The Diamond Myth

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.