Da Beer

De Beers and Beyond:

The History of the International Diamond Cartel∗

Diamonds are forever

hold of them. The idea of making diamonds

available to the general public seemed unthinkable. When diamonds were first found

in South Africa in 1867, however, supply increased rapidly, although the notion of diamonds as a precious and rare commodity remained to the present day.

Similar to the gold miners in California, diamond miners in South Africa tended to rush to

the latest findings.2 As a matter of principle,

diamond miners preferred to work by themselves. However, the scarcity of resourceful

land and the need for a minimum of common

infrastructure forced them to live together in

limited areas. In order to fight off latecomers and to settle disputes, Diggers Committees

were formed and gave out claims in a region.

Each digger would be allocated one claim, or,

at most, two.

Since digging diamonds on a larger scale

was virtually impossible for individuals, small

claimholders soon merged into larger ones.

Moreover, equipment for digging, hauling the

dirt up and pumping water out of the mines

was purchased or rented by groups of miners, thereby forced to cooperate even more

intensively.3 Cecil Rhodes was one of the

first businessmen to rent out pumping equipment and soon realized that he had tapped a

vast market potential. He reinvested the initial proceeds from equipment rental in acquiring claims. By 1880, he held a large enough

share of diamond claims to justify a separate

company purely concerned with managing the

mines: thus DeBeers Mining Company was

created. By 1887, the company was the sole

owner of South African diamond mines.

Concurrently, Cecil Rhodes took control of

the distribution channels through “The Diamond Syndicate,” an alliance of merchants

A gemstone is the ultimate luxury

product. It has no material use. Men

and women desire to have diamonds

not for what they [diamonds] can do

but for what they desire.1

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