The Diamond Illusion

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The idea that diamonds are rare and valuable, and are essential signs of esteem is a relatively recent development in modern history. What we think about diamonds is a myth. At the center of that myth is an illusion: that diamonds are valuable because they are rare.

The illusion that diamonds are scarce was an invention by the De Beers Consolidated Mines, Ltd, incorporated in 1888 in South Africa. However, the diamond invention is far more than a monopoly for fixing diamond prices based on scarcity; it is a mechanism for converting tiny crystals of carbon into universally recognized tokens of wealth, power, and romance.

To achieve this goal, De Beers had to control demand as well as supply. Both women and men had to be made to perceive diamonds not as marketable precious stones but as an inseparable part of courtship and married life. To stabilize the market, De Beers had to endow these stones with a sentiment that would inhibit the public from ever reselling them. The illusion had to be created that diamonds were forever — “forever” in the sense that they should never be resold. The slogan that a “Diamond is Forever”, is actually an ingenious idea by De Beers to keep diamonds in your hands and out of the market.

The moment a significant portion of the public begins selling diamonds from their inventory, the price of diamonds cannot be sustained. For the diamond invention to survive, the public must be inhibited from ever parting with its diamonds. [1]

Before we start to dissect how all this came to be, I would like to start with a name: Oppenheimer. The true genius of diamonds starts with the Oppenheimer family. Ernest Oppenheimer created the Anglo-American corporation in Kimberley, South Africa. In Kimberley, Oppenheimer stumbled upon the largest concentration of diamonds know on Earth [the mines in Russia, India, and Australia were not discovered until many years later]. The land was so rich that according to Albert Alletzhauser, Oppenheimer biographer, “Oppenheimer threatened to flood the world with diamonds unless he was made chairman of the DeBeers Corporation”. Ernest Oppenheimer was made chairman 1929 until his retirement. During this time, he was involved in a number of controversies, including price fixing, antitrust behavior and an allegation of not releasing industrial diamonds for the US war effort during World War II (more on this later). [2]

So where did it all start?

In 1938 De Beers began work with a leading American advertising agency: N.W. Ayer.  N. W. Ayer suggested that a well-orchestrated advertising and public-relations campaign could have a significant impact on the “social attitudes of the public at large and thereby channel American spending toward larger and more expensive diamonds instead of “competitive luxuries.” Specifically, the Ayer study stressed the need to strengthen the association in the public’s mind of diamonds with romance. Since “young men buy over 90% of all engagement rings” it would be crucial to inculcate in them the idea that diamonds were a gift of love: the larger and finer the diamond, the greater the expression of love. Similarly, young women had to be encouraged to view diamonds as an integral part of any romantic courtship. [1]

Let the mind games begin:

In its 1947 strategy plan, the advertising agency strongly emphasized a psychological approach. “We are dealing with a problem in mass psychology. We seek to … strengthen the tradition of the diamond engagement ring — to make it a psychological necessity capable of competing successfully at the retail level with utility goods and services….” [1]

De Beers needed a slogan for diamonds that expressed both the theme of romance and legitimacy. An N. W. Ayer copywriter came up with the caption “A Diamond Is Forever,” …Even though diamonds can in fact be shattered, chipped, discolored, or incinerated to ash, the concept of eternity perfectly captured the magical qualities that the advertising agency wanted to attribute to diamonds. Within a year, “A Diamond Is Forever” became the official motto of De Beers.

So what steps did De Beers and N.W. Ayers take to bring this illusion into the American psyche?  Just how does a company actually implement such an aggressive concept? Simple, just…

  • Exploit the relatively new medium of television by arranging for actresses and other celebrities to wear diamonds when they appeared before the camera.
  • Arrange for lecturers to visit high schools across the U.S. to discuss the diamond engagement ring, thereby reaching thousands of girls in their assemblies in leading educational institutions.
  • Organize a weekly service called “Hollywood Personalities,” which provided 125 leading newspapers with descriptions of the diamonds worn by movie stars.
  • Advertise in magazines that were presumed to mold elite opinion, featuring reproductions of famous paintings by such artists as Picasso, Derain, Dali, and Dufy. The advertisements were intended to convey the idea that diamonds, like paintings, were unique works of art.
  • Offer 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.

Not only did De Beers target those soon to be newly-weds, it also approved a campaign in 1962 to target long-married couples. “Candies come, flowers come, furs come,” but such ephemeral gifts fail to satisfy a woman’s psychological craving for “a renewal of the romance,” N. W. Ayer said in a report. The advertising campaign could instill the idea that the gift of a second diamond, in the later years of marriage, would be accepted as a sign of “ever-growing love.”

De Beers calls this the Rites of Passage campaign and it’s perfectly illustrated on an advertisement commercial geared towards the diamond dealers and sellers:

“Our goal is to make diamonds a cultural imperative for all these important occasions in a woman’s life. That’s why we are continuing to support these segments, so that you’re products like the diamond anniversary band and the 25th anniversary diamond will become as obligatory as the diamond engagement ring, bringing your customers back again and again.” [3]

It’s interesting how the slogan for the public is “A Diamond is Forever”, but for the dealers the slogan is “We help you sell diamonds”.

