not wish to argue the attitude adopted by him; but it is somewhat rough when one wishes to put One’s views that one is told one must not do so.

I think if the amendment is in order, the hon. member ought to have an opportunity to move it now, seeing he has had no opportunity of giving notice. What is the amendment?

I move—

5. Section 45 of the Electoral Act, 1918, Amendment Act, 1926, is hereby repealed.

The Act of 1918 was amended by Act 11 of 1926. I lay stress on the word “further”. If the Bill we are considering is to amend further the original Act, I contend I have a right, subject to your ruling, to move any amendment to the principal Act of 1918. To enable me to do that, I tabled a very simple little amendment which may be far-reaching. I briefly outlined my arguments the other day, and I do not wish to take up the time of the House at this stage, as hon. members are desirous of reaching their homes at an early stage.

I think we must first decide the question whether this amendment is in order.

In order to place you, sir, in possession of my views on the subject to entitle me to move the amendment, I wish to say that under Section 45 of the Act of 1926, Section 91 of the original Act was enlarged. Section 91 [read] deals with the placing of the names of the printer and publisher at the foot of certain articles. The Minister made it obligatory by the said Section 45 that all notices, letters, articles and so forth, published in connection with an election or intended to affect any election, shall bear at the foot thereof the full name and address of the person by whom such newspaper article was written or produced. The purport of my amendment is to delete the provision in the Act of 1926 which enlarged the provisions of the Act of 1918. I referred the other day to a prosecution with regard to a very minor offence, an editor failed to observe the conditions laid down in section 45. In addition to that, I dare say many hon. members have watched the amendment of the Act, and find that very stupid things occur. Perhaps a person speaks in Johannesburg, and the editor has to put his name to the report of it in Cape Town. The liberty of the press and the public all over has been considerably cramped by this provision, which I think is very stupid.

The point raised by the hon. member for Von Brandis has, I think,been decided by me on several previous occasions. In connection with the Iron and Steel Bill, on the 4th of April last year, for instance, I pointed out that it was the contents of the Bill, as read a second time, and not the title that governs relevancy. In the same session on the Magistrates’ Courts Act, 1917, Amendment Bill, I held that, in “amending” Bills, it is not competent to move amendments which have nothing to do with the contents of the Bill as agreed to at the second reading. The honourable member now wishes to move an amendment to section 45 of the principal Act, which deals with advertisements in newspapers—a subject which is not dealt with in this Bill at all. Under these circumstances, I must rule it is not competent to move the amendment to this Bill. It is, of course, competent for the hon. member to introduce a separate Bill to effect the object he has in view, and he will no doubt remember that quite recently when the hon. Minister of Labour wished to move an amendment to the Factories Act, which was not relevant to the subject matter of the amending Bill then before the House, he brought up a separate Bill

Bill, as amended, adopted and read a third time.

I wish to return to a point which I raised when the matter came before the House in the first instance in reference to the meaning of Clause 11. It was suggested, on that occasion, that the select committee might investigate the precise significance of this, clause. Attached to the committee’s report is the following recommendation—

That was an important recommendation, and I take it, was arrived at after careful consideration. It seems to me from a perusal of the minutes of the committee, that they felt exceedingly doubtful as to the course proposed by the Government, but at the same time they felt it was a matter proper to be dealt with by the law advisers to the Crown. One would have imagined, when this report came back to the House, and when the Minister moved that the agreement be ratified, we would have learned from him something of what the Government proposed to do regarding that recommendation.

I dealt with it.

As far as I could follow the Minister he was silent on the point.

You are wrong there.

I think I am right. The Minister made not only no reference to this recommendation, but we are left entirely in the dark as to what the Government proposes to do in reference to the committee’s suggestion. I propose to make two points with regard to Clause 11. I propose to endeavour to show that the House, in being asked to ratify the agreement with Clause 11 in it, is being asked to take a step in direct violation of the existing regulations promulgated under the Act of 1919. Secondly, I propose to show that the Government in an amendment which one can gather, and do no more than gather, is in contemplation, proposes to open up in the legislation at present existing with reference to the imposition of an export duty on diamonds, a breach which involves the surrender of revenue which at the present moment is quite outside the knowledge or contemplation of the House. Dealing wih Clause 11, may I say this is no mere lawyer’s debating point. It is not a matter which can be swept aside by the Minister as one upon which the Government can take responsibility for acting with due advice, because if it is invalid under the law as it stands at present, it is the duty of the House to deal with the invalidity, and for the Government if we are right in our view to recognize it. May I for a moment run over the existing legislation before I deal with the effect of Clause 11. In order to understand the point I am about to make, may I say shortly that Clause 11 proposes to allow these concessionaires the right to export diamonds under one carat in weight which have been partly manufactured. The definition of diamonds to be affected by this clause is perfectly clear. It is to apply to diamonds under one carat in weight which have been subjected by the cutters to one or more of the operations of cleaving or sawing or cutting or polishing, and there is a further qualification that the Minister must be satisfied that they cannot be economically completed within the Union. But the clause will have this effect, that it proposes in respect of diamonds of one carat or less in weight which have been subjected to one or more of those operations that they can be exported, and as I shall show presently, free from payment of export duty. What is a partly manufactured diamond, because that is what the clause refers to? So far as the existing law is concerned it is simply this. After 1917 an export duty was imposed on rough or uncut diamonds. In 1919 in order to promote the establishment in South Africa of diamond cutting factories, this House introduced an exemption from that duty in favour of diamonds that might be completely cut within the Union. Then by section 4 of the Act it was laid down in order to prevent an obvious opportunity for evasion of that duty, that no licensed diamond cutter should export partly manufactured diamonds. By Clause 6 (f) it was provided that it should be competent for the Governor-General by regulation to define what is a partly manufactured diamond. I have the regulations before me, and the partly manufactured diamond is defined in terms which are perfectly explicit. A partly manufactured diamond is one which has been subjected to one or more of the operations of cleaving, sawing or cutting or polishing, but not to an extent sufficient for it to be regarded as a polished diamond. In other words, coming back to Clause 11 which I read, and comparing it with this definition, it will be seen that the class of stone referred to there is a partly manufactured stone within the meaning of the present definition. I do not think that anyone can seriously question that, but I make the point that this is the admitted departmental construction of the existing position. Before coming to the evidence of the acting Secretary for Mines and Industries, I would like to say what is the evidence of Mr. Arend Brink who, I think, will be accepted on both sides of the House as a competent and disinterested expert witness on any question of this kind.

Keep to your own side of the House.

May I turn to his evidence just to make clear the point that the agreement, as it stands, is ultra vires. On page 55, question and answer 2404, we find—

When Mr. Nixon was giving evidence the question was put to him as to how far the Government could justify this proposed export under Clause 11 of partly manufactured diamonds. On page 7, in question 2031, he daelt with the matter. He was asked—

The answer was—

The regulations that have been issued are those that I read issued by Government Notice No. 423 of 1919—

So we have this position, that the House is deliberately invited by the Government to approve of a contract which contains a clause which is ultra vires, and which the Mines Department knows to be ultra vires, but which it says it is prepared to validate at a later date by means of certain regulations. I venture to say that is not a proper procedure, not a procedure which is fair to this House, and it is necessary for us, when we are asked to do something which is contrary to the law, to indicate quite clearly that we cannot approve of it. Where are those regulations, and what will their ultimate form be? How does this House know, in approving of this agreement in anticipation of certain regulations, that it may not be setting its seal on something which eventually may prove to be wholly irregular? I must say I think that is a course of conduct which is apt to give rise to very great difficulty, and where you are making a contract with private individuals and asking this House to set its sanction on a contract knowing at the time that it is admittedly irregular, the House is creating a precedent which I, for my part, think is very unwholesome. In the answer that was given by Mr. Nixon, which I have just read, he stated that it was proposed to amend these regulations, and in the course of the inquiry by the Public Accounts Committee, the legal advice which had been given to the Government by one of its law advisers was put in and, although the House is not in possession of this, I have been able to obtain it, and I find that on the 22nd June, 1927, an opinion was obtained which possibly, might be criticized from a purely legal point, but which does indicate what is the amendment that it is proposed to make in these regulations at some future date, and how it is proposed by the Government to grant to these concessionaires a particular facility which at the present moment it cannot grant, and should not grant, because it is contrary to the regulations. This law adviser pointed out what I have already said, namely, that what the Government proposed to do they could not do under the existing regulations.

Who is that?

