I didn't want to sell my engagement ring -- more out of obstinate pride than any sentimental reason. When my husband and I got a divorce, I did the tasteful thing and offered to return the ring to him. He told me to keep it. Leaving a cushy executive job made sense if one was going to be a wife. But surely I didn't think this silly notion of supporting myself as a writer was going to work out? "Keep it," he said. "You'll probably need to pawn it before the year's out."
Exes are really good at pushing our buttons. But I wasn't about to give him that pleasure. I withdrew the ring, pivoted in place and left.
Photo by Jessica Diamond (Flickr).
Though the year that followed brought with it a lot of writing work, it was still very much a recession. With most publications preferring to contract writers than hire them, my days were spent not only writing but chasing after unpaid invoices and honing my skills at composing payment demand nastygrams in terrifying legalese.
One day, a large media company for which I had spent a significant amount of time developing a story informed me that no, a check wasn't due to me until the story started generating significant pageviews. I knew that I had never signed a contract to this effect, but having just moved, I couldn't locate my copy.
Stuck with no income until I could locate the contract or someone else came through on their invoice, I remembered the ring with a twinge of bitterness. I'd planned to hold on to it for a long time yet and then do something really crazy with it after I became irrefutably solvent through my writing -- like give it to the next up-and-coming writer who had given up the cushy office and steady paycheck to follow their dreams.
Desperate times call for desperate measures, I reminded myself as I walked into the jeweler's. What I found out inside confused me. The jeweler wasn't interested in buying it. And when I finally found one willing to buy it back after a handful of futile attempts, the amounts they quoted weren't even remotely close to the sum at which the diamond had been appraised. The highest was less than a third of its supposed actual worth.
I didn't sell it. That night, I found the contract and was able to set things straight as far as my finances were concerned. But the difficulty I encountered trying to sell it never stopped bothering me. And then this week, I encountered an article in The Atlantic from 1982 that laid it out for me quite clearly: a diamond's "worth" is little more than a product of vary careful image management.
The diamond invention -- the creation of the idea that diamonds are rare and valuable, and are essential signs of esteem -- is a relatively recent development in the history of the diamond trade. Until the late nineteenth century, diamonds were found only in a few riverbeds in India and in the jungles of Brazil, and the entire world production of gem diamonds amounted to a few pounds a year. In 1870, however, huge diamond mines were discovered near the Orange River, in South Africa, where diamonds were soon being scooped out by the ton. Suddenly, the market was deluged with diamonds. The British financiers who had organized the South African mines quickly realized that their investment was endangered; diamonds had little intrinsic value -- and their price depended almost entirely on their scarcity. The financiers feared that when new mines were developed in South Africa, diamonds would become at best only semiprecious gems.
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 production and perpetuate the illusion of scarcity of diamonds. The instrument they created, in 1888, was called De Beers Consolidated Mines, Ltd., incorporated in South Africa. As De Beers took control of all aspects of the world diamond trade, it assumed many forms. In London, it operated under the innocuous name of the Diamond Trading Company. In Israel, it was known as "The Syndicate." In Europe, it was called the "C.S.O." -- 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 names like Diamond Development Corporation and Mining Services, Inc. At its height -- for most of this century -- it not only either directly owned or controlled all the diamond mines in southern Africa but also owned diamond trading companies in England, Portugal, Israel, Belgium, Holland, and Switzerland.
De Beers proved to be the most successful cartel arrangement in the annals of modern commerce. While other commodities, such as gold, silver, copper, rubber, and grains, fluctuated wildly in response to economic conditions, diamonds have continued, with few exceptions, to advance upward in price every year since the Depression. Indeed, the cartel seemed so superbly in control of prices -- and unassailable -- that, in the late 1970s, even speculators began buying diamonds as a guard against the vagaries of inflation and recession.
But De Beers did much more than organize a structure that allows for the control of the supply of diamonds. Supply -- regardless of how carefully managed -- is nothing if you don't have demand. To achieve this, De Beers joined forces with the New York advertising agency N. W. Ayer in 1938, which immediately set about whetting the national appetite for diamonds. But they had to be careful -- every diamond they sold could potentially return to the market. The key to ensuring that sold diamonds did not come back to overwhelm supply was to endow them with emotional value.
To do this, they employed the help of movie stars, which were reaching mass popularity in the late 1930s, and which were recognized symbols of romance and glamour. Decked in diamond-studded engagement rings, stars conferred on the gems the fairy tale endings of the films in which they appeared. Other diamond campaigns employed socialites, the press, anyone who could further the idea that a diamond engagement ring was an vital part of courtship. So successful was N. W. Ayers in this they that three years later, the sale of De Beers' diamonds had increased by 55 percent in the United States.
That wasn't enough. In the next decade they created a Diamond Information Center, which was basically a public relations firm dedicated to sending out press releases with "news" and engaging the press as experts in everything relating to diamonds. De Beers soon set their sights on a younger demographic, and N. W. Ayers responded by arranging for lectures at high schools around the country to further cement the diamond ring as the symbol of a long-lasting union. In 1947, they came up with the now-classic De Beers slogan, "A Diamond Is Forever."
