The diamond in ancient India - Diamantschleiferei Michael Bonke

The diamond in ancient IndiaThe love story between man and diamonds is so old that we can no longer trace back its origins.It was probably love at first sight: a rough diamond crystal is often so beautiful and elegant thatit radiates an irresistible charm. If it is a well-developed octahedron, its perfection sometimesmakes it hard to believe that it is really a chance product of nature.Man first acquired the knowledge to process diamonds in the fourteenth century. Till then, provingyour mastery over the hardest material known to mankind, the diamond, was beyond imagination.Thus, up to some hundred years ago, every diamond was a rough diamond and all documentsand writings from the ancient and middle age always refer only to rough diamonds.Although the diamond could not be machined for so long and thus could not be used as agemstone, it was still the most expensive material of all, right from the time of its appearance tillthe 20th century. The high value and the reputation of these curious, well-shaped unprocessablestones with their strange lustre was based on the perception that these stones must have anunusual origin and remarkable powers.Until some hundred years ago, diamonds were found only in India. Even in the early, ancientworld, diamonds were known only there. Only in the time of Alexander the Great did diamondstravel from India to the Mediterranean region. Owing to this, the most important part of the historyof diamonds has its roots in India.There are ample written records from the time from 500 B.C. to 500 A.D. to be able to imagine theenormous, social role of the diamond in ancient India. The ancient Sanskrit texts make for highlyinteresting reading. From these, the characteristic features of diamond trading, which are actuallyinexplicable in the modern day context, become explicitly clear.In the Indian scripture “Ratnapariksa” (assessment of precious stones), which has its origins inthe 5th century, the author provides an insight into the history of creation of diamonds: “owing tothe great power attributed by the learned to the diamond, the diamond must be treated as the first(amongst precious stones...: the eight great diamond deposits are in: Saurashtra (Himalayas),Matanga, Paundra, Kalinga, Kosala, the shores of the Vainya and the Surpara. ....if there is adiamond anywhere in this world, which is completely transparent, light, with a beautiful colour,with absolutely even surfaces, with no scratches, no scars, no damage, no scrawls, no signs ofcracks – even if it is only the size of an atom, then it is indeed a gift from God; provided that thecorners and edges are well-formed....the one who.... always wears a diamond that has sharppoints, without any marks or flaws of any kind, wakes up every morning to some good fortune, as

long as he/she lives: children, prosperity, grains, cows, cattle…. “The diamond played such an important role in ancient India that its properties and magic powerswere studied right to the minutest detail. Everything was recorded with great accuracy andimplemented painstakingly in social life. For instance, the colour shades of the diamond weredivided into four basic colours and assigned to the four main castes. The four main castes inthe Indian society are the same today as it was 2500 years ago: the Brahmins (the priests, thescholars, etc.), the Kshatriyas (the warriors), the Vaishyas (the business people), the Shudras(the lower cast, mostly farmers and labourers). In the ancient scriptures, diamonds were dividedinto the same four caste groups, according to the colour:“the diamond has four colours, according to its caste. The diamond that has the velvety lustre ofthe mother-of-pearl, the rock crystal, the moonstone is a Brahmin. The one that is slightly red,monkey brown, beautiful and pure is called Kshatriya. The Vaishya is a lustrous, pale yellow. TheShudra shines like a polished sword: the experts have classified it into the fourth caste on accountof its shine.”The fortune bringing properties; the inner values of the diamonds were also attributed analogousto their four colours assigned to the four basic castes of India: the diamond of the Brahmin castewas naturally the most valuable, since it is the highest caste. The Kshatriya; the brown diamondbrought all the good qualities of a warrior: courage, physical strength, etc. The Vaishya, thediamond of the tradespeople, brought prosperity and the Shudra, the diamond of the farmer castebrought agricultural prosperity.The Ratnapariksa reports:“the king , who according to what he has been told, wears a beautiful, light, sparkling diamond,possesses a power that triumphs over all other powers and will become the ruler of all theneighbouring land…. he who wears a Kshatriya diamond will have perfect limbs, be valiant, wellbuilt,invincible, a terror for his enemies.Courage, physical and mental vigour, fortune, dexterity and prosperity are the fruits reapedon wearing a Vaishya. Greater yields, abundant prosperity and grains, commodities andaccommodation are obtained on wearing a Shudra. A Shudra also comes at a high price, if it hasgood markings. However, this caste is powerless if the good markings are missing.”The remarks on the Shudra with respect to price and good signs allude to the fact that this casteis actually the lowest caste. In spite of that, even a Shudra can be relatively expensive sinceit brings along good returns, if the markings are good; if the octahedron crystal has eight evensurfaces, twelve sharp edges and six pointed corners.Moreover, the author of the Ratnapariksa writes:

