Japan, the matrimonial custom had survived feudal revolutions,
world wars, industrialization and even the American
occupation. Up until the mid-196os, Japanese parents
arranged proper marriages for their children through
trusted 'intermediaries. The ceremony was then consummated,
according to Shinto law, by the bride and groom both
drinking rice wine from the same wooden bowl. This simple
arrangement had persisted for more than a millennium.
There was no tradition for romance, courtship, seduction
and prenuptial love in Japan; and no tradition that
required the gift of a diamond engagement ring.
Then, in 1967, halfway around the
world, a South African diamond company decided to change
the Japanese courtship ritual. It retained J. Walter
Thompson, the largest advertising agency in the world,
to embark on a campaign to popularize diamond engagement
rings in Japan. It was not an easy task. Even the quartering
of millions of American soldiers in Japan for a decade
had not resulted in any substantial Japanese interest
in giving diamonds as a token of love.
The advertising agency began its
campaign by subtly suggesting that diamonds were a visible
sign of modern Western values. It created a series of
color advertisements in Japanese magazines showing very
beautiful women displaying their diamond rings. The
women all had Western facial features and wore European
clothes. Moreover, in most of the advertisements, the
women were involved in some activity that defied Japanese
traditions, such as bicycling, camping, yachting, ocean-swimming
and mountain-climbing. In the background, there usually
stood a Japanese man, also attired in fashionable European
clothes. In addition, almost all of the automobiles,
sporting equipment and other artifacts in the picture,
were conspicuous foreign imports. The message in these
ads was clear: diamonds represent a sharp break with
the Oriental past and an entry point into modern life.
The campaign was remarkably successful.
Until 1959 the importation of diamonds had not even
been permitted by the postwar Japanese government. When
the campaign began in 1968, less than 5 percent of Japanese
women getting married received a diamond engagement
ring. By 1972 the proportion had risen to 27 percent.
By 1978, half of all Japanese women who were married
wore a diamond on their ring finger. And, by 1981, some
6o percent of Japanese brides wore diamonds. In a mere
thirteen years, the fifteen-hundred-year Japanese tradition
was radically revised. Diamonds became a staple of the
Japanese marriage. And Japan became, after the United
States, the second largest market for the sale of diamond
engagement rings. It was all part of the diamond invention.
The diamond invention was an ingenious
scheme for sustaining the value of diamonds in an uncertain
world. To begin with, it involved gaining control over
the production of all the important diamond mines in
the world. Next, a system was devised for allocating
this controlled supply of gems to a select number of
diamond cutters who all agreed to abide by certain rules
intended to assure that the quantity of finished diamonds
available at any given time never exceeded the public's
demand for them. Finally, a set of subtle, but effective,
incentives were devised for regulating the behavior
of all the people who served and ultimately profited
from the system.
The invention had a wide array of
diverse parts: these included a huge stockpile of uncut
diamonds in a vault in London; a billion-dollar cash
hoard deposited in banks in Europe; and private intelligence
network operating out of Antwerp, Tel Aviv, Johannesburg
and London; a global network of advertising agencies,
brokers and distributors; corporate fronts in Africa
for concealing massive diamond purchases; and private
treaties with nations establishing quotas for annual
The invention is far more than merely
a monopoly for fixing diamond prices; it is a mechanism
for converting tiny crystals of carbon into universally
recognized tokens of power and romance. For it to ultimately
succeed, it must endow these stones with the sort of
sentiment that would inhibit the public from ever reselling
them onto the market. The illusion thus had to be inculcated
into the mass mind that diamonds were forever-- "forever"
in the sense that they could never be resold.
The invention itself was a relatively
recent development in the history of the diamond trade.
Up until the late nineteenth century, diamonds were
a genuinely rare stone. They were found only in a few
river beds in India and the jungles Brazil. The entire
world production of gem diamonds amounted to only a
few pounds a year.
In 1870, however, there was a radical
change in this situation. Huge diamond "pipes"
were discovered near the Orange River in South Africa.
These were the first diamond mines
ever discovered. Now, rather than finding by chance
an occasional diamond in a river, diamonds could now
be scooped out of these mines by huge steam shovels.
Suddenly, the market was deluged a growing flood of
diamonds. The British financiers who had organized the
South African mines quickly came to realize that their
investment was endangered: diamonds had little intrinsic
value, and their price depended almost entirely on their
scarcity. They feared that when new mines developed
in South Africa, diamonds would become at best only
a semi-precious gem.
As it turned out, financial acumen
proved the mother of invention. The major investors
in the diamond mines realized that they had no alternative
but to merge their interests into a single entity that
would be powerful enough to control the mines' production
and, in every other way that was necessary, perpetuate
the scarcity and illusion of diamonds. The instrument
that they created for this purpose was called De Beers
Consolidated Mines, Ltd., a company incorporated in
As De Beers penetrated and took
control of all aspects of the world diamond trade, it
also assumed many protean forms. In London, it operated
under the innocuous name of the Diamond Trading Company.
In Israel, it was known under the all-embracing mantle
of "the syndicate." In Antwerp, it was just called the
CSO-- initials referring to the Central Selling Organization
(which was an arm of the Diamond Trading Company). And
in Black Africa, it disguised its South African origins
under subsidiaries with such names as the Diamond Development
Corporation or Mining Services, Inc. At its height,
it not only either directly owned or controlled all
the diamond mines in southern Africa, it also owned
diamond trading companies in England, Portugal, Israel,
Belgium, Holland and Switzerland. It was De Beers of
course that organized the Japanese campaign as part
of its worldwide promotion of diamonds.
By 1981, De Beers had proved to
be the most successful cartel arrangement in the annals
of modern commerce. For more than a half century, while
other commodities, such as gold, silver, copper, rubber
and grains, fluctuated wildly in response to economic
conditions, diamonds continued to advance upward in
price each year. Indeed, the mechanism of the diamond
invention seemed so superbly in control of prices-and
unassailable-that even speculators began buying diamonds
as a guard against the vagaries of inflation and recession.
Like the romantic subjects of the advertising campaigns,
they also assumed diamonds would increase in value forever.
My interest in the diamond invention
was sparked originally by a chance meeting that I had
with an English diamond broker in St. Tropez in the
summer of 1977. The .broker was Benjamin Bonas, and
he represented De Beers' Diamond Trading Company. He
was visiting some friends of mine for the weekend, and
during the course of a leisurely lunch the subject of
diamonds was broached. Bonas explained that despite
revolutions, hostile governments and general turmoil
in Africa, De Beers still firmly controlled the production
of diamonds. He pointed out that this arrangement had
proved so successful that even the Soviet Union sold
the diamonds from its Siberian mines to De Beers. He
did not elaborate at this point on the actual mechanisms
used De Beers to lock up the flow of diamonds from diverse
quarters of the world. Nevertheless, I was intrigued
by the idea that a South African company, aided and
abetted Black African and Communist nations who were
pledged a total embargo of South African business, had
succeeded putting together a truly global alliance to
protect the value and illusion of diamonds. As the former
Portuguese colonies of Angola and Mozambique got their
full independence, the pressures throughout Africa,
and most of the world, to isolate South Africa would
drastically escalate. How would the diamond cartel survive?
later that year, I filed a request under the Freedom
of Information Act for all the investigations of the
Justice Department concerning the diamond Cartel. The
resulting archive of documents provided a fragmentary
picture of De Beers' conflicts and near collision with
antitrust laws of the United States, the clues all pointed
to mining companies in South Africa and the distribution
arm in London. I therefore began my inquiry into the
nature and future of the diamond invention in Johannesburg.