Flashbacks December 2006

The Diamond Myth

Articles from the past 150 years reveal the dark side of "the most brilliant of stones"
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It used to be that only a price tag could dissuade a would-be fiancé from buying a diamond engagement ring. But ever since the late 1980s, when bad publicity began to plague the diamond industry, guilt has become an increasingly powerful deterrent. The new film Blood Diamond, starring Leonardo DiCaprio, reflects this growing backlash, dramatizing the diamond industry’s role in Sierra Leone’s recent civil war. Although the film debuted in theaters this week, the World Diamond Council has been on the alert for months, hiring a public relations firm to defend the diamond trade and remind consumers that diamonds stand for “exquisite beauty and the timeless qualities of love and devotion.” 

As a series of past articles in The Atlantic illustrates, the history of diamonds is fraught with violence, and their sentimental appeal is largely manufactured. A March 1861 article (“Diamonds and Pearls”) by Atlantic editor James T. Fields outlined the practical characteristics that had earned the diamond its place atop the gem hierarchy:

It is the most brilliant of stones, and the hardest known body. Pliny says it is so hard a substance, that, if one should be laid on an anvil and struck with a hammer, look out for the hammer! [Mem. If the reader has a particularly fine diamond, never mind Pliny’s story: the risk is something, and Pliny cannot be reached for an explanation, should his experiment fail.]

For diamonds, these remarkable material qualities translated over time into monetary value. Diamonds, the article asserted, were a solid investment:

The commercial value of gems is rarely affected, and among all articles of commerce the diamond is the least liable to depreciation. Panics that shake empires and topple trade into the dust seldom lower the cost of this king of precious stones; and there is no personal property that is so apt to remain unchanged in money-value.

But as Edward Jay Epstein uncovered in “Have You Ever Tried to Sell a Diamond?” (February 1982), the idea that diamonds make a good investment is a false one. Diamonds, he argued, are nearly impossible to sell once bought because “any gain from the appreciation of the diamonds will probably be lost in selling them.” He recounted one test conducted by a British magazine: the editor bought diamonds in 1970 and tried to sell them in 1978, but could not sell them for a price anywhere close to the one he had originally paid. Epstein also wrote of a wealthy woman who tried to resell a diamond ring she had bought for $100,000 from Tiffany & Co. in New York City. After shopping the jewel around in vain, she gave up. The problem with selling diamonds, Epstein noted, was that the buyers, not the sellers, control the price:

To make a profit, investors must at some time find buyers who are willing to pay more for their diamonds than they did. Here, however, investors face the same problem as those attempting to sell their jewelry: there is no unified market in which to sell diamonds. Although dealers will quote the prices at which they are willing to sell investment-grade diamonds, they seldom give a set price at which they are willing to buy diamonds of the same grade.

In fact, Epstein argued, the reselling of diamonds was discouraged by the diamond giant De Beers, whose livelihood depended on the perception of diamonds as “universally recognized tokens of wealth, power, and romance.” In order to stabilize the diamond market, De Beers needed to instill in the minds of consumers the concept that diamonds were forever—even though, as Epstein pointed out, “diamonds can in fact be shattered, chipped, discolored, or incinerated to ash.”

In Europe, where diamonds were thought of as jewels for the elite, the concept of giving diamond engagement rings had failed to crystallize. When prices plummeted after World War I, even wealthy Europeans lost their confidence in diamonds, and the United States became De Beers’s most promising market. In the 1930s, Epstein explained, De Beers launched a massive American advertising campaign with the help of the New York advertising agency N. W. Ayer. The campaign spawned the “diamonds are forever” motto and was credited with reviving the industry:

Since the Ayer plan to romanticize diamonds required subtly altering the public’s picture of the way a man courts—and wins—a woman, the advertising agency strongly suggested exploiting the relatively new medium of motion pictures. Movie idols, the paragons of romance for the mass audience, would be given diamonds to use as their symbols of indestructible love. In addition, the agency suggested offering stories and society photographs to selected magazines and newspapers, which would reinforce the link between diamonds and romance. Stories would stress the size of diamonds that celebrities presented to their loved ones, and photographs would conspicuously show the glittering stone on the hand of a well-known woman. Fashion designers would talk on radio programs about the “trend towards diamonds” that Ayer planned to start.