“the dangers of an early death, snakes, fire, enemies, diseases recede far away the momenta house becomes the sojourn of one of the four castes.” Thus, all those who can afford thepossession of diamonds of the best quality in all four colours are then immune to all misfortunes ingeneral. The effect of individual diamonds apparently intensifies when they appear in a completeset.The science of the properties and effects of diamonds was so well-developed in ancient India thatthere were standard reference works for it. The Ratnapariksa refers to the so-called “Ratnashastra”books. Ratna is the Sanskrit name for precious stone. This term is used even today. For instance,there is a city in Sri Lanka called “Ratnapura” (pura = city), which has the famous sapphire minesin its vicinity. The term “Shastra” is also used today and means “Science”. The “Ratnashastra”books, which the author of the Ratnapariksa refers to, were evidently scientific textbooks aboutprecious stones.These textbooks not only contain the classification of different types of inclusions and a descriptionof their effects on the wearer of the diamond, but also the colour of the inclusions and their specificposition in the diamond:“according to the experts in the Ratnashastra books, “the spots occur at three places: on theedges, the angles and the inside of the diamond. When on the inside, there is danger from fire, ifon the edges, then an imminent danger due to snakes, when on the angles (it means) fame. Thisis the experts’ judgement. If there are four kinds of drops (inclusions) in the diamond, they couldmean something good or something bad; they are called avarta, vartika, raktabindu, and yavakrti.The rewards of Avarta include a long and happy life. Vartika health; Raktabindu the loss of wifeand children; Yavakrti exile….red, yellow and white are the colours of the barley-corn (a certain kind of inclusion). We willdescribe the good and the bad of every inclusion. the red barley corn results in the loss ofelephants and horses; the yellow one the breakup of family; the white one – a long life, grains,prosperity, luck.”The science of the properties of diamonds and their effects was virtually infinite in ancient India.Even the position of the folds on the surface of the rough diamonds and all other possible featureshad a specific effect on the wearer of the stone. Although we cannot prove any direct connectionbetween the knowledge of the ancient Indian and the present day value for grading characteristicsof diamonds, it is apparent that there are striking parallels between then and now.The reason for appraising the diamond today is its outstanding status as a gemstone. Its highrefractive index (the diamond has the highest refractive index possible for an optical material:2.42), makes the diamond the only optical material, which can reflect up to 100% of the incidentlight back in the direction it came from.

This happens due to the double total reflection on the back wall inside the brilliant. No otherprecious stone reflects as much light as the diamond or sparkles as much. Apart from this onespecial feature, none of its other properties are considered as value enhancing for the diamond.For instance, the fact that the diamond is the best thermal conductor in the world (better thancopper) hardly has any effect on women and on the price of the stones. The same applies to itsother outstanding properties, such as its unrivalled hardness.But if the high light reflection by diamonds is the only important criterion for its rank among theprecious stones and for its high price, then the present day price relationship of different stoneswith different grading criteria is completely incomprehensible.A flawless brilliant throws back 100% of the incoming light. A stone with a “SI” (= small inclusions)purity has an inclusion, which holds back a part of the light. Thus, a cut diamond of the SI qualitydoes not throw back 100% of the incoming light. Therefore, a SI stone costs less than a flawlessbrilliant. However, the inclusion in a SI stone normally only withholds about 1 to 2% of the light.This is because the surface of the inclusion is rarely larger than 2% of the surface of the brilliant.But the price difference between flawless stones and SI stones is not just 1 to 2%. An SI stonecosts only half as much or only one-third of a flawless stone, depending on the size and quality.This incongruity can be explained from the price relationship of absolutely pure stones to stoneswith inclusions, in ancient India: “the diamond flawed with even extremely small, barely perceptibledamages is only worth one-tenth of the value or even less. The diamond, large or small, whichhas several noticeable flaws, is not even worth a hundredth of the value.”This extremely strict appraisal of the purity of the diamond in ancient India still influences ourvalue formulation. In the ancient age, the reason for the low price of diamonds that were impurewas the infamous occult effects of the stone. At that time, the stone was not used as a piece ofjewellery. In this respect, the optical effect of the stone was not the decisive factor. And the greatliking for “flawless stones” or stones that are completely pure does not have anything to do withtheir optical effect even today. The optical difference between a flawless stone and a stone witha purity level of SI2 cannot really be determined. In spite of that, a flawless stone costs twice oreven thrice as much.Even the penchant for white inclusions as compared to black inclusions, which is prevalent eventoday, is primarily due to the belief in the occult effects and not due to optical reasons. Eventoday, the diamond with black inclusions is not sold in India. The belief that a diamond with blackinclusions brings misfortune is still widespread there. The colour of the inclusions has no effect,with regard to the light reflection. A white inclusion blocks the light flow in the stone exactly likea dark one.The significance of diamonds in ancient Indian society was so great that there was a separateprofession for it: that of the “Mandalins”, the diamond experts. Even today, a lot depends on thediamond expert in the large diamond institutes. The layman cannot imagine the importance of

