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Diamonds: An Evil Scam | MagnatesMedia | YouTubeToText
YouTube Transcript: Diamonds: An Evil Scam
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Core Theme
The content exposes how De Beers, a single company, has historically manipulated the global diamond market through control of supply, price fixing, and extensive marketing campaigns to create an artificial perception of rarity and value, deeply embedding diamonds into societal notions of love and commitment.
Diamonds are seen as symbols of wealth,
status, and love. But despite what most
people believe, diamonds are not
actually rare. And one single company is
responsible for manipulating the entire
world into believing otherwise. Debeers
spent the 20th century pulling the
strings behind every element of the
diamond industry. From mining to
marketing to sales, Debeers controlled
the diamond trade. And by controlling
the supply of diamonds, they could
completely manipulate the
prices. The beers also pulled off one of
the most successful marketing cons ever.
By convincing us all that diamonds are
much more valuable than they really are,
and that the only way to show you truly
love someone is spending several months
of your salary to buy them a diamond ring.
ring.
What may seem like a romantic tradition
is really an incredible scheme by the diamond
diamond
cartel. So today we're going to uncover
the truth about the brutal business of
diamonds. From secret syndicates,
apartheide, price fixing, and blood
diamonds. This is a story spanning three
centuries into one of the darkest and
most manipulative industries of all time.
time.
It's a story of war and all kinds of
human rights
violations. And it goes much deeper than
you may think. This is the story of the
beers and the evil business of [Music]
Our story starts in 1867 in South Africa
when a young boy was playing a game with
some stones. A passer by happened to
notice that one of the stones seemed to
sparkle as it caught the light.
Intrigued, he asked the boy if he could
buy the stone, but the boy simply gave
it to him for free. That sparkly stone
turned out to be a diamond. And once
people heard of the discovery, a new
diamond rush was ignited. Adventurers
from Europe and America rushed to South
Africa in the hope of finding diamonds
and making their fortune.
Not far from where the diamond was found
in South Africa, Ceil Roads, a shy and
sickly 17-year-old from England, was
working on a cotton farm when he heard
the news. Ceil was born with a weak
heart and lungs and hadn't been expected
to live for very long. But when his
older brother Herbert asked him to come
join him on his farm out in the Cape
Colony, Ceile's fortunes changed completely.
completely.
The Cape Colony was a British colony in
present-day South Africa, and the dry
climate did wonders for Ceile's health,
which improved almost immediately after
he arrived in 1870. But the two brothers
were very different, and working
together wasn't easy. While Herbert was
impulsive, adventurous, and hands-on,
Settle was reserved and awkward. He
spent his days keeping to himself and
reading books and spent his nights
dreaming of a life his poor upbringing
and poor health meant he could never
have. Since he was a child, Settle had
dreamed of studying at the prestigious
Oxford University and living among the
upperass elite he admired from his
books. But instead, he was stuck doing
hard labor halfway across the world in Africa.
Africa.
So when the two brothers heard that a
diamond had been found nearby, they were
both eager to investigate. For Herbert,
it appealed to his sense of adventure.
But for Ceil, it was the chance to make
some real money and turn his dream into
a reality. Herbert was among the first
to purchase claims of land to mine on
the nearby Debeers farm owned by two
Dutch brothers who had until now been
living a quiet life with their family.
This meant that Herbert had the
exclusive rights to mine for diamonds on
these bits of land so long as he paid a
very small annual fee to the
farmers. Immediately after the Debeers
brothers opened their land to
prospectors like Herbert, they regretted
their decision. Desperate to keep their
family away from the greed, sin, and
violence that rapidly engulfed their
home, they quickly sold their farm and left
left
town. And the Debeers brothers were
right. It didn't take long for the local
town of Kimberly to be transformed into
a pit of lawlessness as thousands of
foreigners arrived to try their luck at
diamond mining. And soon, hundreds of
diamonds were being found all across
nearby farms. But this was actually
really unusual. Diamond deposits had
normally been found along riverbeds, and
until now, there had only been a small
handful of locations where diamonds
could be found at all. This had led to
the common belief that diamonds were
rare and valuable. A concept that was
cemented in the west when European
nations like Britain, Portugal, and
Holland colonized the world and took
over diamond production for themselves.