Everything was going superbly well until the end of WWII, when diamonds were discovered in the Soviet Union. These diamonds called for a different advertising campaign because almost all of the Soviet diamonds were under half a carat in their uncut form. De Beers adjusted its campaign accordingly and outlined a strategy for small diamond sales that stressed the “importance of quality, color and cut” over size. Moreover, the advertising agency began in its international campaign to “illustrate gems as small as one-tenth of a carat and give them the same emotional importance as larger stones.” The news releases also made clear that women should think of diamonds, regardless of size, as objects of perfection: a small diamond could be as perfect as a large diamond.

By the mid-1970s, the advertising campaign for smaller diamonds was beginning to seem too successful. In its 1978 strategy report, N. W. Ayer said, “a supply problem has developed … that has had a significant effect on diamond pricing” [1]

In the 1971 De Beers annual report, Harry Oppenheimer [chairman of De Beers for 27 years until he retired] explained the unique situation of diamonds in the following terms:

“A degree of control is necessary for the well-being of the industry, not because production is excessive or demand is falling, but simply because wide fluctuations in price, which have, rightly or wrongly, been accepted as normal in the case of most raw materials, would be destructive of public confidence in the case of a pure luxury such as gem diamonds, of which large stocks are held in the form of jewelry by the general public.” [1]

During the periods when production from the mines temporarily exceeds the consumption of diamonds—the balance is determined mainly by the number of impending marriages in the United States and Japan—the cartel can preserve the illusion of price stability by either cutting back the distribution of diamonds at its London “sights,” where, ten times a year, it allots the world’s supply of diamonds to about 300 hand-chosen dealers, called “sight-holders,” or by itself buying back diamonds at the wholesale level. The underlying assumption is that as long as the general public never sees the price of diamonds fall, it will not become nervous and begin selling its diamonds. If this huge inventory should ever reach the market, even De Beers and all the Oppenheimer resources could not prevent the price of diamonds from plummeting.

Case and point: Go out there in the market and try to sell your diamond(s). Let me know if you get an offer even close to half of what you paid for. I challenge you to prove me wrong.

The surprise factor:

N. W. Ayer learned from an opinion poll it commissioned from the firm of Daniel Yankelovich, Inc. that the gift of a diamond contained an important element of surprise. “Approximately half of all diamond jewelry that the men have given and the women have received were given with zero participation or knowledge on the part of the woman recipient,” the study pointed out. N. W Ayer analyzed this “surprise factor”:

Women are in unanimous agreement that they want to be surprised with gifts…. They want, of course, to be surprised for the thrill of it. However, a deeper, more important reason lies behind this desire…. “freedom from guilt.” Some of the women pointed out that if their husbands enlisted their help in purchasing a gift (like diamond jewelry), their practical nature would come to the fore and they would be compelled to object to the purchase.

Women were not totally surprised by diamond gifts: some 84 percent of the men in the study “knew somehow” that the women wanted diamond jewelry. The study suggested a two-step “gift-process continuum”: first, “the man ‘learns’ diamonds are o.k.” from the woman; then, “at some later point in time, he makes the diamond purchase decision” to surprise the woman.

Through a series of “projective” psychological questions, meant “to draw out a respondent’s innermost feelings about diamond jewelry,” the study attempted to examine further the semi-passive role played by women in receiving diamonds. The male-female roles seemed to resemble closely the sex relations in a Victorian novel. “Man plays the dominant, active role in the gift process. Woman’s role is more subtle, more oblique, more enigmatic….” The woman seemed to believe there was something improper about receiving a diamond gift. Women spoke in interviews about large diamonds as “flashy, gaudy, overdone” and otherwise inappropriate. Yet the study found that “Buried in the negative attitudes … lies what is probably the primary driving force for acquiring them. Diamonds are a traditional and conspicuous signal of achievement, status and success.” It noted, for example, “A woman can easily feel that diamonds are ‘vulgar’ and still be highly enthusiastic about receiving diamond jewelry.” The element of surprise, even if it is feigned, plays the same role of accommodating dissonance in accepting a diamond gift as it does in prime sexual seductions: it permits the woman to pretend that she has not actively participated in the decision. She thus retains both her innocence—and the diamond. [1]

Today, the diamond cartel still controls the production, the marketing and the pricing of rough diamonds around the world. But there greatest achievement has been that is has transformed the illusion that diamonds are valuable into a hard reality.

The future of the diamond industry now rests with the complicity of millions of consumers; all invested in a very expensive diamond myth.

I hope to have convincingly demonstrated how everything you though you know about diamonds is a fabricated illusion. I will eventually follow this article with the darker side of the diamond trade where I will show how diamonds fuel terrorism, war, genocide, racism, and slavery.

Thank you for reading,

References and additional reading:

  1. Have You Ever Tried to Sell a Diamond?, Edward Jay Epstein, February 1982
    http://www.theatlantic.com/magazine/archive/1982/02/have-you-ever-tried-to-sell-a-diamond/4575/
  2. Roberts, Janine, Glitter & Greed: The Secret World of the Diamond Cartel, The Disinformation Company, 2007, ISBN: 978-1932857603
  3. The Diamond Empire: Oppenheimer family’s cartel, artificial scarcity, PBS Frontline, 1994
    http://video.google.com/videoplay?docid=-6186684678299366197#
  4. Diamonds of War: Africa’s Blood Diamonds, National Geographic, 2003
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