these institutes. There is a lot of money involved in this. Whether a stone is still flawless, or onlyVVS1, and whether the colour obtains a River D or only River E, can account for 40% of the salesvalue. Here, the effective neutrality of the expert is often under extreme pressure. And manyinstitutes simply do not ensure objectivity of the assessment. Thus, we only recommend theexpertise of the institutes GIA, HRD and DPL.A thousand year old Sanskrit text gives an insight into the power of the mandalins in ancient India:“a diamond should be such that the edges, the facets, the points, the surface, the head have thedesired properties. It must first be weighed on the scales and its price is then determined ….. allmunis (= girls, court ladies) want to know what the diamond expert has to say. The mandalin iscalled since it is his/her profession to determine the price. The person, who identifies a diamondas native and coming from one of the eight mines, or as foreigner, coming from another dvipa, is amandalin. The type, colouring, shape, size, quality, source, nuance and price are the eight basicvalues that must be assessed. Diamonds are sold in the following regions: Akara, Purvadeca,Kashmir, Madhyadeca, Ceylon and in the Indus valley. All those who do not belong to one of thefour castes, or have disfigured limbs or other bad signs are not permitted to be officers and areeven more strictly prohibited from counting among the mandalins.As soon as a mandalin is available, the Sura, the Daitya, the Uraga, the Graha immediatelyretreat and do not come in the way. There is no doubt about this. One must have a mandalinwith such qualities. But it is not easy to find such a mandalin, even in heaven, where suchtreasures are guarded; that the buyer, who has respectfully requested for his experience, offers aseat, fragrances and garlands of flowers to the main mandalin; that the initially consulted expertcarefully checks the quality and the flaws and then secretly declares the prices using a signof hands. It could happen that the seller determines the price of his/her stones without anyknowledge. This is no obstacle to the head of the mandalins. If a low price is quoted for a highqualitystone, a high price for a low-quality one, due to fear, confusion, greed, misfortune willalways follow. …. Some merchants demand an exorbitant price based on a particular property.They neither consider any flaws nor quality. The mandalin must check this. Being experts on theRatnashastra, all mandalins remain stable, impartial adjudicators; but there are many who allowthe place and time to govern the fixing of prices. Occasionally, there is one to be found, who iswell-versed with the text and meaning of the Shastra and capable of appraising all stones. If sucha mandalin is handy, he/she can be relied upon to look after the price determination.There are disreputable people who manufacture false diamonds. All those who know the Shastracan spot these by means of touchstone, knocking and scratch tests….”

