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
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
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
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
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,
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
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.