Slavery, violence, and land seizures
were used to mine diamonds and send them
back to feed the growing appetite of the
wealthy elite in Europe. This meant that
by the time of the unusual discoveries
in South Africa, the diamond sources in
historic locations like India and Brazil
had all but dried up. By comparison, the
amount of diamonds being found in South
Africa was turning out to be
unbelievably large. Rather than a few
diamonds deposited on a riverbed here or
there, thousands upon thousands of them
were being found. And they were all
hidden in a blue layer of rock deep
under the ground that was soon dubbed
Kimberlite. after the nearby town of
Kimberly. But while Herbert was off
trying to make his fortune on the
Debeers's land, he had left his
frustrated younger brother Ceile in
charge of the cotton farm. Although he
was unhappy about it, to his own
surprise, Settle was able to
significantly increase the profits
within a single season. But he couldn't
help but wonder if he was able to do so
well in charge of a meager cotton farm,
how would he fare at the head of a
diamond mine? Ceile's heart began to
race as he considered the idea. Maybe
this could be his way to make enough
money and gain enough status to study at
Oxford and become part of the upper
class elite like he'd always
dreamed. So, ignoring his big brother's
orders, 18-year-old Ceiles abandoned the
cotton farm, took the extra money he'd
made, and purchased his own claims on
the Debeers farm. To keep his costs low,
Ceile saw no issue with exploiting
locals to dig for him, who he frequently
referred to as
barbarians. You see, Ceil had many
different sides to him, and some of them
were extremely
dark. His obsession with the British
upper class had also led to an obsession
with British imperialism, causing Ceile
to see the British race and culture as
far superior to the rest of the world.
This meant he was happy to pay little to
no wages to the local workers and
enforce intrusive searches and brutal
beatings. And as the miners continued to
dig deeper and deeper holes, the already
exhausting work became significantly
more dangerous, especially once the
rainy season began. Sites were prone to
collapsing down on workers and the holes
frequently filled with deep water.
Nearly a third of all workers either
died, were severely injured, or became
too sick to work. [Music]
[Music]
However, where others saw disaster, Ceil
saw opportunity. He'd recently seen an
advert posted in town by a local farmer
desperate to sell his water pump, which
Ceile knew exactly what he could do
with. He spun a story to the other claim
holders about how he had single-handedly
tracked down the only water pump in the
entire colony and fiercely negotiated to
buy it from its unwilling owner, paying
an insanely high amount that the farmer
simply couldn't refuse. Ceil knew that
sometimes the story is more important
than the truth. The other claim holders
believed his story, and seeing no other
option, they all paid Ceile fees to rent
out the machine so they could pump the
water from their mines and continue
digging for diamonds. Just as he'd
hoped, Ceile's story helped propel him
to local fame. With many seeing him as
an intelligent entrepreneur to keep an
eye on, using all the money he made, he
began buying other mining operations and
consolidating them. He quickly became
the largest claim holder on the entire
Debeir site and this enabled Ceil to
found his own business named the Debeers
Diamond Mining Company. Ironically named
after the two Dutch brothers who had
wanted nothing to do with diamonds as
they said it was an evil
industry. However, while Ceil was
becoming wealthier than he could have
imagined, his brother Herbert wasn't
doing as well. So he made another
impulsive decision to head across the
country to search for gold instead. But
soon after his tent caught fire while he
was sleeping and he was burnt
alive. Ceile was horrified to hear what
had happened and decided it was time to
return home to England to reunite with
what was left of his family. So using
his newly made fortune, Ceile put one of
his business partners in charge of the
mine. and he returned home to England to
see his family and grieve the loss of
his brother. Whilst back home, he seized
the opportunity to make his childhood
dream a reality and enrolled in Oxford
University. But within just a couple of
months, Settle's health drastically
deteriorated again, leaving him with no
choice but to return to the drier South
African climate that seemed to keep his
sickly heart and lungs under control.
Settle now knew that the only way to
truly propel himself into upper class
society would be through his diamond
business. However, as more and more
diamond deposits continued to be
discovered nearby, Settle began to
realize an unsettling truth for his
company's future. Diamonds weren't
actually that rare. In fact, they were
incredibly common. Since so many were
being found, the global market was soon
flooded with South African diamonds. And
so their price began to
plummet. Once again, Zeal knew that the
story was going to be more important
than the truth. To keep the price of
diamonds high, he was going to have to
make it seem as though these common
stones were as rare as they were once
thought to be. But to do that, he'd need
a way to control how many diamonds were
going into the market. And this would
Many claim holders had struggled to keep
up with the rising costs of replacing
workers who died from accidents and
sickness and also the costs for new
equipment as the mines got deeper and
more complicated to work. But Ceil had
managed to keep his minds profitable by
entrenching himself in the government.