Only with the campaign of Alexander the Great did the first diamonds come from India to theMediterranean region. Experts speculate whether the export of diamonds from India wasprohibited before Alexander the Great. Some historians also suspect that the diamond was usedfor taxation in ancient India. If that was the case, then possibly the tax in the case of the highersocial classes (nobles and rich merchants) was settled in diamonds. At its zenith, the earlyIndian culture was considerably ahead of the contemporary Egyptian culture. For instance, thewheel was invented in India, not in Egypt. The ancient Indian philosophy of the Vedas and theUpanishads is so far-reaching that even Schopenhauer said: “There is nothing more comfortingthan reading the Upanishads”.It is hard to believe that the prominent position of the diamond in ancient Indian culture was onlybased on a simple superstition. And that too in a country like India, which studied the word ofmysticism and occultism with so much energy and devotion. A superstition can last for maybeone generation, or two or maximum three but not over several thousand years and not with sucha radical effect.Thus, there must be something other than pure superstition behind the diamond phenomenon.Psychological factors such as man’s inherent pursuit of perfection are definitely one of them. Theaccurately crystallised octahedron rough diamond presumably symbolised classic perfection, likenothing else. And then facts such as its hardness and indomitability. Apart from psychologicalreasons, even socio-political reasons could have influenced the role of the diamond. There waspresumably a requirement for a symbol of value for kings and noblemen – maybe even for a kindof parallel currency, which combined a lot of value in a small space.As far as the belief in occult powers is concerned, the Indians, just like us, assumed that thereare other worlds parallel to the physical world known to us, which are unfathomable to our mentalawareness. The ancient Indians were specialists in the study of these worlds. Ultimately, wediscern only a certain part of what exists. A presumably much larger part of everything remainsunobserved by our perception and our awareness. And it at least appeared plausible that thediamond occupied a special position in this concealed part of the universe. There is no physicalmaterial on this earth that embodies as many superlatives as the diamond: it is the hardest material;the material with the highest optical refractive index; it is the best thermal conductor in the world.And there is still a whole series of other superlatives that follow the string of special features ofthe diamond. The fact that one substance embodies superlatives from so many different areasshows that it is a very special material. The fact that the diamond also has outstanding qualitiesin areas unknown to us can at least not be refuted.Thus, the desire to own such an exceptional piece of nature’s perfection is certainly justified – asis the belief in the exceptional powers of this rare crystal, which is indomitable in so many areas.It seems befitting, that this fantastic material has been at the top of the value structure of an entireculture, especially if we compare it to the object that is at the top of our value structure today: thecar.

the initial stages of diamond polishingit perhaps seems astonishing that the first steps in the diamond polishing craft were taken in thelate middle age, about 1350 A.D. Actually, dating the beginning of the diamond polishing skillback to the 14th century is wrong in any case. In India, diamonds were “polished” much earlierthan that. But then, it did not involve the faceting and shaping of a rough diamond, as we knowit today.In Europe, the attraction of polishing diamonds was born from a desire to discover new gemstones,but this was not the incentive in India. India had an abundance of precious stones. Kashmir hadthe best sapphires, Burma the best rubies and the whole of India was full of precious stonedeposits of all kinds. All these precious stones could be processed and polished into jewels.But there was something different about the diamond. It ranked much above all other preciousstones. To polish it into a jewel would be to degrade it. Moreover, a well-shaped rough diamondoctahedron was of so much more value than any gemstone, that nobody had tried to convert itinto a jewel. In addition to this, it was not as easy to process a diamond as it was to processanother precious stone, since it is the hardest material known to man.The stimulus to process a rough diamond in India arose only and only out of the desire to removeany flaws in an “almost perfect” stone, for instance, if an octahedron has the customary triangularor pentagonal relief figures on one or several of its eight facets.perfect octahedron octahedron with triangular reliefmarkson the surfaceThe ancient Indian scripture Ratnapriksa from the 5th century says:“the diamond flawed with even extremely small, barely perceptible damages is only worth onetenthof the value or even less. The diamond, large or small, which has several noticeable flawsis not even worth a hundredth of the value.”

A visible inclusion inside the stone could naturally not be corrected. But it was easier to polish offany relief figures on the surface of the stone.The only problem was that there was no material that was harder than the diamond. What couldbe used to polish away such defects? The only material for this was naturally again the diamond.Since the increase in value of even a small diamond was enormous if a flaw was polished away,the incentive was naturally high. Even if a worker took ten years to polish away a single, tiny flawin a one-carat stone, it was still good enough. And thus, diamonds were polished using diamondsvery early on. A simple device was used for this purpose and this was still in use in the Pannaregion till the last century. The Panna region is the only place in India where rough diamonds canstill be found.The diamond polishing board is a simple instrument – usually smaller than a DIN A-4 sheet. Awooden arm grinds one diamond to and fro on another diamond. If the two diamonds are rubbedagainst each other for a sufficient amount of time, both of them polish each other. Eventually,in this method, the diamond polishers of ancient India realised that their method sometimes leadto a quick result but at other times, to nothing. With some observation, the Indians stumbledupon the big secret: the diamond in itself, is of varying hardness! If both the octahedron andthe processing stone are fixed at a certain position, the octahedron can be processed relativelyspecifically and effectively. This is because a diamond is up to ten times harder than the “soft”direction than when it is applied in the “hard” direction.The soft directions in a diamond are always the directions from the tip of a triangle up to the centreof the opposite side, on the octahedron triangular facet.