One of the Crown law advisers. He pointed out that if it was desired to allow partly manufactured diamonds to be exported on these favourable terms, the Government could, by definition, say that a partly manufactured diamond was a completely polished diamond. In order to make this contract the Government is driven to the length of saying that, although a completely polished diamond which is classified here, and which is capable of being exported free from payment of the 10 per cent. duty, though that is something that is clearly recognizable, it is now proposed that where the Minister is of opinion that a diamond under one carat in weight cannot be economically completed in the Union it shall be capable of being exported, and shall be entitled to leave this country free from the imposition of that duty of 10 per tent. Clause 11. when one reads it in the light of these circumstances, goes to show that the concession which these concessionaires are to have is part of the price of establishing this diamond cutting industry. I would like to show what Clause 11 now means having regard to the law as it reads. It will then mean that the Minister may allow diamonds under one carat in weight, Which have been subjected to one or more of the operations of cleaving, sawing, cutting or polishing, and which, in the opinion of the Minister, cannot be economically completed within the Union, to be exported free from duty. The authority to procure the requisite exemption from the Act of 1919, which prohibits entirely the export of partly manufactured diamonds, is to be secured by means of regulation. So far as these cutters are concerned, they have contracted in the agreement that they will pay a royalty. It is described in the clause as an “amount in lieu of duty”. They have agreed with the Government that if they secure that exemption they will pay an amount in lieu of duty, and the first question I think the House would ask itself is this—if it is now proposed to confer upon these gentlemen by means of an artificial definition, which really almost goes the length of calling black white, if it is proposed to give them this special concession, what is that going to cost the country? That question was gone into by the committee, and it will be found on page 23 of the report that Mr. Nixon gave the committee, an assurance of what the exemption was going to cost the country. He said (Question No. 2177) that this remission of part of the duty over a period of five years would amount to approximately£22,250. Mr. Brink dealt with it in a different form. He pointed out what were the latent implications of the clause, and said (Question 2461. p. 62)—

What I complain of, and I hope the Minister will deal with this point, is that the Public Accounts Committee was given to understand that the maximum cost of establishing this industry, as Mr. Nixon put it, was £60,000 for the five years (p. 22). The committee was givenn to understand that that was the cost of bringing out these workmen, etc., and allowing this particular remission of duty. But what has been withheld from the committee of, alternatively, what has not been brought to its notice, is that when this new regulation is promulgated, which lays down that all partly-manufactured diamonds under one carat in weight which cannot be economically completed within the Union, can be exported therefrom free of duty,every diamond cutter, present of future—

Not all diamonds. What about Section 12?

That only applies to the cutters. My hon. friend has put his finger on the very point. That is exactly what the Government told the committee. They said: “Look at Clause 12. The Government can impose restrictions. This thing cannot go too far”. When the Government by regulation lay down that diamonds of this particular weight can be exported from the Union free from the 10 per cent. duty, they are making a breach in the dyke through which every other cutter, present or future, will be entitled to claim the benefit of the regulation, and to demand that their diamonds shall be allowed to go out on an interpretation of this regulation identical with the interpretation to be applied to these concessionaires.

What is wrong with that?

My point is this—does the House know what it is doing? Has the Government been entirely frank in the matter? If this regulation is promulgated, if it is done on the lines suggested by the Government law adviser, then diamond cutters in South Africa, present or future, will be entitled to take advantage of it. May I just point out a curious result? Under the contract, the concessionaires have agreed to pay a royalty of 2½ per cent., rising after the third year to 5 per cent. This has no relation at all to the Act of 1927. These particular contractors have assumed the burden of a royalty to the Government in lieu of duty which, of course, other cutters will not have to pay. I do not know whether the Minister made it quite clear that this was a burden to be laid upon them which would not be shared by other diamond cutters, who take advantage of it. We have this remarkable result, that the proposal of the Government is one under which there will be a complete remission of the 10 per cent. export duty upon all diamonds under one carat in weight, which have had some sort of handling in a diamond cutting factory, and are then sent out of the Union because they cannot be completed here. It might be put to me, as it was put by the hon. member over there, what is wrong with that? What effect will that have? I agree that the effect may be unlimited. I agree the Public Accounts Committee were never told of the effect from a revenue point of view, but before the House considers a policy which is possibly going to substantially affect our revenue, at least the facts and information should have been put before the House. So far from the amount involved being £22,500, spread over five years, it is quite clear that it is going to be a very much larger sum. Mr. Brink pointed out this, that all diamonds under one carat in weight, after they are cleaved or cut, cannot be economically completed within the Union, and it practically means the export of all diamonds under one carat in weight that have undergone some preliminary operation in the Union.

What did he estimate the loss at?

That question was not put to him.

Look at 2315.

I hope the chairman of the select committee, when he rises to address the House, will explain why he did not inform the select committee of the actual meaning of this Clause 11. In the meantime, I will show what Mr. Brink does say in answer to a question put to him by the chairman himself. On Question 2487, this question was put to him [question read] and he said this—

If that is the opinion of a leading diamond expert in South Africa, I say, therefore, that this regulation, which the Government proposes to promulgate, will practically be applicable to all diamonds under one carat in weight, because, as he says, they cannot be economically completed within the Union.

They can be partly completed.

Part completion is a matter over which there can be no practical control.

That is only for five years.

But what about the other cutters? The other cutters are not subject to any five years’ limitation, and if this does only last for five years, what is the total sum we are losing on this 10 per cent. remission? Mr. Brink says definitely that these diamonds cannot be economically completed in South Africa, and I understand from the evidence that they are not even actually completed in Antwerp or Amsterdam, but that they go to Germany for certain processes. About that I am not clear, but I do take his evidence, which is conclusive on this point, and I prefer it to the opinion of the hon. member for Delarey (Mr. van Hees). On the question of how far this may be practicable, Mr. Brink came back to it again on page 68, and he says this in answer to Question 2526—

How far does the Minister propose to determine whether or not a stone can be economically completed? Mr. Brink says—

I think it must be quite obvious that it will be an impossible thing for the Minister to provide such a system of inspection where stones under one carat are being cut and determine in each case whether each stone can or cannot be economically completed within the Union. He will have to lay down, as a broad and general rule, that stones under one carat, where anything at all has been done to them, cannot be completed economically in the Union. It seems to me he will be compelled to allow all these stones to leave the country. How can an expert stand over each stone while it is in course of cutting? I do not see how it can be done. This very question was put to the responsible head of the Mines Department. It was put to him, I think, by the hon. member for Newlands (Mr. Stuttaford), and in reply he said “What form of supervision would this take? You cannot have a man supervising each diamond.” [Quoted from evidence.] So the official head of the department indicates quite clearly that the detailed inspection of every stone, which the hon. member indicates might be possible, will not be practicable. I am quoting this to show the extent of the concession which the Government proposes to make, and it is rather interesting to quote the evidence of Mr. Korbf himself, who is under no illusion as to the value of this concession, indeed, he considers it a most vital point of the contract. One wonders whether he has come here out of sheer goodness of heart and to help these apprentices, or whether he comes out having his eye on the main chance, and hoping to reap substantial benefits? Let us look at what he said himself on this question in order to estimate what the total quantity may be, because under the contract we are dealing with minimum quantities. It was put to him by the hon. member for Newlands (Mr. Stuttaford) (page 172, question 3405)—

To this he (Korbf) replied—

And then on page 177, paragraph 2, he dealt again with the need for this privilege. He had a little memorandum prepared before he entered the witness box, and he said—

Now we therefore know that, as far as these cutters are concerned, if they work no more than the minimum quantity specified in the agreement, there will be a remission of duty, spread over a period of five years, of something like £22,500, and we are entirely in the dark as to amount of duty to be remitted on diamonds exported by other cutters. We do know that according to the figures he gave to the committee the turnover of Mr. Vermey is £100,000 per annum, and there are seven or eight other cutters whose output, I imagine, would be equivalent to that. I only want the House to understand what the price is it is to pay to these particular persons, to establish their factory, and contrast that with the fact that if we allow the other cutters to go on in the normal course we would not have to make this provision. I think, before we commit ourselves to this principle of the partial abolition of this duty, far more careful enquiry should be made, because once this regulation is promulgated and you have a rush in the export of diamonds under one carat in weight, the consequences may be very serious, and there is no guarantee that you are going by way of compensation to secure this large measure of employment. I ask the Minister of Labour to tell us whether, at the present moment, he is not committing, the House to an unlimited remission or reduction of this duty, whether he has consulted the Minister of Finance, and the Government is satisfied that that is a proper, and not an excessive, price to pay? May I point out two other defects of this contract? I anticipate, when this regulation is promulgated, it will be bound to stimulate the export of small diamonds in a partly manufactured state, and they will have a sale in the markets overseas—in competition with our own rough goods which will pay the full 10 per cent. duty. [Time limit extended.] If you are going to have two classes of export, the producers, both alluvial and mines, of the rough goods, will have to submit to a reduction of their prices, because they must compete with the partly manufactured stones which do not pay this duty. I think we should realise what the policy of the Government will lead to, and I particularly hope the alluvial producers will realize that the Minister of Labour, in order to start this particular industry, proposes to reduce the value they get for their products in the markets of the world. I do not think that has been sufficiently investigated, and not one word was said about this aspect before the Public Accounts Committee. The Government did not see fit to place this issue before it. You are extracting from the pockets of the diggers themselves a contribution to the establishment of this industry. Surely you cannot say, because some money is to be spent in wages, that that compensates these persons for the lower prices that will be obtained. May I come to another aspect of the matter? We have heard a great deal about the advantages of establishing a diamond cutting industry in South Africa, and if one listened to the Minister of Labour and his references to the "national honour,” one would imagine that these gentlemen were saviours providentially sent to South Africa to assist our industries. I wonder if during the six years the negotiations have been carried on they have stopped two minutes to think about the interests of South Africa. They are here to make as much money as they possibly can for themselves. The Minister has used as an argument that they propose to train 500 apprentices. It is very interesting to read what is said on this point by men in the trade, and I wish to demonstrate that this contract may have a most damaging effect on the reputation of South African cut stones. In one respect the contract is rather extraordinary. The Minister proposes that 40 polishers and 10 other persons shall be brought out to this country and in the course of five years train 500 apprentices. Is diamond cutting such a simple business that you can turn out apprentices as fully qualified when in the first instance two apprentices will have to work under one polisher?