De Beers’s American marketing scheme was so successful that the increased demand for diamonds eventually spread globally. In “How to Steal a Diamond” (March 1999), Matthew Hart chronicled the effects of sky-high demand for diamonds at the other end of the pipeline, in mining countries where theft and corruption were commonplace. The black market for diamonds, he discovered, was especially prevalent in Namaqualand, a region north of Cape Town, South Africa. Miners supplemented their $350-a-month wages by smuggling diamonds from the mines and selling them to bootleggers. (The practice of smuggling was not new. In his 1861 Atlantic article, Fields had described laborers swallowing diamonds or concealing them in the corners of their eyes.) Hart explained exactly how diamonds leave the tightly-guarded mines:

Let’s say a miner spots a diamond. He may glance around to make sure that security guards are looking the other way, and press the diamond under his fingernail for later transfer to another receptacle, such as his mouth. In the event that members of the security force have been corrupted (always a possibility), he needn’t be that careful. The next step is to get the diamond out of the mining area. In one scheme workers smuggle trussed homing pigeons out to the mining areas in lunch boxes. They fit the birds with harnesses, load them with rough, and set them free. Sometimes the thieves are too ambitious. Security officials at [diamond consortium] Namdeb caught one thief when they found his pigeon dragging itself along the ground, its harness loaded beyond takeoff capacity.

These illicit diamonds, Hart explained, bankrolled the civil wars in Angola and South Africa. In South Africa, the apartheid government reportedly allowed its military to trade diamonds illegally, which entrenched the activity, Hart argued.

As another Atlantic article pointed out, the diamond industry played an integral role in South Africa’s development as a wealthy, racially divided nation. After massive stores of diamonds were discovered near the Orange River in South Africa during the nineteenth century, it was whites who became the owners of the mines and the blacks the laborers who slogged in them. “It was only some seventy or eight years ago that the gold and diamond mines fist began to call upon the labor of large numbers of Africans,” read a June 1960 Atlantic “Report on South Africa.” It updated readers on the plight of blacks in South Africa and presciently predicted the reluctance with which white South Africans would relinquish their disproportionate share of power:

South Africa is the most modern, most highly industrialized and wealthiest country in Africa, and its modernity, its industry, and its wealth all depend upon the labor of the blacks in the cities and towns and farms of South Africa. The government of South Africa is as anxious as any government anywhere else in the world to have its country increase in wealth, productivity, and power, and for this reason it never has had and never will have the intention of separating from white South Africa the black workers, out of whose toil the wealth of the country comes.

Thousands of miles north in The Congo (now the Democratic Republic of the Congo), the illicit diamond trade also flourished. A September 1963 “Report on the Congo” detailed the web of smuggling. After political unrest forced European diamond workers out of the region, smuggling surged as production continued. “Nearly everybody is in on the racket,” the report indicated before describing an incident in which a cabinet minister was caught chartering a plane loaded with 2,000 carats of stolen diamonds he intended to sell.

Thirty years later, in “Zaire: An African Horror Story” (August 1993), Bill Berkeley exposed the political instability in the same country—called Zaire at that point—identifying its ruler, President Mobutu, as hopelessly corrupt and its ruling governmental ideology as “kleptocracy.” At the center of Zaire’s corruption, of course, lay diamonds:

Zaire is one of the world’s largest producers of diamonds. Last year recorded diamond exports came to $230 million. Unrecorded exports? “Anybody’s guess,” a diplomat told me, “but certainly larger, by a substantial margin.” Reportedly, an array of mostly Lebanese diamond buyers, working with silent partners in the Central Bank and in the military, are reaping hefty profits in a complex foreign-exchange scam involving a parallel market in checks worth as much as forty times the official exchange rate. They bring in their foreign currency, exchange it for zaires with their silent partners, and then head for the diamond mines. The proceeds leaving the back door of the Central Bank are keeping afloat Mobutu's extended “family” of relatives, elite troops, ethnic kinsmen, and followers.

With films like Blood Diamond now translating these perspectives to the big screen, consumers may begin to associate the glittering stones not with love and eternity but with the turmoil they cause on the way to the jeweler’s display case. The diamond industry is, in the end, much like the diamond itself. To the untrained eye, it might appear radiant and unbreakable. But under intense magnification and scrutiny, it is flawed.

—Stuart Reid
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