A diamond, in fact every diamond, has only a few polishing planes, and only a few polishingdirections in every polishing plane. The polishing planes are:a) the octahedron facet.- a triangular facet, which actuallyappears eight times in an octahedron. However, since twoplanes are always parallel, there are only four real polishingplanes. This plane is called the “three-point plane”, since ithas three polishing directions.b) the octahedron edges.- twelve of these edges can befound in an octahedron. However, even here, two edges arealways parallel. Therefore, there are altogether six polishingplanes through the edges. There are two polishing directioneach in these polishing planes, which run 90 degrees to theedge. Thus, these planes are called two-point planes.c) the octahedron points.- these are also called four-pointplanes, since there are four polishing directions here. Theoctahedron had six points. Since two respective points lieopposite each other, the octahedron has three so-calledfour-point polishing planes.Every diamond has the octahedron crystal structure, irrespective of its shape. Even if a roughdiamond looks like a pile of scrambled eggs or a potato, it still has the crystal structure of anoctahedron. And every rough diamond has four three-point polishing planes, six two-pointpolishing planes and three four-point polishing planes, irrespective of its shape or appearance.Thus, every diamond altogether has 4 x 3 + 6 x 2 + 3 x 4 = 36 soft polishing directions. All otherdirections, approximately 100,000 (360 x 360), are hard. A deviation of a few degrees from theactual polishing direction causes the hardness to increase to such an extent that the diamond canbarely be polished any longer. The fact that this knowledge about the varying hardness of thediamond was discovered in Europe only in the 14th century was probably because this knowledgewas kept secret, like no other. Similar to the art of mirror production in Venice in the middle agesor the art of glass production in ancient Egypt, diamond polishing in India was certainly also oneof the best kept trade secrets. In any case, there are no written records pertaining to the art ofdiamond polishing in ancient India.

Sometime, presumably in the late Middle Ages, diamonds began to be polished as jewels, evenin India. In the beginning, only flat diamonds were polished to oval briolettes or to the so-called“rose-cut”.The knowledge that diamonds can be processed came to Europe via India only in the 14th century.At that time, the diamond was more expensive than other jewels, but only because it was soexpensive in India, and could only come from India. Since a rough diamond was very insignificantfor the European way of life, there was hardly any interest in importing such a stone from India fora huge cost. And hence, there were only very few rough diamonds in the whole of Europe. Mostof the naturalists who had talked about the diamond in their records (possibly including Pliniusin Old Rome) had never ever seen a diamond. This is also evident from the fact that almost allEuropean naturalist records about diamonds claim that the diamond would dissolve in the bloodof a he-goat. If diamonds had really been available then, this superstition would have hardlylasted for one and a half thousand years among the scientists.The few diamonds, that were actually available in Europe were in possession of the kings ordignitaries, and were mostly used for ceremonial or ritualistic purposes, due to their high valueand rarity.The diamond was well-known in the Roman Empire and had a prestigious position there as themost valuable object, but it was not very common. It was apparently handed over to a successoras a symbolic insignium of power, when an important post was conferred. Aelius Spartianuswrote in the 4th century:“During the second expedition to Dacia, he (Traianus) made him (Hadrian) the commander-inchiefof the second Minervion legion (whose main stock location was located in present-dayBonn) and took him along. At that time, many of his outstanding deeds brought him fame. Thus,Traianus passed on the diamond, which he had received from Nerva and which was a symbol forsuccession.”In Europe, the art of polishing diamonds probably had its origins in one of the most technicallyadvanced cities of Europe, Nuremberg. Nuremberg was much more superior as compared to theother European cities, with its trade guilds and its citizens’ drive for research.