What about the Brighton diamond cutting factory?

The Brighton experiment was a failure.

The cutting was not a failure.

To train 100 apprentices in the first year there are to be only two cleavers, and cleaving is one of the most difficult branches of diamond cutting. This ratio of 100 apprentices to two cleavers does not sound very much like the ratio that the Minister of Labour insists on in his trade union. It is interesting to read the evidence of a practical cutter as to the competence of apprentices who would be turned out under such a system. If the country, after spending a large amount of money, finds that the men trained in South Africa are incompetent, so far from assisting diamond cutting in this country, we shall have done it a considerable injury. Mr. Vermey, in reply to a question, stated that it was an impossibility to train 500 apprentices with only 40 workmen. The chairman asked Mr. Vermey—

If the Government is prepared to allow you to sign a contract such as this providing for the employment of 500 apprentices, would you be willing to sign?

The witness replied—

I hope the Minister is not making a mistake. If we were really desirous of training 500 apprentices properly, the Government should have gone to greater pains in selecting the people to establish the factory. The two gentlemen to whom the contract is to be given have persistently pressed for the establishment of a diamond cutting factory by themselves, and the Minister, out of regard for what he calls the “national honour”, which apparently is in the keeping of the Labour Department, says Parliament must ratify the agreement. But we have no guarantee at all that the supervision will ensure that the apprentices will be properly trained. The inspector of apprentices will not be able to say whether the instruction is adequate, and it is significant that Mr. Vermey and Mr. J. B. van der Berg, who is a diamond cutter of 40 years’ experience, said there was the greatest doubt whether the contract would effect the purpose the Minister has in view. The latter says in effect that if the contract is signed, the present diamond cutters in South Africa will be “Boydelled”, in other words, “let down”, as were the settlers at Doornkop. He also says that if the factory is established, the existing factories will be put out of business. If that is so, the price we shall have to pay for this contract is altogether too high. One would have thought that the trade union principles the Minister professes so often would have induced him to safeguard the interests of the existing diamond cutting factories. I would like to summarize the points of criticism. First of all, this House is being asked, on the resolution to ratify the contract, to commit a manifest illegality. “If that were not sufficient reason for refusing our consent until the whole position has been made clear and proper legislation passed, as the committee recommended, or regulations properly promulgated and put on the table of the House, we find that all unknown so far as the Public Accounts Committee is concerned, the Minister proposes, to pass new regulations to open the floodgates through which the export of these smaller stones can he immensely stimulated at an unknown cost to the revenue, and with consequences which may be very serious to the actual producers of diamonds in this country. I move, as an amendment—

I second the amendment. Before dealing with the main question, I would like to reply to two points that were made by the hon. member for Vredefort (Mr. Munnik) and the hon. the Minister last night. The hon. member for Vredefort said the select committee had entirely exonerated Messrs. Rosenstrauch in regard to the case in the Supreme Court of Belgium. I do not think that is the correct way of putting it. The members of the committee regarded the charge as not proven. We really passed what you might call a Scotch verdict on the matter. To anyone who heard the evidence it was quite clear that we had not anything like all the facts before us which would enable us to come to a definite decision on the matter. We must keep this matter in its right perspective. The case at Antwerp was not the only point we have to consider. We also had the business references that our Government secured with regard to this firm, and, I think if any business man had read those references he would not have called them entirely satisfactory. The Amsterdam bankers advised the Government that the morality of this firm is variously estimated. That is rather a curious statement. It does not give one entire confidence in the firm. The Antwerp bankers suggest that if the matter is of any considerable importance reasonable prudence should be exercised. Now we have one of our own representatives, the kind of man we understand is going to become a charge d’affaires, our own man in Antwerp, writing to the commissioner for South Africa in Milan, saying he has gone into the matter and got information regarding this firm, and the information is rather ambiguous.

He said more than that.

In dealing with the whole matter in rather a lengthy letter, the whole of which I need not read to the House, our representative in Belgium writes—

Now I would suggest that those are not exactly credentials that would enable one to go ahead with a feeling of entire confidence. If the committee had understood that this firm would have a monopoly of diamond cutting, I do not think the committee would have come to the conclusion that they did. The committee only agreed to the acceptance of this agreement provided every other diamond cutter in the country should have exactly the same concessions so that there should be free competition and no monopoly. The Minister said that the offer made to the committee by the Diamond. Syndicate included the condition that the syndicate should have the monopolistic right of doing the diamond cutting. The entire opposite is the fact. If hon. members will refer to that evidence question 2906 and following questions [extract read] they will see that no monopoly of any kind was asked for by these people. In listening to the hon. the Minister introducing his motion, one would imagine he had not read the report of the select committee. The whole resolution of the committee accepting this agreement was based on one condition, and without that condition being present, the committee would never have agreed to the suggestion that the agreement should be ratified. That condition was that the other cutters should have exactly the same concessions.

Wouldn’t that open the flood gates?

The hon. member will have plenty of opportunity of speaking afterwards. I shall enjoy hearing him defend the erection of a diamond cutting monopoly.

Better that than the syndicate.

The essence of this arrangement—and that is why I support the amendment—is that before we enter into the agreement, necessary legislation must be brought in enabling all the other cutters to have these concessions. The Minister gave some qualified undertaking that later on they might look into the matter, or, if one of these cutters happened to come into his office, possibly he would not be thrown out of the door, and he might be listened to. I must say I am very doubtful about any undertaking by the present Government, and I would not give very much for the undertaking which was given last night, because it was not at all unequivocal. It was not a definite undertaking by the Minister, on behalf of his Government, that they would bring in at once the necessary legislation, and that is the only statement that would meet the views on this side of the House. As the Government has decided to force through, as I take it they have, this diamond cutting monopoly, I would say at once that there was no evidence in the select committee showing any necessity whatever for a diamond cutting monopoly. There are seven or eight diamond cutters in the Union, they are progressing, and the diamond cutting industry is expanding. There are no conditions evidenced which require any form of monopoly, and if the Government had given the concessions, which they now propose to give to these gentlemen from Belgium, by way of legislative amendment to the Diamond Bills, that alone would have stimulated the industry, and by this system you would have had just as big an industry as you will get in five years if you enter into this agreement. The men who are working to-day are quite as capable and efficient as the men you are supposed to give the agreement to, and they would continue to build up their business and, in the ordinary normal way, you would get a healthy industry, instead of a monopolistic industry. That is the clear result of the evidence before the committee. Clause 11, as the hon. member for Cape Town (Gardens) (Mr. Coulter) has said, is the very essence of this agreement. To put it clearly, that is where the money is, and, as far as I can see—I go a little bit further possibly than the hon. member in his suggestion that if you try to alter the law by regulation, all the other cutters will be able to get their diamonds under one carat out of this country free of duty—on the last paragraph of Clause 11 these people who will have to pay this per cent. and 5 per cent. may have a case against the Government for fraud, because it is clearly stated here that if the Government amend any Act reducing the duty, then these people should have the advantage of it, and the Minister may then turn round and say: “We are not going to amend the Act; we are going to do it by regulation and, having done it by regulation, we can, therefore, slide out of our moral obligations under the last paragraph of Clause 11”.

You don’t believe the Government would do that?

No, I hope not. What I want to point out to the hon. member is that if the Government carry out the spirit of this agreement, and not the exact words of it, then the whole of the output of diamonds under one carat will go out free of duty and the consequent loss to the Treasury will be even greater than the hon. member for Gardens has pointed out.