By running for office and being elected
into the local Cape Colony Parliament,
Ceile was not only able to promote his
British imperialist ideology on a larger
scale, but he was also able to write and
push through new laws and deals that
directly benefited his company, such as
the ability for Debeers to use convicts
that he could treat however he wanted
and even kill if he suspected they were stealing.
stealing.
The Beers had also been one of the first
companies to make use of a closed
compound system for its black workers.
In essence, segregating all of the black
workforce and keeping them permanently
locked inside a barracks until their
contracts expired. Inside these
compounds, they were forced to be naked,
paid extremely low wages and were
punished regularly. Their entire lives,
from the moment they woke until the
moment they slept, were under the
control of the bears. And to make
matters worse, Settle was known for
disregarding safety laws, endorsing
invasive body searches, and treating any
discontent with extreme violence. These
brutal tactics had allowed Ceile to cut
his costs and earn larger profits. And
this enabled him to buy out other
claimments who were struggling. By
absorbing the competition, he was able
to get the majority of the Debeers mine
under his control.
However, another young Englishman,
Barney Bonato, had the majority of the
newer Kimberly mine under his control,
and Barney's mine appeared to be larger
and produce better quality diamonds. If
Settle was to keep the price of diamonds
high, he needed to truly control the
supply. Thus, he needed to figure out a
way to seize Barney's Kimberly Central
Company for himself. Luckily for Ceile,
as his wealth had continued to grow, so
had his political influence. Having
practically trained his whole life to be
among the elite, Ceile was skillfully
able to blend into the circles of the
upper class, something Barney had failed
to do. This allowed him to connect with
powerful and wealthy figures like Nathan
Rothschild, who he convinced to back his
plan to manipulate the diamond market.
In person, Cecile befriended Barney,
proposing plans to cooperate and strike
a deal together. But behind his back,
Ceile was secretly using his investors
money to buy a huge stake in Barney's
business. By the time Barney realized
what was happening, it was too late.
Ceile ended up buying out Barney's rival
enterprise. And with both the Debeers
mine and the Kimbley mine now completely
under his control, Ceile merged the two
companies in 1888 to form Debe's
Consolidated Mines. Ceile had wiped out the
the
competition. As the most powerful man in
the country, Ceile levied his influence
over the limited voting population and
was elected to become prime minister,
which put him in a position for the next
phase of his plan. Ceile helped
introduce policies like the hut tax,
which forced locals to pay to live on
what was previously their own land. And
in order to pay, they had to earn money
by working in his dangerous diamond
mines, where they would be forced to
live, eat, and sleep in his closed
compounds until they repaid their
supposed debt. He even made it close to
impossible for black citizens to vote,
resulting in constant riots and protests
that he shut down with excessive
violence. In fact, many of the laws Ceil
introduced were instrumental in laying
the foundations for the nation's future
apartheid policies.
But regardless of how they were
received, these policies made diamond
production in South Africa cheaper than
ever. At only 35 years old, Settle now
controlled more than 90% of the diamond
output in the entire world. And thus, he
could now fully control the number of
diamonds available on the market. He
began to stockpile diamonds, releasing
only a limited amount into the market to
create the illusion that they were still
rare as this artificial scarcity would
drive up the price. To achieve this,
Settle and his investors created a
diamond syndicate based out of London
where a small carefully chosen group of
firms gained the exclusive right to
purchase diamonds from Debeers, which at
this point basically meant they were the
only companies able to buy diamonds at
all. These firms were forced to buy a
specific amount of gems at a fixed price
with the beers stockpiling the rest to
avoid saturating the market. Members of
the syndicate would then sell their
diamonds to smaller merchants who then
sold them to customers. This single
channel selling method gave Ceil and
Debe complete control over the
production of diamonds, the sale of
diamonds, and the price of diamonds.
They had created a diamond cartel. As a
result, the price of diamonds steadily
increased around the
world. Meanwhile, Ceil continued to
consolidate power. He even had his own
private army, which he used to take over
other parts of Africa and mine for more
diamonds. Ceile roads then founded the
African territory of Rhdasia, named
after himself, which is present day
Zimbabwe and Zambia. Ceil seemed unstoppable.
unstoppable.
But in 1902, at only 48 years old, his
weak heart finally caught up with him.
Settle died with no wife or children,
leaving nearly his entire fortune to
establish the road scholarship at
Oxford. It's quite incredible how a
sickly boy from England rose to control
90% of the world's diamonds and become
prime minister of the Cape Colony, all
whilst using the most brutal and
cutthroat tactics.