Thus, it was not only the extremely famous gingerbread, but also tin or pencils for instance, whichwere produced in Nuremberg.However, historians often claim that the art of polishing diamonds began in Paris or was principallydeveloped in Paris, as far as Europe was concerned. But this is not entirely true. The first writtenreference to diamond polishing in Europe comes from Nuremberg. For instance, Nuremberghad a “guild” of diamond polishers in as early as 1375. There are no written records available,pertaining to diamond polishing activities from Paris or any other European city as early as this.Diamond polishing obtained a completely new dimension with the option of processing roughdiamonds into gemstones. At that time, there was virtually no limit to the pomposity and prestigerequirements of European aristocratic families. And thus, Paris was naturally one of the mostlucrative locations for the sale of new products. Hence, it is no surprise that the first written recordthat alludes to diamond polishing in Paris, mentions a diamond polisher called “Herman”. Therecord dates back to 1407. It evidently pertained to a diamond polisher from Nuremberg, whomoved to Paris got ahead in his big career over there.Until then, diamond polishing was still a skill that took place without a polishing wheel. By then, thediamond polishing board from India had been replaced by advanced technology in Nuremberg. Atabletop was “impregnated” with diamond powder and the diamonds to be polished were grindedon it. This method was elaborate and tedious, but resulted in success. In principle, this methoddoes not differ from the procedure used today. The diamond crystals, which are scattered indifferent polishing directions, polish the diamonds grinding in the soft direction on the tabletop andcreate a facet.The Flemish diamond polisher Lodewyk Van Berquem from Bruges made an extremely decisivebreakthrough in the art of polishing. He discovered that diamonds could be polished with theirown diamond dust and developed the diamond grinding disc. And since then, i.e. the second halfof the 15th century, polishing technology has barely undergone any changes. What came alongmuch later was the sawing of diamonds and the grinding of the girdle. But diamond polishing orfaceting technology is still the same today, as it was at the end of the 15th century.

The diamond in modern ageAt the start of the modern age, i.e. at the time Christopher Columbus discovered America the artof diamond polishing in Europe was not even 150 years old. The knowledge had spread fromIndia to Europe in the first half of the 14th century. But till 1729, rough diamonds were only foundin India.The faceted diamonds, which could now also be used as jewels, immediately captured the heartsof European aristocrats and the high society. The European dynasties’ needs for ostentationand pomp were extremely high; it was a part of the system. Instead of demonstrating power andstrength with a fleet of ships or a large army, money was preferably used for prestige symbolsthat did not give rise to any running costs, such as for jewels. Moreover, there was a needfor interesting objects, in which the nobles could invest their enormous wealth. Here, the firstjewellery diamond that was created came at just the right time.At the same time, it was an advantage for the emerging European diamond market that Englandhad colonised the whole of India. Thus, just as the Spaniards had stripped the South AmericanIndians of all their gold and pearls, the English looted Indian temples and royal dynasties and tookvast amounts of diamonds to England. From there, the diamonds were sold to France, Spain,Italy and other European countries.While the Indian rough diamond made it to Europe only in extremely rare cases in the middle age,it advanced to become the most sought-after good on earth at the beginning of the modern age.The affair of Marie Antoinette and the diamond necklace shows the importance and financialmagnitude of this penchant for diamonds in European modern age. Some historians even claimthat the affair of the diamond necklace acted as a catalyst for the French Revolution:Marie Antoinette was only a teenager when she married King Ludwig XVI in 1774 and became theQueen of France. But she was already well-known for her exceptional beauty, her extravaganceand love affairs. Her reputation as an extravagant and not really a moral First Lady had alreadyresulted in feelings of deep hatred amongst the French people for her.Two years before her marriage, her future father-in law, King Ludwig XV had commissioned thefamous Parisian jeweller Charles Boehmer to create a diamond necklace. This necklace wasfor the lady-love of Ludwig XV, Madame du Barry and it would certainly have been the mostexpensive gift in history that a king had ever given his mistress. When the necklace was ready,it had diamonds with a total weight of 2800 carats! It consisted of a single row of 17 pieces of 8carat diamonds, below which there was a three-row chaplet of diamonds with diamonds danglingfrom it as pendants. As a final touch, the necklace had a double-row of diamonds, where thelargest stone weighed 11 carats. The necklace cost two million livres, which when converted,would amount to a little over 100 million dollars.

