qz | A diamond is carbon, one of the most abundant elements on Earth. But
as anyone who has ever shopped for, admired, or worn a diamond can tell
you, there’s a lot more to them than just a tetrahedal crystalline
structure of atoms.
Both physically and culturally, these stones have weight. Diamonds
are romance, love, commitment, legitimacy, achievement. Diamonds are
forever. But why are they so loaded? Sure, they catch the light, but why
do diamonds—rather than, say, emeralds, rubies, tourmalines, or
sapphires—get to be a girl’s best friend and everlasting love?
Why? In a word: marketing.
Who dreamed this up?
Forever is a long time. Yet just 100 years ago, diamonds had only just started to trickle into the popular consumer conscience.
Before then, diamonds from India and Brazil were used as an
adornment, but only by the ruling classes. Then, in 1866, a teenage boy
playing on the Orange River near Hopetown, South Africa found an oddly
hard, shiny stone: the 21.25-carat “Eureka Diamond,” that would set off
an African diamond rush and transform the market. By the late 1880s, two
British mining rivals in South Africa, Cecil Rhodes and Barney Barnato,
flooded the market with diamonds as they tried to outsell each other.
Prices plummeted, and the men recognized that controlling the supply of diamonds
would be the best way to keep prices high. Rhodes took control of
Barnato’s company, and in 1888 established De Beers Consolidated Mines
Limited.
De Beers proved to be arguably the most successful cartel of the modern era—and after the stock market crash of 1929 hit the demand for diamonds—its savviest marketer.
“South Africa must do without her diamond industry,” wrote the Spectator
in February, 1932. “An impoverished world cannot buy its gems; and the
diamond syndicate dare not seek more custom by reducing its prices.
Diamonds would lose half their attraction if they were cheap.
Overproduction of them might spoil the trade for years to come.”
wakingtimes | Diamonds were first discovered 2,500 years ago and were extremely
rare. They were only available to royalty, aristocrats, and the wealthy.
They were originally found in riverbeds in India and Borneo. In the
early eighteenth century, diamond mines were found in Brazil and as the
supply increased the prices dropped.
In 1866, a 15-year-old boy found diamonds on his father’s farm on the
banks of the Orange River in South Africa. Within fifteen years,
African mines became the leading producer of diamonds and the industry
was changed forever.
A mining rush ensued and industrial mining for diamonds had begun.
Cecil Rhodes, an English imperialist, whose thirst for power and
quest to spread the British way of life across the globe stumbled upon
the diamond mine on the De Beers farm and purchased it for a small
price. Rhodes feared that if all these diamonds hit the market, the
prices would crash. His goal was to then control the market by securing
supply. One-by-one, he bought out the other mining companies and founded
De Beers Diamond and Mining Company.
By 1888, Rhodes had control of 90-percent of the diamonds in the
world ensuring there would never be a flood of supply to lower prices.
He also had been named Prime Minister of Cape Colony giving him
political power to enforce laws that would pave the way for Apartheid by
removing natives off their land and into forced labor camps to mine his
diamonds.
The De Beers Company had created a cartel that was based on the
French concept of controlling the copper industry – buying up mines,
restricting supply, and raising prices. A cartel, by definition, is
simply an agreement between competing firms to exclude prices and
exclude entry of a new competitor into the market – illegal in the
United States and United Nations.
De Beers largest competitor, Anglo-American Company, was founded in
1917 by Ernest Oppenheimer. Oppenheimer had stumbled upon massive
amounts of alluvial diamonds (diamonds on top of the earth that did not
need to be mined). Oppenheimer threatened to flood the market with these
diamonds unless he was made chairman of De Beers. And just like that,
the illegal anti-trust monopoly was created with complete control of the
industry. Now that supply was in control, they had to take charge of
the other side of the business equation – demand.
In 1930, a De Beers engineer warned,
“The diamond market is dependent for its smooth function on the maintenance of the illusion in the minds of the general public that the diamond is a rare and valuable stone.”
The cartel then set up an office in Hollywood and exchanged valuable
diamonds to producers to put in scenes showing off the diamonds with the
man surprising the woman with the diamond which helped launch the
notion that engagement meant receiving diamonds. They would give to
actresses to flaunt at all public appearances for advertising to the
public.
This followed with the marketing campaign with the simple phrase, “a
diamond is forever.” This trained the public that love is synonymous
with diamonds and people were willing to pay large portion of their
salaries to show love for their significant other.
Furthermore, “A Diamond is Forever” also suggests that there is no
resale value of diamonds. Every woman deserves her own unique diamond to
symbolize your love. This also prevents diamonds from returning to the
market, which again would lower prices.
While this sounds like a brilliant marketing scheme; this false
concept of diamonds are rare and valuable led to millions of lives being
slain, forced manual labor, set up the foundations for apartheid, and
brutal civil wars over the next century.
wikipedia | The De Beers Group of Companies has a leading role in the diamond exploration, diamond mining, diamond retail, diamond trading and industrial diamond manufacturing sectors. The company is currently active in open-pit, large-scale alluvial, coastal and deep sea mining.[2] The company operates in 28 countries and mining takes place in Botswana, Namibia, South Africa and Canada. Until the start of the 21st century, De Beers effectively had total control over the diamond market as both a monopoly and monopsony of diamonds.[3]
Opposition has since dismantled the complete monopoly, though De Beers
is still a large shareholder and currently sells approximately 35%[4] of the world's rough diamond production through its Global Sightholder Sales and Auction Sales businesses.[5]
The company was founded in 1888 by British businessman Cecil Rhodes, who was financed by the South African diamond magnate Alfred Beit and the London-based N M Rothschild & Sons bank.[6][7] In 1926, Ernest Oppenheimer, a German immigrant to Britain who had earlier founded mining giant Anglo American plc with American financier J.P. Morgan,[8] was elected to the board of De Beers.[9]
He built and consolidated the company's global monopoly over the
diamond industry until his death in 1957. During this time, he was
involved in a number of controversies, including price fixing, trust behaviour and an allegation of not releasing industrial diamonds for the U.S. war effort during World War II.[10][11]