However, whilst the beer's leader was
dead, the company's rise to power was
Ernest Oppenheimer had spent his entire
life learning about the diamond industry
and admiring the exploits of Ceile and
his partners from afar. With his astute
knowledge of the industry and razor
sharp instincts, Ernest was quickly
taken under the wing of several major
players on the Debeers board of
directors. and he eventually became the
chairman and head of the entire company.
Whereas before Debeers had tried to
outmuscle or take over all new diamond
sources that popped up, Ernest had a
different strategy. He instead chose to
incorporate new sources into his selling
channel. Ernest created several
subsidiary companies under the bracket
of the central selling organization
known as the Cso that would directly
purchase all diamonds from alternate
producers. If anyone refused to be
bought out or sell to the cso, Ernest
found ways to undermine and disrupt
their production. He used connections
with governments to force companies to
sell. He flooded markets with similar
diamonds to devalue their products. And
he even sent in undercover employees to
sabotage mines and equipment. If anyone
did manage to produce diamonds that they
wouldn't sell to Debeers and the Cso,
Ernest would cut off their ability to
sell by threatening to blacklist any
merchants who dealt with them. As a
result, everyone had no real choice but
to partner with the bears. From hordes
of diamonds seized by the communists in
Russia to oldw world sources in India to
new mines across the African continent,
the beers led by Nest purchased
everything. But since they operated
under several different subsidiary
names, most people had no idea just how
much power and control Debeers actually
had. In reality, Debeers had a hand in
nearly every diamond mine in the world,
and they continued to stockpile all
those diamonds. They released just the
right amount to keep prices high and
maintain the perception of diamonds
being rarer than they actually are.
However, many of the diamonds deers were
now stockpiling came from operations
that were even more dark and disturbing
than their own. Mines in countries like
Belgian Congo were built on slavery,
child labor, and even genocide. In other
parts of Africa, the diamonds were being
used to fund wars and overtopple
governments. And unlike Debe's own
mines, these new business partners
weren't really under their control. This
would later lead to some very serious
problems. But to Debeers in earnest,
none of that mattered right now, as they
had bigger things to worry about. You
see, between their own production and
their mass purchasing, the biz was
building up such a huge stockpile of
diamonds that they were starting to
worry they might not be able to sell
them all. And this problem was about to
be massively intensified in 1929 by the
worst economic crash in history. In the
following years, the world economy
suffered a devastating collapse known as
the Great Depression. And needless to
say, demand for diamonds completely
plummeted. The American economy was in
pieces and this was a major issue for
Nest as the price of diamonds had been
completely tied to the American market.
In 1919, America was importing roughly
$84 million worth of diamonds from the
Beers. Yet by 1930, American imports had
dropped to only $5 million a year. And
since the beers was determined to
continue buying up all global diamond
production that fell outside of their
own control, this left them with huge
expenses and very little income. Despite
the state of the American economy,
Ernest was still convinced the US was
the answer to his problems. He just
needed a way to expand his market wider
to include everyone, not just the
wealthy elites. In other words, to biz
already controlled the supply, but now
they needed to control the demand.
So Ernest sent his 29-year-old son,
Harry, to America to begin what many
have called the greatest marketing
campaign of all time. Or, as some would
say, the greatest marketing scam of all time.
With the help of an advertising firm,
Harry Oppenheimer was tasked with
overseeing a campaign unlike any that
had been done in history. Rather than
focusing on a specific brand, they were
going to promote the concept of diamonds
themselves. In the early 20th century,
there had been a trend of rings being
given by a man to their partner when
they proposed. But these rings had
featured cheap jewels like birthstones,
and it hadn't really caught on yet. That
was until Harry and the marketing team
laid out a plan to convince the public
that engagement rings were a necessity
for all
proposals, and more importantly, that
the only stone worthy of true love was a diamond.
diamond.
Harry and Ernest wanted their team to
interlink diamonds with the fundamental
concept of love. If the general
population felt they had to have a
diamond engagement ring, regardless of
their wealth or social status, the beers
would have a guaranteed diamond market
forever. Because if you can convince
people the biggest romantic gesture is
giving a diamond, people will buy it no
matter how the economy is doing.
So they began small using classy
handdrawn images and planting stories in
newspapers that focused on linking
diamonds to the ideas of love and
marriage. To make sure this message got
into the minds of young girls and women,
they sent lecturers around the country
to churches, high schools, and
universities to give propaganda fils
about diamond rings. Then they paid
Hollywood studios and producers to
insert scenes about diamond rings and
proposals into their movies. and they
started placing diamond rings on the
fingers of Hollywood celebrities so the
biggest stars were seen wearing them.