Unfortunately, King Ludwig XV died − even before the necklace was ready, and thus, was unableto gift it to Madame du Barry. On the death of her father-in-law, Marie Antoinette banishedMadame du Barry, who she hated, from the court, and the jeweller Boehmer now tried to sell thenecklace to King Ludwig XVI. However, it was too expensive for the king. In order to not be asilent spectator there, Marie Antoinette asserted that she would refuse to ever wear the necklace,since it was beneath her to wear jewellery designed for a non-aristocratic courtesan.The necklace became the talk of the town and attracted the attention of an aristocratic court lady,Countess de la Motte. Although her noble lineage enabled her to move freely in the courts, sheplayed a pitifully minor role in the court. The Countess conceived a cunning plan to acquire thenecklace, by cleverly taking advantage of her knowledge about the psychological idiosyncrasiesof the various actors in the court. The central figure of her act was Cardinal Rohan, who had fallenfrom grace with Marie Antoinette. Countess de la Motte knew that Cardinal Rohan was waiting foran opportunity to play up to the queen again and portrayed herself to him as one of the queen’sconfidantes. By forging the signature of the queen, she was able to convince Cardinal Rohan thatMarie Antoinette deeply desired the necklace and commissioned him to negotiate in secret for abetter price for it. The cardinal carried out, what according to him were the queen’s instructionsand did not suspect a thing. Finally, it came down to a contract conclusion between CardinalRohan and jeweller Boehmer. The Cardinal accepted the necklace for the queen and handed itover to Countess de la Motte.The unsuspecting Marie Antoinette was rehearsing for a role she was going to play in “Themarriage of Figaro”, when the bill for the necklace was delivered to her from jeweller Boehmer.When jeweller Boehmer did not receive any payment, he went to Versailles and presented theforged letter with the signature of the queen, which authorised Cardinal Rohan to take the deliveryof the necklace. King Ludwig XVI and Marie Antoinette were furious and got Cardinal Rohanimprisoned.Cardinal Rohan was the highest-ranking leader of the French clergy and this only made thescandal perfect. The French bourgeois was furious. Finally, even Countess de la Motte wasimprisoned, but she asserted that it was Marie Antoinette, who had commissioned her with thisdisreputable deal.Cardinal Rohan was freed on advice of the king’s aide. On the same evening, the queen turnedup at a gala in the Parisian opera, where she was greeted by a hostile crowd of Parisian citizens,who shouted out insults and threats against her.As it turned out later, this night marked the beginning of the French revolution.

The advent of the new era of diamonds and the diamond syndicatein the same century as the French Revolution was a decisive turning point in the world of diamonds:in 1729, diamonds were found in the alluvial deposits of a river in Brazil. Till then, diamonds wereonly found in India. This broke the monopoly enjoyed by India for several millenniums. In 1886,diamonds were also discovered in South Africa, also in a so-called “secondary deposit”; in a riverbed. The first primary deposit, a kimberlite pipe, in which diamonds had come up to the earth’ssurface due to volcanic activity, was also found in South Africa in 1871.The beginning of the twentieth century was then the time of the great discovery of diamonddeposits in Africa: 1907 in Congo, 1908 in Namibia, 1913 in the Central African Republic, 1913 inTanzania, 1916 in Angola, 1920 in Ghana. In the thirties, in Guinea, Sierra Leone and the IvoryCoast. Around the middle of the twentieth century, 99% of all the diamonds in this world wereextracted in Africa.The exhaustible deposits in India and the huge deposits as compared to that in South Africabrought a new element to the world order of diamonds: De Beers, the “diamond cartel”.With the flourishing of the African diamond deposits, the power of De Beers over the diamondmarket became almost unlimited. De Beers called the shots almost everywhere as far as Africanmines were concerned. However, diamonds were suddenly discovered in Siberia in the fifties.And that too in the primary deposits. The mining, in Siberian conditions, in perennial ice underthe earth, was not easy. But Russia’s foreign exchange hunger in the Cold War and the abundantfindings made the diamond deposits from Yakutia to De Beers’ first real competitors. Ultimately,diamonds were discovered in over 20 kimberlite pipes in Siberia and at the beginning of thesixties, Russia began its deep involvement in the international diamond market.In 1978, extensive diamond deposits were discovered in Northwest Australia and subsequently inCanada. De Beers initially tried with all its might to control even these deposits or to at least havea finger in the pie. However, it later backed out completely from Australia, since the licence feesand the mining costs were so high that the deal was not profitable for De Beers. De Beers simplyhad better and more affordable sources in South Africa at hand.The influence of De Beers began to dwindle till it only controlled about 30% of the worldwidediamond extraction. Nonetheless, that was enough for De Beers to still have the price of diamondsall over the world under its control.

