De Beers and the Diamond Market

I’ve pre­vi­ously men­tioned, in passing, how the concept of the dia­mond wed­ding ring was man­u­fac­tured. I’ve now been reminded of this upon redis­cov­er­ing Edward Jay Epstein’s com­pre­hens­ive 1982 art­icle in The Atlantic chart­ing the story of how De Beers cre­ated the entire mar­ket for dia­monds through supply/demand manip­u­la­tion and PR.

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.

The art­icle has numer­ous quotes from the strategy doc­u­ments of the advert­ising agen­cies involved in the PR: N. W. Ayer and J. Wal­ter Thompson–the former classing their assign­ment as “a prob­lem in mass psy­cho­logy”.

It’s a fas­cin­at­ing phe­nomen­on set to become even more inter­est­ing now that the tech­no­logy to mass pro­duce flaw­less dia­monds in a labor­at­ory is becom­ing affordable: Wired looks at the rise of the man­u­fac­tured dia­mond.