No, it is a sliding scale, 50 per cent, coming down to 10 per cent.

I bring forward one point that the hon. member for Gardens has not dealt with, and that is the value of this agreement, because, as has been pointed out, these gentlemen are not here to take the air, they are here to make money, and I would just like the House to follow the evidence of Messrs. Rosenstrauch on that point as to the extreme value and the money value it is to them to get this agreement. If hon. members refer to question 3184, they will see that Rosenstrauch Bros have been in existence for 40 or 50 years in Belgium. In question 3136—it is all Mr. Rosenstrauch’s own evidence—hon. members will see that they have been known as the biggest cutters in Antwerp. They are an old-established firm. In questions 3135 and 3144 they point out that they have employed over 1,000 workmen. It is quite evident, therefore, that they are a very considerable firm. That is the statement of the hon. member for Vredefort (Mr. Munnik). According to him, we were extremely lucky to get this star firm from Antwerp to come here and do our diamond cutting. Having heard the evidence of Mr. Rosenstrauch, I, naturally, thought it was really very good of him to come out here and see us out of our diamond cutting troubles. I asked him (question 3374)—

“Yes, exactly”, was the answer.

Yes, no one thought otherwise.

Here is a firm who, according to their own statements, are a very considerable firm in Belgium, and a firm of old standing, having been there over half a century, a firm who have employed over 1,000 workmen, and yet they consider they can make more profit here on half the number of people than they can in Belgium, and it is worth their while to give up their great certainty in Belgium in order to chance what they expect to get in this country. I think that gives you, more than any other point, what this agreement is worth to Messrs. Rosenstrauch Bros. That gives you an idea of how much money there is in this for Rosenstrauch Bros. If you want any other evidence, these gentlemen, according to themselves, have been hanging round here since June, 1923—for five solid years—in order to get it. If it is worth while for people who say they are one of the biggest diamond cutting firms in Antwerp to hover round South Africa for five years in order to get an agreement, there must be a great deal of money in it—and the money is in Clause 11, the big bulk of it.

What would you have said if they had said they would get less here than there?

I did not imagine, for a moment, that I was going to get any other answer. These gentlemen are very shrewd gentlemen. They are not staying here for five years and giving up one of the best businesses in Antwerp in order to get nothing. They are going to do very well out of it. For these reasons I hope the amendment moved by the hon. member for Gardens (Mr. Coulter) will be accepted, because this agreement, as it stands, gives a monopoly. It gives very valuable concessions to foreigners at the expense of South Africans. That is a point that has to be stressed. These men have no interest in South Africa, and you are going to take away the livelihood of men who are living in South Africa. There is no reason to give this agreement. The concessions you give under this agreement, if given to other diamond cutters, will equally well establish your industry, and the last, but not the least, consideration is that if you give this agreement, and these valuable concessions, and you do not give it to the others, you are going to ruin men who deserve well of the country.

Apparently the one and the great question to the hon. members for Newlands (Mr. Stuttaford), Cape Town (Central) (Mr. Jagger) and Cape Town (Gardens) (Mr. Coulter), now is whether Mr. Rosenstrauch and Korbf are out to do a big business and get much profit. To us, as representatives of the South African people, the great question is, I think, what benefit South Africa will derive from it, and the immediate answer is that under the agreement South Africa will have its own diamond cutting industry or industries on a large scale so that the work which is done in Europe will be brought here, at any rate to a large extent, and that in the first place 500 South African youths will be trained as first-class tradesmen to cut the stones that South Africa produces here. I am glad that there was one exception on the opposite side, namely the hon. member for Gardens, who mentioned a point in connection with the pupils. He asked at the end of his speech if it would go well with the pupils or not, in other words, whether they would get a good training. I think in the long run it is a great question with us whether, for the expenditure of £50,000 or £60,000 we shall get in exchange a thorough training for our boys. Otherwise the agreement will be of no use, and may be a hindrance instead of a benefit, for the simple reason that, if the boys are not trained to be first-class tradesmen, South Africa will get a bad name as a diamond cutting country, and will not be able to sell its diamonds overseas. I should like, however, to refer the hon. member to a few points in the contract which he has apparently overlooked. The contract which was signed in September, 1927, was altered, and the alterations just deal with points which are important in this connection. The hon. member will see that at the start in Clause I of the agreement, the following words have been added, viz.—

That means that, even after the expiration of the contract, the work must be continued with the highest efficiency and skill, but the addition in Clause 5 is more important still, and the hon. member has apparently not noticed it. There is added to the clause—

The Minister has therefore gone further in the new contract, and laid down that, if good workmen are brought out from Europe, and they train pupils, they will get the bonus which is paid for such work in Europe. I think that is a sound provision, because if good tradesmen train up their pupils into good tradesmen, they in that way create competitors, and the bonus must therefore be given to the workmen who do the training. I am astonished that the hon. member for Gardens apparently did not see those important points. What, however, I attach particular importance to, is that the hon. members for Cape Town (Central), Newlands, and even Gardens were quite contradictory in their arguments on the contract. I must say that the speech of the hon. member for Cape Town (Central) (Mr. Jagger) made a considerable impression on me, and that I thought that there was a strong point in his argument, namely, that the existing diamond cutting industries ought not to be less favourably treated. According to my information there are 40 workmen in South Africa who are actually experts, and seven masters, and they have a further 30 pupils, in all 77 persons. I agree that they must be taken account of, and I therefore sympathised with the plea of the hon. member that existing industries in South Africa, or industries that may be established, should also immediately have the benefits which, according to the contract, are being granted to the new industry. That great point of the hon. member which was his reason for voting against the agreement has, however, been completely upset by the hon. member for Cape Town (Gardens). The hon. member for Cape Town (Central) himself was not quite consistent when he said that he was going to vote against it, because the select committee, of which he was a member, never said that it must occur simultaneously, never recommended that, together with the concession to Rosenstrauch and Korbf, those concessions must be granted to existing or future diamond cutting industries. The argument of the hon. member was therefore very weak, but it was completely upset by the hon. member for Cape Town (Gardens) who, with legal authority, said that under Clause 11 in the case of diamonds of less than 1 carat, the present diamond cutters get the same privileges, because the small diamonds, even with a little cutting can be exported, not only upon payment of per cent. tax but free. the hon. member for Gardens said in his amendment that this contract ought not to be approved, because the same privileges were not being given to other cutters, but five minutes before, he said that under Clause 11 the privileges will operate immediately in favour of existing diamond cutters. I cannot understand the hon. member. The hon. members for Newlands and Cape Town (Central) could, as members of the select committee, examine all the documents and in the joint report which they made the approval of the agreement is recommended, in other words the report says that the slander against the contractors was false. Without dealing with a single new point they come to-day, and take up a different attitude. When was the hon. member for Newlands mixed up, when he signed the report or now? I do not know whether there is another voice which is not heard here, if an echo of another voice has reached them, perhaps of a very powerful organisation, perhaps they heard “His Master's Voice.” I think that something very wrong has happened to the hon. members. Something must have happened, because even the hon. member for Gardens, who has a clear head and a strongly developed legal intelligence, was so confused with his papers that he could not see what was right, and a non-legal member from this side could immediately put him right. There you have the three leading members on the opposite side who now disapprove of the agreement, although two of them as members of the select committee approved of it a few days ago. We have so often heard of “His Master’s Voice” to the great detriment of south Africa, and perhaps now again there has been a slight echo. I must honestly admit that I have much sympathy with the existing cutters whom I know, and of whom I know that they have built up their business from the beginning, and I was quite prepared to move an amendment that we should give to some of those people at once what we are granting to other people under the contract, but after the hon. member for Gardens showed that they would in any case get the rights, I will heartily support the ratification of the contract as it is.

I rise as one of the members of the select committee which sat in connection with the evidence given on this agreement. Two conditions were laid down by the select committee in their report, and I want to emphasize them. The first point was that the Government take the necessary steps to extend to all other diamond cutters similar privileges; and the next one that the Government take steps to adjust the position by legislation.

Where is that laid down as a condition?

It is in the report.

It is a suggestion.

I felt it my duty to propose that condition, to protect existing diamond cutters in the Union who have been five years in this industry, and have been placed under great difficulties in getting established. The evidence before the committee goes to show that they have made a considerable success in the last year or two; the firm of Vermey is producing at the rate of about £100,000 cut diamonds a year. I do not think that this House should do anything to injure existing industries. The Pact Government has been rather prone to introduce legislation or to take steps to disregard the pioneers of industry in this country; they have done so in a former case and I opposed their action, and I feel bound to oppose their action again, because the country owes a debt of gratitude to the pioneers who have come here, established the industry and are making a success of it. They have a considerable number of apprentices. We all know that where a new industry is started it takes a long time before it is on a large scale. Industries are based on the sound foundations of experience. If the existing industries were given only the same opportunities as are given to these contractors, I would raise no objection at all, but we have no definite promise or undertaking—nothing tangible—to show that the same conditions will be extended to the existing industries.

