All Info About Jewelry Collecting
Make Jewelry Collecting your home page


Sign up for
a Free "Jewelry Collecting" Newsletter
Subscribe Unsubscribe
Powered by

Shop For Books With Amazon

Advertise on All Info About
We offer extremely competitve rates for businesses of all sizes.
Click here to find out more

From The Archives

Diamonds Our Best Friend?

Debunking The Myth

Dateline: 12/20/00

With the annual holidays fast approaching, we turn to wish lists filling them with the most desired things.

On top of many a wish list is a diamond. Or diamonds. If we never received a diamond in an engagement ring, perhaps the holidays would be a good time to hope for a solitaire ring. Or a band set in all diamonds. Or a tennis bracelet. Or a pair of diamond earrings perhaps, something to suit the budget of the giver.

Why our fascination with diamonds?

What makes a piece of hard clear glittering carbon so desirable?

Glad you asked.

Would you believe it's because we have been carefully brainwashed to want one?

Not by the display of diamonds by queens and nobility in the past and present but because a determined man decided to hire an advertising agency to promote our desire to own a diamond.

The man so determined was Ernst Oppenheimer. When he arrived in Africa in the late 19th century, his early experiences there inspired him to create his own empire, the single biggest monopoly for an individual product the world has ever seen, the diamond.

With his diamond mine empire well in hand after so many years of hard work and machinations, Mr. Oppenheimer continually had to fight off the competition, the other mine owners, in Africa and elsewhere in the world. He did this by either buying the mines, often through subsidiaries of his own company, De Beers Consolidated Mines, and if that didn't work, he offered contracts to buy the entire mine production at prices not matched by anyone else. Most producers took the offers as there were no other buyers.

His widespread companies, all intertwined in complicated arrangements with each other and spanning across all diamond-producing countries, soon controlled not only production but total world distribution. And, most important, they controlled the retail prices of diamonds everywhere. Upstart competitors were disposed of by every means available from buyout to shutout. Only Mr. Oppenheimer's cartel controlled the amount of diamonds distributed to the buying public every year for almost a century.

Why did others go along with Mr. Oppenheimer's demands you ask?

Easy. If diamonds weren't bought by his companies they were impossible to sell to anyone.

Why wouldn't competitors buy these independently produced diamonds?

Many tried. But when they did, they were frozen out of doing business with any of the cartel-controlled companies. Many came crawling back to the cartel as a result, they had no other choice.

At the end of the 1930s, after so many years of hogging the world supply of diamonds, the available stockpile was getting unmanageable. More company monies were sunk into buying new production than returned from the annual wholesale sales which were intentionally limited to projected annual retail sales. And diamond production still continued and kept growing. More customers had to be found.

What to do? An advertising agency, N.W. Ayer of New York City, was hired to create a campaign that would give every new bride the incentive to dream of a diamond. The famous slogan "A Diamond Is Forever" is its lasting legacy.

Every year a foreseeable number of marriages takes place in every country around the world. Demographic studies showed the diamond cartel owners exactly how many projected new unions there would be in the United States, Canada, Australia, parts of Asia, and the European countries.

The American movie industry was now wooed into a vigorous promotion of diamonds. Beautiful film stars prominently showed off their large diamond engagement rings both in especially created movie scenes and in real life. To the Western moviegoing public this was the strongest influence possible.

The message sent was clear. The size of the diamond from a loved one became the measure of his love and generosity and, hopefully, his social standing, i.e. wealth, too. Young brides-to-be flocked to the jewelers clamoring for more choices in diamond engagement rings. The U.S., Canada, and Australia were the earliest countries to be so seduced.

But these countries only couldn't handle the enormous and continous world output of diamonds. Europe had proven to be a hardsell, especially before World War II.

Germany, Great Britain, the Scandinavian countries, all Westernized countries with discretionary funds to spend, were still steeped in old traditions of simple gold bands, one at engagement and one at marriage. Some countries had no tradition of an engagement ring at all, only a band at marriage. All these countries were slow to accept the new idea of a diamond in an engagement ring, much too slow for Mr. Oppenheimer who after World War II had been succeeded by his son, Phillip Oppenheimer, as head of his empire.

So the diamond cartel turned to Japan with even harder traditions to combat. Not to be daunted, the N.W. Ayer 1960's campaign commercials, ads, and billboards in Japan showed a beautiful Western model in modern settings, playing golf, tennis, bicycling, driving cars, with a diamond ring on her finger. The ads also showed a Japanese man in the background watching her from a distance.