Using a weekly service they called
Hollywood Personalities, they sent
pictures and details of rings worn by
the stars to all of the country's biggest
biggest
newspapers. At the time, this kind of
product placement was an innovative
strategy, and most people didn't even
realize they were being advertised to.
But subconsciously, symbols of American
beauty and the American dream became
heavily tied to diamonds. And clever use
of corporate branding, like having
Marilyn Monroe sing the now famous,
"Diamonds are a girl's best friend,"
helped hammer in the message for Debeiz
and make diamonds the ultimate status
symbol. However, to make sure they
appealed to every segment of American
society, they had another genius idea.
Instead of putting out a recommended
price to spend on an engagement ring,
they cleverly advertised that you should
spend 2 months salary. This meant
whether you were rich or poor, you still
had a price in mind. They would later
raise this to 3 month salary. And it's
crazy really, the company profiting from
you buying their product, literally
telling you how much they want you to
pay, but making it seem like a tradition
rather than a marketing campaign.
And when the advertising team noticed
that men and women were picking out
engagement rings together and that women
tended to go for cheaper alternatives,
they added another layer to the message.
And engagement should be a
surprise. In a single marketing move,
they forced men to shop alone with
nothing but debeers advertising to guide
their choices. Underneath it all, there
was one message that stood strong. If
you wanted to get married, you had to
buy a diamond.
And before long, the concept of diamond
engagement rings was so ingrained in
American culture that young couples
believed it was a timeless tradition
instead of a recent invention by a
corporate machine. Because up until this
point, engagement rings weren't as
common. And most importantly, different
gemstones were typically used. But
Debeers convinced the world you had to
propose with a diamond ring. In fact,
it's widely believed that debeers helped
push the superstition about opals
attracting bad luck as opals had often
been preferred over diamonds before
debeers got involved. Even today, almost
a century later, many people are unaware
of the manipulative origins of this
still maintained tradition.
But nothing captured the success of the
marketing campaign greater than its key
slogan, a diamond is forever, which has
since been recognized as the greatest
advertising slogan of all time. Not only
did it elegantly capture the notion of
lasting and symbolic love that could
never be destroyed, but it subtly hinted
at something else. Diamond should be
kept forever and never resold. By
convincing the public that diamonds
should never be resold due to what they
represented, the beers prevented a
secondary market of secondhand jewels,
undermining their single channel selling
so that people wouldn't buy secondhand
from someone else. Like everything to do
with diamonds, the story was of course a
lie. Diamonds don't last forever. They
can be scratched, scuffed, and even
destroyed. But what did the truth matter
when Debe was making millions and
millions in profit?
At the start of the campaign in 1939,
less than 10% of women in America
received a diamond engagement ring. But
within only 20 years, that number was
over 80%. And within 40 years, diamond
sales in the US had risen from around
$23 million a year at the start of the
campaign to an incredible $2.1 billion a
year or around 7 billion adjusted for
inflation. And with its success in the
US, Debeers replicated its marketing
campaign in different nations across the
world. And soon it had huge markets for
diamond engagement rings in countries
like the UK and Japan. In Japan, for
example, the amount of future brides
receiving engagement rings grew from 1%
in 1966 to 90% in the early '90s. Even
though a diamond is basically just a
lump of carbon, the beers convinced the
world that diamonds equal love.
But all the time Debeers had been
marketing the concept of love, some much
darker events had been unfolding in the
background that threatened to completely undo
everything. Before we get to the next
chapter, it's time to answer a question
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Soon after Debeers began their marketing
campaign to the American public, the
Second World War broke out. Because of
changing technology, diamonds had become
a strategic resource for both sides of
the war as they needed industrial
diamonds to manufacture new weapons and
aircraft. In many ways, the need for
industrial diamonds was great for the
beers as it gave them a way to offload
their poorer quality stones, but in
other ways, it was a threat to the
cartel's dominance and single channel
selling. Nazi Germany was particularly
troublesome. The Nazis had forbidden all
diamond exports, confiscating them for
themselves in every country they
occupied. Now, it's worth noting that
diamonds don't look anywhere near as
impressive when they're first found. It
takes the skill of cutters and polishers
to transform them into the final product
we see. And as the Nazis swept through
Europe, they destroyed many of the key
diamond cutting centers like the one in
Antworp. And since this industry
featured a large Jewish community, many
of the skilled workers were taken off to
concentration camps, never to
return. The Nazis planned to create
their own diamond cutting monopoly, one
that Debeers would have no choice but to
use within their selling channel.