They never asked for it.

I consider the existing industries should have exactly the same terms as are extended to these foreigners. The people who have established the diamond cutting factories have become South Africans and they deserve well of this country.

How does that fit in with the amendment of the hon. member for Cape Town (Gardens) (Mr. Coulter)?

Wait a bit. The next point is whether the contract is not ultra vires of the existing Diamond Cutting Acts. The hon. member for Cape Town (Gardens) put the case very clearly and apparently convinced the hon. member for Pretoria East (Mr. Giovanetti) that his contention is correct. It is true that the Secretary for Mines has admitted that it will be necessary to alter the regulations so as to make Clause 12 intra vires of the Act. But we are asked to ratify an agreement which, on the face of it, is illegal. If the Government thinks it has the necessary power under Section 6, then the question is whether in giving a definition of diamonds under one carat the Government will have the right to impose any taxation on the export of stones under one carat or to extend the same conditions to those diamond cutters who are not a party to the present agreement. If the existing regulation is amended the Government will not have the right to tax stones under one carat. As a consequence the country will lose a very large revenue, and this point was never clearly expressed before the select committee. I doubt whether the point could be covered by regulation. It is necessary in view of the further information now placed before the House that the agreement should be referred back to the select committee to ascertain what revenue the country is likely to lose.

Another McTaggart.

You will hear more about McTaggart later on. I think all on this side of the House are anxious to have a big diamond cutting industry established in this country.

I doubt it.

If we were not does the Minister think we should have voted for the report? We are only asking that the matter be put on a sound basis. If the Minister would give us a definite undertaking that existing factories woud receive the same consideration as Rosenstrauch and Korbf, then I think there would be no objection to the agreement. It is only fair that diamonds should be cut in South Africa, seeing that we produce 90 per cent. of the world’s output.

It has been extraordinarily interesting to hear the arguments of the hon. members for Newlands (Mr. Stuttaford) and Newcastle (Mr. Nel) and how they justify themselves in running away from their actions in select committee. All the questions raised this afternoon were gone into by the select committee. The hon. member for Newlands was perfectly satisfied that these people were satisfactory persons with whom the Government could enter into a contract, and he was in favour of signing the agreement subject to one condition. Nothing was said then about moral culpability or responsibility. Are we to examine the financial transactions of every firm with which the Government enters into a contract? It that is so, are we to examine the financial transactions from the beginning of the diamond buying syndicate? Are we satisfied that the personal honour of all members of the syndicate is beyond reproach?

They carry out their contracts.

The hon. member for Gardens—Cape Town (Gardens)—not Hatton Garden, as one would think by his speeches, told us that the particular condition attached to this agreement by the hon. member for Newlands (Mr. Stuttaford) is the very one that is going to be most detrimental in this country. I understand his argument to be that Clause 11 will mean a tremendous financial loss to the revenue, and yet that particular condition is the one which was imposed by his colleague, the hon. member for Newlands, who himself, as you will see on page 17 of the proceedings, moved that particular recommendation.

And the most important clause of the whole thing.

If we are going to allow these diamonds under one carat to be exported without payment of duty, the amount of duty collected is going to be less. There is also a great deal of force in the contention of the hon. member that, if this condition is extended, we shall lose more money. It is also obvious that if we cut diamonds at all in this country and export them, we are going to lose revenue. It is the inevitable price which we have to pay for the building up of a diamond cutting industry. To-day everybody admits that we can establish a diamond cutting industry. A few years ago diamond experts did not admit that. This is not an ideal arrangement. I would prefer to see the Government start a diamond cutting industry itself. I moved that on the select committee, but it was obvious that it was not possible to carry it. Still, this arrangement is better than nothing. I think every member of the general public will be satisfied that if no agreement is entered into all these fairy stories which have been told about the diamond buying syndicate’s intentions to build up a million pounds diamond cutting industry in this country will vanish into thin air. We have had these promises held out to us years ago. When there was a threat of the establishment in this country of a diamond cutting industry, up came De Beers and said “We will do it, leave it to us.”

Col. Sir DAVID HARRIS: That is absolutely incorrect. I defy you to bring evidence to prove it.

I can produce the report of the annual general meeting of De Beers where the statement was made. It is quoted in the evidence of the select committee.

That is absolutely wrong.

The same thing will happen again if this agreement is withdrawn. The million pounds will never materialize, not a single cutting mill will be established in Kimberley. The diamond cutting syndicate will have achieved its aim. I think several S.A.P. members have run away from their votes on the selectcommittee.

Not one of them has run away.

They are going to.

No. We decided we would stand by it if they carried out the conditions which we attached.

Is there any definite proof that they are not going to be given effect to?

You will have to alter the law.

The pressure of the big diamond interests is causing the South African party members to run away from their votes.