At the same time it was working to turn the diamond into the one true symbol of commitment and love for women, N.W. Ayer was working to position the diamond as a symbol of financial success for men. In 1939, the year N.W. Ayer had partnered with De Beers, diamond sales were stagnant at $23 million. By 1979, sales were at $2.1 billion.
Were it not for how carefully De Beers controlled the supply of diamonds, this might be a story of brilliant advertising. But there is something almost sinister in the way the "cartel," as Epstein calls it, handled the discovery of diamonds in the former Soviet Union in the 1950s. They moved in to partner with them and control the sales, and to avoid natural price fluctuations, absorbed the flow of Soviet diamonds itself.
The diamonds coming from the former USSR were very small, so to accommodate the supply, the diamond industry began refocusing its marketing effort: no longer was a big diamond the ultimate symbol of success and everlasting love. Value in a diamond, the new campaign decreed, is determined by quality, color and cut. When the sale of smaller diamonds went through the roof as a result of this campaign, the sales of bigger diamonds sagged, prompting De Beers to launch a campaign in 1978 that stood in direct opposition to the campaign they'd run at the introduction of the smaller Soviet diamonds. The public didn't seem to notice and so De Beers watched sales boom once again across the board.
Knowing that the sale of diamonds that are currently in the public's hands would undermine the notion that diamonds are rare and precious gems, the industry counts on campaigns that hammer into consumers the emotional value of diamonds, thereby preventing anyone who acquires a diamond from trying to sell it.
The article features several stories of people who tried to sell back diamonds -- like me, the highest sum they received were only a fraction of what had been paid to purchase it. Epstein explains: "The 'keystone,' or markup, on a diamond and its setting may range from 100 to 200 percent, depending on the policy of the store; if it bought diamonds back from customers, it would have to buy them back at wholesale prices. Most jewelers would prefer not to make a customer an offer that might be deemed insulting and also might undercut the widely held notion that diamonds go up in value."
The Epstein article, it bears mentioning again, was written in 1982, at a time when it was not known how the discovery of diamonds in Australia would affect the grip De Beers had on world supply. As it turned out, Australia struck a deal that allowed De Beers some control of their production, which mostly involved colored gems. This uneasy truce with Australia fell apart by the mid-90s, however, causing them to look to India for cutting and polishing. In retaliation, De Beers dropped their prices for the colored gems, which had a severe impact on Australia's sales, but they refused to be taken in by the cartel once again.
At around the same time they were negotiating with Australia, De Beers had to neutralize a situation in Israel, where people had been buying diamonds as an investment and using them as collateral for loans. They were only partially successful in this -- by 1984, they had to absorb the excess diamonds that threatened to overwhelm supply. That year, their stocks in diamonds ballooned to $2 billion.
The following year, De Beers was forced to give their suppliers a 7.5 price increase on diamonds to keep them from accepting cheaper diamonds from the Soviet Union, which had grown to resent its previous arrangement with the cartel. Here, too, De Beers was forced to renegotiate: they eventually bought the Soviet's entire diamond output. The relationship between the cartel and the nation would remain a difficult one. Unlike Australia, Soviet diamond holdings were big enough that De Beers could not effectively intimidate them into compliance.
Compounding the giant's precarious situation, in 1991 diamonds were discovered in Canada. De Beers attempted to seize control of production and distribution but was beaten by Australia's Broken Hill Proprietary Co. (BHP). Negotiations between De Beers and BHP for control of the Canadian holdings began in 1999 and produced some positive results for the gem giant; however by 2002, BHP effectively dissolved the agreement which allowed De Beers control of 35 percent of the Canadian mine's output.
In 1992, Angola did as the Soviets had and began selling rough diamonds directly, causing De Beers to move in and relieve the market of some $500 million in gems. Shortly thereafter, Russia and De Beers had another row that would threaten the entire industry. Eventually, in 1996, they came to an agreement that once again allowed De Beers some control of Russia's diamond supply. Not quite satisfied, the cartel quickly moved to purchase a controlling share of two of Russia's biggest diamond deposits, hoping to cripple subsequent attempts at mutiny.
In 1999, reports of diamonds sold to finance insurgency in Africa resulted in a review by the United Nations. The negative publicity led to much damage control by the gem giant, which was continuously being pressed to guarantee conflict-free diamonds. In November 2002, negotiations among governments and the diamond industry resulted in the founding of the Kimberley Process Certification Scheme to control the production and trade of diamonds. In 2004, De Beers claimed that it could, in fact, guarantee its diamonds were "conflict-free," an assertion it continues to espouse, despite frequent critique.
When the giant discovered what the film Blood Diamond was about, they pushed producers to include a disclaimer saying that the events portrayed in the 2006 film were entirely fictional. They later admitted that a very small percentage of their diamonds may be conflict diamonds. Their Forevermark campaign is a response to this criticism. This proprietary line of diamonds, all of which are inscribed with a symbol and unique number, are said to guarantee responsible sourcing.
In 2011, the Oppenheimer family -- which essentially made De Beers the giant it became at the height of the monopoly -- sold their stake in the company.
Despite the changes and politics, De Beers continues to be the biggest diamond company in the world. In 2010, it made a deal with Botswana, currently the biggest diamond producer in the world, and reported sales of $5.9 billion, a 53 percent increase from 2009.
"Forever" dies hard. I'll tell you this much -- I never want to receive a diamond again.