However, as Debeers was based in Allied
territory and Ernest was a patriotic
supporter of his home country of
Britain, Debeers was publicly backing
the Allies. But in reality, Ernest, just
like Ceil, had always supported his
company's interests over any sense of
morality or
duty. So when President Roosevelt came
to Ernest demanding he sell him 6.5
million carats of diamonds that the US
desperately needed, Ernest outright
refused. That is unless the beers was
given permission to formally sell on US
soil with indefinite immunity from any
prosecution due to their monopoly which
breached US trade laws. Roosevelt
couldn't give nest what he wanted. So
Ernest wouldn't give Roosevelt what he
needed. But then President Roosevelt
threatened to pause the supply of planes
being sent to Britain which were needed
to defend against German air raids and
the same planes that required industrial
diamonds in their manufacturing process.
So that's when the British government
stepped in and pressured Debeers to make
a deal with the United States. They
eventually did, but even still, time
after time, Debeers failed to fulfill
the deal, claiming they didn't have
enough stock. This caused the US to open
an investigation into the company,
leading to them uncovering a whole host
of dark secrets.
They discovered that Debeers had not
only been lying to them about their
stock, but that they'd been sabotaging
rival operations to ensure that the
Allies would have to pay their high
monopoly prices for industrial diamonds.
The US accused the Beers of violating
antitrust laws and price fixing, but it
was unable to prosecute them as they
weren't technically operating on US
soil, not directly at least. And when
they tried to get their allies in
Britain to punish them instead, they
soon found out that everyone in the UK
government dealing with diamonds was
either an active or former employee of
the beers or the syndic. Roosevelt was
furious at Nest, but he had no choice
but to buy what was offered for the
prices that were
demanded. More disturbingly, the same
investigation discovered that Nazi
Germany had almost run out of their own
supply of diamonds. Yet somehow they
were constantly receiving more. Through
an undercover operation, the US
discovered that diamonds were being
illegally smuggled into Germany
originating from mines owned by Debeers.
Even though the US were convinced Ernest
and his syndicate were knowingly selling
to the enemy for an extortionate profit,
they could never conclusively prove it
With the end of the war, these conflicts
with the US government faded away, at
least for the time being. But
controversy remained tightly bound to
nest and his empire. While selling a
romanticized dream of love to the
American public, the new apartheid
government had risen to power in South
Africa. And as these brutal laws of
separation, abuse, and exploitation
became known around the world, it was
hard for Debeers to claim ignorance when
they were directly benefiting from the situation.
situation.
And just as the global community began
to take notice and demand action, at the
age of 77, Ernest Oppenheimer passed
away, leaving his son Harry in charge of
his sprawling
empire. In the face of severe global
backlash, Harry shut down the brutal
closed compounds the Beers had been
using since its inception and raised
wages for its black workers. But due to
new government laws, he still had to
segregate his workforce by race. and
nothing he could do to try and save the
company's image was enough to get around
the global sanctions that cut South
Africa off from the wider world
economy. In order to keep exporting
diamonds, Harry had no choice but to
focus his attention on other mines
outside of South Africa, investing
heavily in new African sources. But to
Harry's shock, just as he began to
regain a degree of control, huge diamond
deposits were discovered in Russia. To
make sure these new Soviet sources
didn't disrupt the already unstable
market, Harry personally flew to Russia
to negotiate a
deal. In exchange for buying close to
100% of the gemquality diamonds produced
by the USSR, Harry agreed to give Russia
all the industrial diamonds it needed
for its weaponry and machinery. The only
issue was publicly Russia had cut all
ties with South Africa. And this was at
the height of the Cold War with the USSR
being seen as an enemy of the West. So
Harry had to conduct all of these deals
in secret, not wanting to anger the
Western nations he was publicly allied
to. And to make matters worse, the
diamonds that came from the Russian
mines were different to any that had
been seen before. They were extremely
small and had a different silver
coloring to them. Harry knew that the
syndicate members didn't want these
lesser diamonds. So, he began forcing
them to purchase bundles of different
quality diamonds, including the silver
Russian ones. They had the choice of
purchasing the entire bundle or nothing
at all, which really wasn't a choice for
them. It only took a few months for many
of the merchants to complain. Debeers
had spent years advertising a specific
style of diamond to the market, and none
of their customers wanted these tiny
Russian gems. So Harry went back to his
marketing team to try and find a
solution. Together, Harry and his team
once again came up with a genius
marketing campaign. This time to sell
diamonds to those who already had an
engagement ring. They began advertising
the concept of eternity jewelry that
featured a handful of small silver
diamonds. This eternity jewelry, they
claimed, was a way to show your wife how
much you still loved her and to
celebrate your
anniversaries. Like their last campaign,
it was a rousing success. Without
anybody realizing, Harry and Deers had
convinced the West to buy valueless
luxury goods during the height of the
Cold War that was directly funding the
military expansion of their enemy.