I am free to confess I have always taken not only a great interest in this matter of the diamond cutting industry, but I have taken a very favourable view of it. I have never been one of those who think, as we have been told for years that a considerable diamond cutting industry in South Africa is an economic impossibility. We have listened to that sort of argument for many years. I am sure that if the thing is properly done, a diamond cutting industry should have a very good chance here. The House may not know it, but in a large sense I am responsible for this legislation which is on our statute book, the law of 1919, in regard to the establishment of a cutting industry. I then happened to be in London, and the late Mr. Bernard Oppenheimer had made a start with a diamond cutting industry at Brighton, in which he was employing disabled soldiers. The enterprise at Brighton was in its initial stages, and as I knew Mr. Oppenheimer very well, he used often to discuss the matter with me, and I said: “Why not South Africa; why not Kimberley?” He said: “Well, if you have proper legislation in South Africa, if you will have a proper scheme, I am quite prepared to start diamond cutting on a large scale in South Africa”. It was in consequence of these conversations that took place in 1919 with Mr. Bernard Oppenheimer that I cabled to the Government here and subsequently got the support of Gen. Botha, who came to London, and in the session of 1919 this legislation was put through. At that time I thought there was the brightest chance of having an industry started on a fairly large scale at Kimberley through the offices of Mr. Bernard Oppenheimer. The legislation of 1919 miscarried for the simple reason that certain amendments were put into the Act which Mr. Bernard Oppenheimer thought made the enterprise very difficult. These amendments, moved without his knowledge, seemed to him to stand very much in the way of the undertaking, and in consequence, he decided not to come to South Africa, but to concentrate all his energy at Brighton. I felt very sorry at the time. It seemed to me we had missed a very great chance, but as events turned out subsequently, we were saved from a very great disaster, because Mr. Oppenheimer, after having spent a very large sum of money, I believe something between £1,000,000 and £2,000,000, the business at Brighton went to pieces, and a very serious state of affairs resulted. We could never have stood such a strain if the industry had been started on a very large scale in South Africa and had broken down, as it broke down at Brighton. The unemployed could be absorbed to some extent in England, but unemployed on that scale it is most difficult for us to absorb here. I mention this to make the House understand that I have always been one of those who thought that it is possible for us to have a large cutting industry. I do not agree with those who think that the day will come when we will cut all our diamonds in South Africa. To my mind the economic and financial difficulties in the way of such expansion are enormous, but we are justified in starting an industry which will cut quite a considerable proportion of our diamonds. The negotiations with one of the contractors, Mr. Korbf, started under the late Government and went on for some time, without any result. It was very difficult to come to a good contract, such a contract as we thought more or less water-tight, and which would protect the position in future, but we did our best at the time Now the Government come forward with this contract. They have concluded an arrangement with Messrs. Rosenstrauch and Korbf, and they ask the House now to ratify this agreement. Now I do not want to appear hostile. I would go a long distance, even if I am not quite satisfied in my own mind that everything is in order. We are busy with a good idea, we are busy with a great thing, and I would go a long way to take a favourable view of the situation in order to see the enterprise started in South Africa, but I must say that the present contract does place one in very considerable difficulties. In the first place, there are these difficulties which have been mentioned in the House and fairly fully discussed, about the contractors themselves. I am so very much afraid that the enterprise will not get the best start under these auspices. The Minister has already had a very sad experience in regard to Doornkop, and it was largely due to what is called the personal factor, the human factor. I am sure if Mr. Rosenberg had been the right man Doornkop need not have been the failure it has proved to be. Now we are starting with something very much bigger and more important than Doornkop. We are starting this enterprise, and I have the lurking fear in my mind that this may turn out another Doornkop. With the best will and intention, starting with the highest hopes, as the Minister no doubt is starting, this thing may end in the same way, not because the enterprise is bad in itself, not because diamond cutting is a wrong thing, but simply because it does not get the best chance with the men with whom we are dealing. I am somewhat upset by the evidence given here in this House, and I believe, in the select committee, about the gentlemen with whom we are allying ourselves. I have no knowledge of them whatever, and I do discount, to some extent, the statements which have been made partly by their opponents and partly by people who do not want to see diamond cutting started in South Africa, but even so, and making allowance for any bias in this matter, I must say I feel most doubtful about these gentlemen, and nothing that has been said in this House has convinced me that this enterprise is getting a sound and proper start with these gentlemen as cutters. That is, perhaps, my greatest difficulty. I am sure that diamond cutting can be made a success, but I am not sure that it is going to be a success with the start we are making now. My second difficulty is this—I have been very much impressed by the arguments of the hon. member for Cape Town (Gardens) (Mr. Coulter). The Minister, in moving the ratification of this contract, said that the Minister of Mines and Industries, who is a most competent lawyer, had satisfied himself about the legal position, that the Mines Department had also taken legal advice, the advice of the Crown lawyers, and they were also satisfied about the legal position. I was not quite satisfied. I do not pose to be a competent lawyer, but still, when one looks at this position, even with the little time we have at our disposal, with some care, and I have not been satisfied about the position, and the hon. member for Gardens has increased my fears. Looking at the evidence which we have before us, what is the legal position? It appears that, under the original Act of 1919, it is not possible for the Minister to give this rebate of export duty which he proposes to do under Clause 11, unless he makes use of a certain power of making regulations. The Act, as it stands, really forbids this rebate, and the whole duty will have to be charged. But the Minister seems, in that clause, to have that power, and I understand from the evidence given by Mr. Nixon in the select committee, that that is the instrument which they want to use departmentally in order to right the situation legally. Although it is not right now, the Crown lawyers are of opinion that it can be righted in that way under Clause 6 (f) by drawing up regulations. But yon see what the effect is, and there my hon. friend (Mr. Coulter) is quite right. As soon as that regulation is drawn under the Act of 1919, the whole duty of 10 per cent. goes. As soon as use is made of that means of escape the whole duty goes, and when that regulation is promulgated partly-cut stones under one carat in weight, in terms of this contract, will be exported from this country without paying any duty. You will have two difficulties in consequence. You will have the difficulty that our contractors here will have to pay a duty under their contract, which other cutters, who are not bound by contract, will not pay. Mr. Vermey and the other gentlemen will be able to export their partly-cut stones without paying any duty whatever, and our present cutters, Messrs. Rosenstrauch and Korbf, will, under the terms of their contract, have to pay 2½ per cent. up to 5 per cent. The way out, which the Act of 1919 allows, therefore, raises fresh difficulties. In the first place, it handicaps these contractors. It was never intended by the Government that these men should be placed under a penalty, but rather to help them. As a matter of fact, they will have to pay a duty which these other gentlemen do not pay, and not only is there this unforeseen result, but you have the further unforeseen result that all partly-cut stones under one carat in weight will go out of the country without paying any duty and to the loss of the Treasury. It is, therefore, clear that the legal position under Clause 11 can only be put right by opening new difficulties which were never contemplated before, and which might have very serious consequences, not only for the contractors here, but also for our revenue. It seems to me that the Government has not considered this position properly, that the legal difficulties remain, and, if the legal difficulties are removed, they can only be removed in a way which creates fresh difficulties of a more serious character. I am not satisfied at all. The Minister can take it from me that I think these two laws, the Act of 1919 and the Act of 1927, do not really help the Government to make a clause such as No. 11, and, if they do, they will find themselves in difficulties. I want to mention another difficulty, which, to my mind, is very serious. What if this enterprise miscarries? See what we are doing. We are making a contract with gentleman who, in a certain sense, are men of straw. I do not wish to use any invidious expressions about these gentlemen at all, but quite clearly they are not strong financial men, and they have not strong financial backing. They come to the Government and they ask the Government for this grant of £30,000. They are evidently men who will not weather a storm, and the difficulty that arises in my mind and the difficulty which we are bound to consider, which the Government is bound to consider, and we, too, because we are taking a great responsibility, as a country and as a House, the question is this—what is going to happen if this scheme miscarries? We are going to train a number of apprentices. They will go up to 500. At any time during the period while this number is being worked up, or even thereafter, this enterprise may go wrong. What is going to happen? The Minister will see we may have the Doornkop position repeated, but only on a much larger scale, and in a way which makes it impossible for the Government to come to the assistance of these men. The Doornkop men we can send back to the forest settlements, but where are we going to send these young South Africans? They will be trained as diamond cutters. They will not be very efficient men. What is going to be the result if this scheme goes wrong? These men will look to us. We will be told this is a Government scheme, a Government contract, and these hundreds of young men can look to the Government for protection. They can say: "Why did you enter into an agreement with Messrs. Rosenstrauch? We have been let down. You must see us through”, and we shall be in a very difficult position, as the Minister can understand.

Section 19 provides for that. It says we can take it over.

No. The Minister will understand that if this scheme fails, as a private enterprise, he will have to encounter very great difficulty in persuading Parliament that the country will have to undertake the job. The country will not look favourably at a State enterprise of diamond cutting, and still less will they undertake the job once it has proved a failure in the hands of private people. Here is where the personal factor comes in once more. If this scheme were started under good, strong auspices, men above suspicion, backed by strong capital, we might feel much more certain that the thing will be a success.

Where are such men?

I hope such men will be forthcoming still. I admit we have had a sad experience, that, so far, nothing has been done, but public opinion has been growing in this country, and I hope the pressure of public opinion will finally force this through. I do not want to make unnecessary difficulties about the scheme. The Minister can take it from me that I take a favourable view of this industry. It only pains me that I cannot take the same favourable view of the prospects under this contract. That is my only point. I do not want to oppose this scheme. I say so frankly. I have been in favour of the industry. I think Kimberley is the proper place. Kimberley is in very grave difficulties. Kimberley has been one of the centres that have been the mother centres in South Africa, so to say, and I think in days like this, when Kimberley is going downhill, we on all sides of the House should extend a helping hand to Kimberley wherever possible, and if some industry is forthcoming, if there is an opening of hope, do not let us close it in this House. I only hope we may not find in years to come that there was very considerable substance in the difficulties which I have urged here, and which I hope the Government will consider fully before they finally close with this matter. We must leave the matter largely in the hands of the Government. It is very difficult for us to judge on the scanty information at our disposal. The Government have probably sources of information which we have not, and for that reason I think we must leave the responsibility very largely with them. But I do make this appeal to the Minister. He has not met fairly the demand, the condition which has been imposed by the select committee and urged from this side of the House, the condition, namely, that we should make no distinction between these contractors and other people, perhaps smaller, on a small scale, who have started, or in future may start, a diamond cutting industry. Give the assurance to the House—I know it is impossible in the last day of the session to pass legislation which will protect everybody, and we do not expect it— but I think what can be very fairly asked of the Government, and what the Government should give a definite assurance on is this— that they will either by legislation or by contract see that the other cutters enjoy the same rights and privileges as these Government contractors will enjoy. Do not let us put Mr. Vermey or anyone else who has put private money into an undertaking of this kind on a worse basis than these Government contractors. If the Government gives the House the assurance that these men will be protected, and that equal rights will be maintained, it will satisfy the main condition laid down by the select committee, and it will satisfy to a very large extent the misgivings which we have felt in this House. I hope the Minister will give that assurance, and with that difficulty removed, we can then only leave the matter in the hands of the Government. I do not think we ought to set ourselves against an enterprise which may be a success, hut, to my mind, as at present advised, it seems somewhat of a doubtful character.