The implication was that the Western woman's tastes included a great diamond and that Japan should take a leaf from the West and treat the Japanese woman to equal luxury. This impression was not lost on Japanese women who quickly caught the hint. Soon diamond sales were demonstratively higher in Japan than in the years before the ad campaign. A new market, a large one, had been created, almost overnight.

Why were the Oppenheimers so intent on controlling the world diamond prices you ask?

They realized that free enterprise competition would reduce diamonds to just another commodity subject to enormous price fluctuations and they could not have that.

A diamond cannot be "used up." It can be recut, reset, even lost due to accidents, but it cannot wear out.

A diamond therefore had to retain its "value." In the retail market place, that is. To ensure that diamonds would not be resold in a secondary market, the slogan A Diamond Is Forever had to convince the buying public of the great sentimental value of a diamond engagement ring so that no one would ever want to resell it.

As practically all diamonds that ever came out of the ground are still somewhere in the possession of people, there was not only the profits of the continuing production to protect but also the perceived value of all privately held diamonds. If large quantities of pre-owned diamonds were to suddenly flood the market, it's not difficult to guess what the effect on prices would be.

Anyone who has tried to resell diamond jewelry in the secondary market also finds out quickly what happens. No one will pay anywhere near the original retail price paid. This is intentional as a diamond is not meant to be resold, ever.

This careful marketing invention actually worked for the cartel for almost a century. In the early 1980s, however, the monopoly grip on the industry began to loosen, accidentally. In order to increase diamond sales ever larger in this economically overheated decade, an attempt to sell loose diamonds for investment purposes directly to the buying public, much like gold bars or silver ingots, backfired totally.

When the new diamond investors tried to sell their investment stones they were offered 25-35% of what they had paid for them. The scandal of this disappointment immediately spilled over into the open market. Investment diamonds were a flop. And if they flopped at resale, what about diamond jewelry?

It was too late to stop the erosion of the diamond myth or the open market from freely participating. Countries which formerly had been held in check by the diamond cartel no longer wanted to play by its rules.

The Soviet Union, Israel, India, China and South America burst out of the cartel stronghold, played their own diamond sales game in the open market. Israeli banks particularly had been badly burned on extending full retail value credit lines to its diamond dealers. With diamond prices falling, banks and diamond dealers folded fast and almost took their country's economy with them. One quarter of the State of Israel's available capital was tied to diamond loans in the late 1970s.*

The predictable result was naturally that all diamonds across the world fell enormously in price. This was exactly what the diamond cartel had tried to prevent for so many years while maintaining its strangle-hold monopoly. But the free market was not to be held back, the strong competition could not be stopped this time. Although the cartel still exists, doing business as usual, today it is less influential in its attempts to control the market prices of diamonds. Update Nov. 2001: It's working hard on it though.

How far did the diamond market fall?

One hypothetical example: A diamond tennis bracelet, with an average weight of 10 to 12 carats of decent grade diamonds might have cost anywhere from $5,000 to $10,000 in the early 1950s, if tennis bracelets had been popular then (which they were not). Today, a comparable quality diamond bracelet can be purchased at retail for around $2,000. to $4,000, or less depending on the source.**

The dream of a diamond has gotten a little less expensive than it used to be. Does it still have the same emotional or psychological value?

It's in the mind of the beholder, to be sure. If diamonds are only valued for the money they represent and not for the beauty of the jewelry in which they appear, what's the point?

Costume jewelry collectors are fond of saying, "A Diamond Might Be Forever, but Rhinestones Are For Everyone."

So if we love jewelry for its beauty, rhinestones, the superb diamond imitators, could definitely be on the wish list. They cost a lot less and there's usually more of them in almost any jewelry piece, a much bigger bang for the buck. And should they wear down, well, they don't cost that much to replace. We'll have the fun of shopping for more.

Diamonds? Of course, if our dear beloved wishes to express his love in this manner, sure, we'll take them!

For more about diamonds, visit:

Diamond Facts & Trivia
Links to many fun and factual articles about diamonds around the Net.

*Sources for the factual information in this article include The Rise and Fall of Diamonds by Richard Jay Epstein, Simon & Schuster New York, Publs., 1982.

**There is enormous competition and great variation in diamond quality and sources in the world, therefore also in individual pricing. This example is fictitious and only meant to show an approximate price comparison difference in the 1950s versus the late 1990s.

Photos by Liz Bryman or as credited.

All Info About

These fine products and services companies have elected to be represented on Jewelry Collecting.
You can too, follow link from button above.

Vintage Jewelry At
Liz Collectible Jewelry