Debeers were selling the concept of love
while funding the reality of war.
But the general population had no idea
about any of this. Instead, their
attention had turned to the African
diamonds Debeers were selling, which
were gaining a very different and very
In the years after Harry had diversified
into wider Africa, many of the same
countries were beginning to declare
independence from their colonial rulers.
And these new governments wanted control
of their own resources with or without
Debeers. But Debeers wanted to make it
clear that without them was not an
option. As diamonds were smuggled out of
these nations to be sold outside the
cso, debeizers took action. These struck
deals with governments offering huge
financial incentives to sell directly to
them and stamp out smuggling on their
behalf. In nations like Congo that had
just become independent, the government
was more than happy to take the beers's
money in exchange for protecting their
business interests. They raised an
entire army to oversee production of the
diamond mines, murdering thousands of
supposed smugglers. In one incident,
they gunned down 200 people near a
diamond deposit, killing every one of
them in minutes, only to discover it was
a group of students on a camping trip.
Before long, it became easier to sell to
the deers and the cso than to face the
wrath of the governments, soldiers, and
mercenaries they were financing to
protect their interests. But as many of
these new African nations became
engulfed in internal conflicts, waring
factions took control of the diamond
deposits, using slavery and child labor
to work them. They too were happy to
sell to the cso and deers if it helped
raise the funds they needed for their
wars. But this time the world had
started to notice that their diamonds
from nations like Sierra Leon, Angola,
and Congo were being used to fund these
conflicts in which horrific atrocities
were being committed. This led to the
term blood diamonds being coined,
meaning a diamond that was mined in a
war zone and sold to fund terrorism,
warlords, or other violent activity. The
West was outraged by the idea that their
symbols of love and eternity were born
in blood and death. With about 15% of
global sales believed to be blood
diamonds, the issue became so severe
that the UN introduced embargos on the
purchase and sale of them. Though
Debeers was reluctant to join any
embargos, Harry began to worry that the
romanticized idea of diamonds their
family had spent half a century
perfecting was starting to be eroded by
its association with violence and war.
It seemed at long last the story of
Debeers's diamonds was no longer strong
enough to overpower the truth. News
stations, protesters, and human rights
activists were calling Debeers out by
name, accusing them of endorsing and
encouraging blood diamonds. So realizing
that this threatened their entire
empire, Debeers agreed to the embargos
and promised they would stop trading in
blood diamonds. And in an attempt to
regain confidence in their diamonds,
Debeers helped introduce the Kimbley
process. This meant diamond sellers
would have to prove exactly where the
gems came from and how they had been
obtained. They claimed this would mean
every diamond could be proven to be
sourced from either ethical or unethical
sources. These changes seemed to end the
public outcry. And whilst it's true they
certainly helped, the reality is that
blood diamonds still exist. The
company's vast structure continued to be
used to send blood diamonds to other
nations such as Rwanda and Uganda, who
would then sell them to the CSO through
third parties, claiming they originated
in their own countries. Suddenly,
countries with no actual diamond
deposits were miraculously becoming some
of the biggest exporters of diamonds in
the world, and all of these supposedly
clean gems were ending up in the Debeers
selling channel. Another issue was that
the scope of the Kimbley process
certification was very narrow, which
meant nations like Zimbabwe that weren't
deemed to be a war zone were free to
sell clean diamonds. Even though
atrocities and human rights crimes were
being carried out to mine them, while
the media outcry had quietened down, the
association between violence and
diamonds never truly left public
consciousness. The popular movie called
Blood Diamond, starring Leonardo
DiCaprio, only helped highlight to the
masses the brutal realities of diamond
mining. However, it wasn't public
opinion that was going to finally bring
down the Diamond Empire. It was
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In the 1950s, General Electric patented
their technique to manufacture man-made
diamonds in a lab. Debeers was terrified
as if synthetic diamonds caught on and
were produced at scale, it could be the
end of their empire. But initially,
these labmade diamonds had been small
and rough and only really usable in the
industrial market. Still, since the
beers had seen them as a threat to their
business, they struck a number of
exclusivity deals with General Electric.