I know the House is tired, and I know we are anxious to finish, but I want nevertheless to put a question. Where are the people to-day who always said “South Africa first”? There are only a few hon. members opposite, although we are debating such an important contract. Where are the Ministers? I know that some of them are busy in another place, but the other Ministers are travelling, and they have left this important matter which is before the House in the hands of the same Minister who recently had the experience with Doornkop. I am afraid that we are concerned to-day with the same kind of business—only a little worse—as Doornkop. In that case we had to do with an inhabitant of this country whose name was Rosenberg, and to-day we have to do with a foreigner named Rosenstruik, of something like it. I ask if that kind of business will not injure the country. Why is the agreement entered into with people from abroad when we already have skilled diamond cutters in the country? Is the Union so rich that we must pay out Government money as provided in this contract by which we are giving £30,000 to foreigners, while the diamond cutters who began in a small way, and, according to evidence before the select committee, already have an association with 31 members, get no support? These existing cutting industries already have 50 skilled men who can teach other persons. It would cost the Government nothing, while the people who come from abroad import 40 skilled polishers and a few cutters, in all 50 people. Those are the people who get the prefernece in the cutting of diamonds, who the people who started in a small way, and struggled against great difficulties and have to-day put their business on a sound footing, are crushed by the contract, and have their rights taken away. Is it necessary then to take this step? Those existing cutters are people who came here without asking a grant from the Government. We have had experience in the past of that class of people who come with such charitable hearts to the Government. Those are the people who say that they come to settle the poor white question by employing 500 young South Africans. They come from abroad, and I ask hon. members what reasons they have for having such a warm heart for South Africa. They come here and get £30,000 from the Treasury to assist young South Africans. There are already diamond cutting establishments in Johannesburg where 40 skilled workmen are employed, and they can train young South Africans. They have already employed some of our young people, and they would have been able to train more persons in future. Then the Government would not have the trouble of dealing with the young people if the industry possibly fails. The Minister in reply to a question by the hon. member for Standerton (Gen. Smuts) said that if things did not succeed then the Government under Clause 19 of the agreement could take over the business. The Government also had the task of taking over Doornkop, and there will be much greater difficulty here in finding a solution for the young people if the diamond cutting turns out a failure. I wish hon. members opposite would keep their eyes open, because we have had experinece of cases where people have got money from the Treasury for some undertaking or other to help South Africa forward. Nor is it at all necessary to pay out money from the Treasury, bcause we already have people doing the work, and there are others who are prepared to establish a cutting industry without a grant. I am sorry the hon. member for Pretoria (North) (Mr. Oost) is not here, because he spoke about “His Master’s Voice”, referring, of course, to the De Beers Company, but if that “Master’s Voice” is prepared to spend £1,000,000 for the establishment of a diamond cutting industry, then I am not opposed to it, and I do not think anyone can be, because they will establish it without assistance from the Government.

They will never do it.

What authority has the hon. member for saying such a thing? How many hundreds of companies are there not in our country who have worked up great industries with overseas capital? Is it right then to crush the people who have already established an industry here under great difficulties? What has happened to the principle “South Africa first”?

The hon. member must not repeat himself so much.

I shall remember that, but I cannot help continually asking myself that question when such a thing is before the House. How is it possible for them to want to bring the people from abroad? We have seen that class of people coming into the country before, and we always called them pocket patriots. I am very much afraid that if we conclude this agreement we shall have the same experience as we recently had with Doornkop.

Like my colleague the hon. member for Johannesburg (North) (Mr. Geldenhuys), I distrust a type of contract that virtually amounts to a concession for the fattening favourites of the Government. We are only too familiar with the type of man who comes full of good intentions for the upliftment of the poor white unemployed in this country. The Minister of Labour is unfortunate in having to adopt other people’s children; he has come to-day with a proposition which is not his own, and the progenitor of this child, if there is one, is the Minister of Mines and Industries, who is absent to-day. There was an hon. member who spoke of “His Master’s Voice”. He is probably echoing the views of Mr. Rosenstrauch, who stands so frequently in the lobby and is so assiduous in his attentions to certain hon. members. We have a proposition to pay a large and definite subsidy for benefits which we are not assured are going to accrue in the manner held out to us by this contract, the bad points of which have been indicated from the legal point of view; and I hope the Minister will not be so blind as to go on, irrespective of the advice which has been given to him, as he did in the case of Mr. Rosenberg, in disregard of the dangers he was likely to encounter, persisting in going on with regard to that contract, which was a very disastrous one from the point of view of the Government. One would almost believe that there is a certain type of concessionaire—large hearted fellow—who comes to this country imbued with a passion to uplift the unemployed and consumed with an ambition to kill the capitalist. There is an organism that fattens on the back of the capitalist, and is by that means designed to bring about his destruction, but, as a rule, this organism—which one might term the Rosenparasite—ends by feeding out of the hand of the Government instead of destroying the capitalist. The Minister is unfortunate in having to play the role of stepfather to other men’s children. Rosenberg, for example, was the child of others, but he was treated as a white-haired boy by the Minister, who grew to love him. Similarly, I have no doubt, Mr. Rosenstrauch may endear himself to the Minister and may enjoy the fruits of his contract with the Government. I think the contract is a thoroughly bad one and we shall repent if we approve of it in its present form.

I would urge the Government to accept the amendment and get back to a position of safety. If they do not, they will jeopardise what we are all in favour of—diamond cutting in South Africa on a very large scale. In the light of the Namaqualand discoveries it is quite apparent that the Government can get any number of offers from the very strongest firms to establish diamond cutting here. The Minister will see that what I spoke about when the question first came up is right, that is, that the outstanding difficulty turns on the differential duties. On a previous occasion I used the expression "the nigger in the wood pile”, and wondered where he came from. Not one of the eight existing diamond cutting factories in South Africa has asked for these complicated differential export duties. I thought at first the suggestion came from Mr. Arend Brink, as official adviser to the Government, but I understand he has disclaimed any connection with it. Then I discovered that the suggestion really came from these very gentlemen who are now wanting this contract concession. It is most unfortunate that any differential duty should ever have been dragged in a departure made from the simple protective duty of 10 per cent. Mr. Arend Brink said that a duty of 40 per cent. would be required to establish cutting in the Union, but the Select Committee of the Senate recommended 10 per cent., and that has since resulted in £8,000,000 being contributed to the revenue. Small cutting factories have resulted. Since then I understand that Mr. Brink has reconsidered the position, and, instead of advocating 40 per cent., he estimates that owing to the rise in the value of diamonds, a duty of 10 per cent. is almost sufficient. About 25 per cent. of the total output can be cut in this country, and the Government could collect the duty on the 75 per cent. remainder exported. The result of the Government’s concession contract will be endless trouble, the question of the legality of the differential duty in the third year will come in, and on top of that complication the Government will be faced with the fact that, under the contract, they have made themselves morally, if not legally, responsible to furnish all the rough diamonds required by the cutters. What will happen? All the diamond cutters are after the Namaqualand diamonds, and we can get any number of them to come here while the output from Namaqualand lasts. Immediately the Government opens the State diggings, and furnishes diamonds to the cutters, the first thing they will hear is that the valuation is too high, and they must be supplied cheaper to ensure the sale of cut diamonds in the markets of the world. Whatever the value placed upon them, these concessionaires will demand the rough stones essential to keep the apprentices employed at lower and lower prices and the Government will find it difficult to resist the appeal, which will tend to lessen the prices obtained for the total output.

The hon. member should confine himself to the amendment. He is repeating arguments used on the main question.

I understood the amendment to be to ask the Government to take the whole thing back into consideration.

No.

I regret that the hon. member for Beaconsfield (Col. Sir David Harris) is not here, for he led the attack from the other side, and I also regret very much that he should have based practically three quarters of his case on doubts as to the responsibility and character of the contractors. If he had dealt with the merits of the contract, rather than the demerits of the contractors, he would have done his case more good. This question of the bona fides of the contractors was very carefully investigated by the Minister of Mines. The select committee was satisfied that exception could not be taken, to the bona fides of the contractors, otherwise they would not have dared unanimously to recommend that this contract be ratified on condition that the same conditions were extended to other persons. I cannot believe that members on the other side would have recommended that the Government ratify a contract with persons whom they were satisfied were undesirable from the point of view of their bona fides, and character. The hon. member for Cape Town (Central) (Mr. Jagger) asked why we have been, as he termed it, shilly-shallying since last November. I have a very sound answer to that. On October 31st my colleague, the hon. the Minister of Mines and Industries, moved that this contract be ratified, and, although it had been known for months previously that the Government was negotiating with these people, and public meetings had been held to urge the making of a diamond cutting agreement, not until the day after the agreement came before this House for ratification did certain documents come to light. These were handed to the Government in order to try and stop the agreement from being ratified, on the 1st November, before this House had finished discussing the ratification of the agreement. On that date a representative of the big diamond-producing interests in this country came to the Government with certain documents which, on the face of them, were very damning. They were produced by a representative of the biggest diamond interests in South Africa, who waited until the day the document was before Parliament for ratification, and then calmly walked into the office of the Minister of Mines and Industries and produced these documents. In the face of that evidence the Government dare not continue with the motion for ratification of the agreement. We withdrew it, to consider fully whether there was any ground for these damning statements. That was the reason we did not proceed then, and not out of any lack of interest or enthusiasm for fixing up a diamond cutting industry in South Africa. When the hon. the Minister of Mines and Industries starts out to investigate anything he does it thoroughly. He took every possible precaution and used independent channels, Government officials not connected with South Africa. It was stated in this document that Rosenstrauch had been expelled from British Guiana, where he had been carrying on a diamond business. My colleague cabled to the British representative in British Guiana and got a cable back that there was absolutely no truth in it whatever. We also cabled to the British officials and the Union Government officials in Antwerp and Amsterdam and the Minister of Mines and Industries conducted, for weeks and weeks, a most searching investigation into these allegations. They amounted to a charge laid by Peters and Landau, and what has been regarded as a finding or judgment was merely an ex parte statement submitted to the court. On that statement these people have been accused in this House, although that statement was unreservedly withdrawn, and the 100,000 francs to which the hon. member for Beaconsfield (Col. Sir David Harris) referred as having been paid by Rosenstrauch, was repaid to Rosenstrauch with 6 per cent. interest. The case went to arbitration through the Diamond Club, and Mr. Rosenstrauch was completely acquitted of the allegations made against him. Is it fair and honest that we should try at this eleventh hour to prevent the contract from being entered into with these people on the ground that their bona fides are discredited, when this is the result of our investigation? The select committee had every opportunity of investigating the case fully. I want to show the length to which certain interests in this country will go to safeguard their interests and prevent the establishment of a diamond cutting industry here. The right hon. member for Standerton (Gen. Smuts) says he does not look favourably on the contract itself, but I am glad that he looks favourably on the general proposition to have a diamond cutting industry. Deeds are better than words. For fourteen years he was either the head or one of the leading influences in the late Government, and surely he could have taken the necessary steps to secure to South Africa a diamond cutting industry. He said that, as a result of certain conversations with Mr. Bernard Oppenheimer, his Government passed an Act. It is the most extraordinary thing that the one thing that that Act really did was to prevent the setting up of a diamond cutting industry in South Africa. Surely the right hon. member could have said to Mr. Oppenheimer: “Well, if there is anything in this Act that is going to prevent you from coming out here, what is the good of my passing the Act if it is going to prevent you from setting up an industry? Now you tell me you cannot come out here because of certain amendments; well, in the interests of South Africa, we will amend the Act in such a way that it will be possible for Mr. Oppenheimer or anybody else to come here and set up a diamond cutting industry”.

