Why are we still buying diamonds? 'Search Engine' looks for the answer

'I never thought of like the concept of an heirloom being about someone protecting their monopoly'
Photo credit Getty Images

You've heard the saying diamonds are a girl's bestfriend, but why? Why do we hold this stone in such high regard? It's been a symbol of love, power and admiration for decades and in a new episode of Search Engine, PJ Vogt dives into the history of diamonds and how they really are a representation of a century-long scheme.

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Recruiting some expertise in the matter, PJ spoke with Barak Richman, author of Stateless Commerce: The Diamond Network and the Persistence of Relational Exchange. Diving into the history of the gem, Richman said "diamonds were only found in the Indian subcontinent until about the year 1800. So for at least two millennia you had diamonds mined in India but distributed throughout the world through the usual merchant networks."

"In the early 1700s, people began to find diamond mines elsewhere," PJ said. While mines were discovered in Brazil as well, those discovered in South Africa kicked "off the beginning of a modern diamond industry."

There was a huge diamond rush in Kimberly, South Africa, Richman compared it to the the California gold rush. With no real property rights, people just began mining. Until a man by the name of Cecil Rhodes, "came from England and purchased the vast majority of plots."

He didn't start out mining though. He first rented water pumps to the miners before buying up the land where the diamond mines were located. He later founded DeBeers Consolidated Mines and his company was responsible for about 90% of the diamonds circulating throughout the world.

Operating as a monopoly, DeBeers was not allowed to sell diamonds within the United States because of The Sherman Antitrust Act of 1890. "DeBeers effectively didn't show up to court," however so he decided to never go to America and never set up shop on U.S. soil.

But how did diamonds become such a popular gem in America when the company that has monopolized it can't even sell in the country? "DeBeers dreamt up this unusual arrangement. Where most of the world's diamonds were mined in South Africa and distributed in Europe, those diamonds would reach the U.S. but through intermediaries. "Throughout almost the entire 20th century, if you bought a diamond in the U.S., it was almost certainly a DeBeers diamond but you would never buy it in a DeBeers store," PJ said.

During the 1930's DeBeers met a demand problem. The sales weren't booming in Europe because of the war and people were purchasing them in the U.S. for engagement rings but it wasn't enough. So the company recruited the help of an American advertising agency, N.W. Ayer. Through creative slogans like "a diamond is forever," using sought-after celebrities like Marilyn Monroe, infiltrating diamonds into movies, they successfully convinced Americans to purchase diamonds by 55%.

When you think about it, it's really all a scheme. PJ said "I never thought of like the concept of an heirloom being about someone protecting their monopoly."

Check out the full podcast episode above for a deeper dive into how the advertising of diamonds altered consumer's subconscious minds and how DeBeers was exposed as a monopoly.

Featured Image Photo Credit: Getty Images