These deals gave the beers access to
General Electric's patent and enabled
the two companies to divide up the
western industrial market between
themselves. Despite being identical to
natural diamonds, these synthetic
diamonds sold for less than 50 cents a
carat. But because of the huge growth of
the market, with industrial diamonds
used for practically every aspect of
modern technology, it meant that even
when General Electric finally mastered
making gem quality diamonds in a lab,
they chose not to. It was more
profitable to make barrel loads of 50
cent rough diamonds in minutes than
spend days or weeks growing a small
number of bigger and better diamonds.
Regardless, Debeers simply couldn't risk
their deals with General Electric going
sour. So Debeers decided to buy up big
chunks of US companies that manufactured
products like saws and drill bits from
industrial diamonds. This would ensure
that even if General Electric ever
offered better prices or withdrew their
exclusivity deal, Debeers could instruct
these American companies to order their
own diamonds instead. But this ended up
backfiring for Debeers. You see, ever
since World War II, the US Department of
Justice had a target on Debeers's back.
They knew the company was violating
antitrust laws as they clearly had a
monopoly by controlling the supply of
diamonds, but every case they'd raised
ultimately fell apart due to the company
not officially operating on US soil. But
with the recent deals the beers had made
with American companies, the DOJ finally
had a solid case against them. Thus, in
1994, both General Electric and Debeers
were in the American court, accused of
price fixing and secretly dividing up
the synthetic diamond industry. And
before long, a number of US states also
began taking Debeers to court. Debeers
had spent decades sabotaging,
undermining, and bullying American
businesses in the diamond industry. And
now they had been shown to be operating
in the US, they could no longer use this
as a way to get around American laws.
Debeers were found guilty on all charges
and fined just shy of $300 million. This
still might not have been a huge amount
to them, but the impact on Debiz'
operations was massive. As part of the
settlement, they were forced to abide by
US laws or lose access to the entire US
market, which was nearly half of the
entire global diamond market. This meant
they could no longer enforce their
single channel selling within America,
thus ending their centurylong monopoly
on the continent. And while the beers
were busy spending millions in fines and
lawyer fees just to lose control over
diamond sales, they were simultaneously
losing control over diamond production.
For starters, their deal with Russia had
fallen apart after the collapse of the
USSR, with many businessmen and local
governments choosing to sell their
diamonds outside of the cso. And at the
same time, vast new diamond deposits had
been discovered in countries like Canada
and Australia. It wasn't long before new
competitors emerged who were producing
so many gems that they rivaled the
output of debears. And many of these
companies actively marketed their
diamonds as an ethical alternative to
the murky history of the bears as did
the producers of lab grown diamonds as
they grew in popularity too. Between the
new diamond production coming out of
Canada, Australia, Russia, and newly
independent African nations, plus the
rise of synthetic diamonds, Debeers had
completely lost control of production.
With all of these new sources and rivals
actively choosing to operate outside of
the syndicate, the beers had to accept
defeat. They couldn't use the threat of
restrictions to force merchants to take
their diamonds anymore. If the beers cut
them off, they just go get their
diamonds from somewhere else. The years
in which Debeers monopolized the entire
However, Debeers is still a major player
in the diamond market with roughly a
third of all global production still
under their control and the modern
consumer market for diamonds is larger
than ever, estimated at over a hundred
billion dollars. Given that lab grown
diamonds are so perfect at this point,
it may seem surprising the demand for
natural diamonds remain so high. As one
tweet put it, "We figured out how to
grow diamonds that are cheaper and
better quality than the real thing." And
so many people are still like, "No
thanks. The suffering is what makes it
special." But once again, it's the
marketing. Ironically, after decades of
telling people that the more perfect the
diamond, the more it'll cost, now the
diamond industry claims that the
imperfections from natural diamonds are
what make them more real and valuable
than synthetic diamonds. They've managed
to convince people that natural diamonds
are more special, despite the fact you
wouldn't be able to tell any difference
from a diamond grown in a lab. And thus,
despite the availability of cheaper lab
diamonds, despite the knowledge of the
wars and damage diamonds have caused,
and despite the fact we know how deers
so ruthlessly manipulated the market,
somehow their original lie still
However, if you think the diamond
industry has a dark past, wait until you
hear what happened with the tobacco
industry and the company Jewel. This
story is crazy. So, just click the
thumbnail on screen to check that out
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