I was not here; I was in London at that time.

That might have been a good reason for the action at that time, but surely it was not a good reason for the hon. member when he came here to say that this Act would not help the diamond cutting industry to be established, and that they had got to pass an amending Act in order to enable diamond cutting to be (established. I am pleased that he favours the establishment of the industry at Kimberley. The big interests have been against it at Kimberley all along.

No, De Beers have not been against it.

The big interests have always been against it being at Kimberley. Kimberley deserves well of South Africa. It has had to weather the storm in many ways, on account of the fluctuations in the diamond market, and I say that if there is any town in South Africa which is entitled to get an advantage and benefit out of diamonds, it is the town where most of the diamonds have been produced. Practically the whole of the criticism has centred round the policy of differentiation as between the cutters and the out side people, allowing the cutters to export their partly-cut stones under one carat at less export duty rates than the others. It is an extraordinary thing that all this hostility towards the main provisions of this agreement should now be submitted by hon. members opposite. They talk as if this was quite a new thing. My hon. friend, the member for Pretoria (West) (Mr. Hay), a few minutes ago said he Wanted to know where this came from, but now he finds these people have brought it forward, and it is they who are responsible for this policy of reducing the export rate on the partly-cut stone. How did the thing originate? It originated long before we took it over. I have here the original document which had been agreed to by the late Minister of Mines and Industries, in which he was about to enter into a contract with this same Mr. Korbf. He was about to enter into a contract, and on what basis? Exactly on the same basis as this Government is entering into the contract now before the House. On the 14th August, 1923, this letter was written by the Secretary for Mines and Industries on behalf of the then Minister to Mr. Korbf, after months of negotiations and meetings and discussing and drafting and redrafting—

What do we find ?—

We have forty coming out. Then also they undertake to train 250 apprentices, whereas there are 500 under our agreement. There is the basis, there is the foundation. The main principles of the agreement now before the House are to be found in that draft agreement which had been approved of by the Minister of Mines and Industries, and who asked Mr. Korbf to accept it, so that he could submit it to his Government for final approval. That was in August, 1923. Next session, of course, the Government went out of power and they did not get the chance to ratify the agreement. Now I come to the legal argument, and here I deal with the hon. member for Gardens (Mr. Coulter).Really, as I sat this afternoon and listened to him winding out one legal argument after another and giving reasons why this House should not ratify this agreement I just thought how easy it would have been for the hon. member, had he been so inclined, with his legal ingenuity to have spent the same forthy minutes in trying to convince the House why the agreement should be ratified. The hon. member has been working on this for two weeks. He has been working on it just as an advocate handles a brief, and he has turned his mind to every possible argument that could be used against the ratification of this agreement. But it carried no weight, because I think every hon. member, including myself, is quite satisfied that the same hon. member could have turned his mind to finding an equal number of arguments as to why this agreement was sound, and why it should be ratified. We come to the legal side. Where lawyers disagree it is very difficult for a layman, like myself and others, to attempt to lay down or give a decision, but here we have this position. We have an advocate over there, the hon. member for Gardens (Mr. Coulter), and we have the right hon. the member for Standerton (Gen. Smuts) getting up and saying that they have grave doubts. The hon. member for Gardens was quite definite in saying this was illegal, and it could not be done, but on the other hand, we have the Minister of Mines and Industries, who is also a very careful and able advocate, and very thorough, and we also have, in addition, the law advisers, and both the Minister of Mines and Industries and the law advisers are satisfied that this agreement can be given effect to and its provisions carried out in terms of our present legislation, providing that we amend the regulations under the Act which, of course, it is permissible for us to do. Is there anything wrong in that? Supposing we cannot?

Why have you not amended the regulations?

The hon. member knows full well that a few days ago, when we tried to bring it forward, hon. members took exception, and we had to take it back and get it signed. There will be no difficulty in amending the regulations along the lines which the law advisers advise should be done. Every contract for diamond cutting has to come before the House, unless you pass an amending Bill, which gives an enabling right to the Minister to give concessions. Under Section 7, an agreement can be entered into, provided no such agreement shall confer upon any person the exclusive right of carrying on such business. You cannot give any person an exclusive right, and, for that reason, we have given no monopoly. Any other person can come along. The agreement has to be ratified by Parliament. The Minister of Mines and Industries told me to emphasize this point—that we are quite prepared to consider any proposals from any cutters in South Africa or from anywhere else on their merits, deal fairly with them, and give them a square deal; of course they would have to carry out corresponding obligations as these people are prepared to do. We cannot do more than that. I am not prepared to say we will give it to A, B or C—we might have some reason for not giving it to any of them. Any applicant who wants the advantages and benefits, and where we think it is to the best interests of South Africa, and the finances of the country are safeguarded, can have my personal guarantee, I will do all that is possible to extend diamond cutting in South Africa. What, other object have we than to see that as many diamonds as possible should be cut in South Africa? We do not know these people. They are practical cutters. Two things are necessary, and we have satisfied ourselves that these people have them. First of all, they must have had practical knowledge and actual working experience; they must, in other words, be successful diamond cutters. We are satisfied that these people have been successful diamond cutters in Antwerp—the home of the diamond cutting industry—and that they have had some of the largest diamond cutting factories in Europe. The other point is that they must have resources and the financial backing to see them through. The Government has investigated that and is satisfied that they have the financial resources which will enable them to carry through their undertaking. What more could you have had? Their bona fides were questioned, but we investigated them and have satisfied ourselves that no question can be raised regarding their bona fides and character. We have all that is necessary to make a start with the industry. I do not say the agreement is a perfect one, but it is a beginning, and I hope, as a result, others will come forward, De Beers included, and they will get as much consideration as these people, for we are anxious to have a diamond cutting industry established.

When can you give these privileges to people who have not yet applied for them?

They have been operating for five years, but they have not applied. No one has made any proposal for setting up a cutting industry. The hon. member thinks Rosenstrauch and Korbf will have an unfair advantage, but it will take six months before they can have the factory going. Parliament will be in session again by that time, so there will be no undue delay if Government decides that any action is necessary. The Government is satisfied that it has the right to do what it is proposed to do under present legislation, but if action is taken in the courts we shall then have to consider the matter. I cannot accept the amendment.

Amendment put and negatived.

Original motion put and agreed to, and transmitted to the Senate for concurrence.

With the consent of the House I would like the amendments to be taken now. They are just two small amendments to which, I think, the House will immediately agree.

On amendment in Clause 10,

The amendment gives a Minister the power, when he finds that a pensioner is a man who would waste the money, to let someone else receive it—for instance, the wife on behalf of a bad husband.

Amendment put and agreed to.

On amendment in Clause 17,

This is the omission of the words “director of census”. The Minister of Finance thought that should be done because of the secrecy which has there to be observed according to law.

Amendment put and agreed to.

I move, as an unopposed motion—

Agreed to.

seconded.