The diamond cartel: De Beersin the second half of the 19th century; in the southern Orange Free State of the Republic of SouthAfrica, 100 km west of Bloemfontain, the two brothers Johannes Nicolaas and Diederik ArnoldusDe Beers ran a farm. At that time, South Africa was sustained by agriculture farms that were runby white immigrants, mainly from Holland but also from England and other European countries.The region was fertile, but the work was rigorous and a constant struggle.In 1866, a certain Erasmus Jacobs finds a strange white pebble on the banks of the Orange river,over the De Beers brothers’ farm. There is great surprise as it is discovered that finding is a 21.25ct large diamond. Soon, more diamonds were found. 5 years later, in 1871, a 83.50 ct diamondwas found on the slopes of the Colesberg Kopje, not far from the farm.These findings trigger off a “diamond rush”, and white farmers flock on the banks of the OrangeRiver and on the Colesberg Kopje hill in thousands. The masses of diamond searchers cannotbe held back and the farm owners divide their land into plots and auction off the mining rights; theso-called “claims”.The two De Beers brothers leave the region and basically have nothing to do with the whole affair.But their name will go down in history, since the mine subsequently developed there as well as themining company resulting from it were named after them.The alluvial deposits of the Orange River were soon sifted through and the diamond containingColesberg hill disappeared. The diamond searchers dig deeper and deeper into the earth, resultingin the legendary large hole, the “big hole”. As the news of the lucrative diamond discoveriesreached England, it annexed the entire region, much to the resentment of the government ofthe Orange Free State, which had actually controlled the region. The new city “New Rush” thatemerged near the “big hole”, was renamed to “Kimberley” in 1873, after the English governor atthat time, John Wodehouse, the 1st Earl of Kimberley.Even his name made history, since all the primary diamond deposits, the so-called “Kimberleypipes” are named after him.But soon, the mining of diamond became more and more difficult. The big hole penetrated sodeep into the earth that vast amounts of earth must be eroded to attain the sought-after diamonds.Lone diamond searchers could not get anywhere now and needed to unite into groups.The hour had come for some clever businessmen in the region, mainly for Cecil Rhodes andBarney Barnato. Barney Barnato was a common man, who had made a fortune with a lot ofluck and through good diamond discoveries. Cecil Rhodes was the clever, astute businessmanwho did not look for diamonds on his own, but loaned out pumps to the diamond searchers atexorbitant prices.

Both now bought the claims of the diamond searchers, which were practically useless for them,and founded their own mining companies. It triggered off a vehement battle for the supremacy onthe mining fields. Ultimately, Barnato succeeded in obtaining supremacy over the Kimberley minein 1887. But Barnato was a common man, and thus, was fighting a losing battle with the banksand authorities in the English aristocracy. Therefore, he finally united with his competitor Rhodesand on 12th March 1988, the “De Beers Consolidated Mines” was formed, with Cecil Rhodes asthe chairman. Over 75% of the Kimberley mine and the entire De Beers mine belonged to thiscompany. From there on, De Beers developed its supremacy step by step, such that eventuallyalmost all mine claims in South Africa were under its control.Rhodes and Barnato also used external capital in their advancement, by establishing theircompany as a stock corporation.However, the entire operation in South Africa had a problem, right from the beginning: therewere far too many diamonds discovered. Till the first South African diamond discovery in 1886,the entire world market was supplied by Brazil. The deposits in India were depleted and Brazilwas the only large diamond supplier in the world. But the discovery in South Africa was huge ascompared to the Brazilian one. In 1871, when the first large diamond was found on the slopes ofthe Colesberg Copje, the production of the claims on the former De Beers farm and on Colesbergalready amounted to 269,000 carats. In 1872, the production was already six times more than thetotal production in Brazil. In 1873, 1,080,000 carat diamonds were already mined in South Africaand in 1877, a total of 1,765,000 carats. This was clearly too much to keep the price stable. Whilethe local price of diamonds in 1871 and 1873 was still 1.5 English pounds, the price sank to barelyunder one pound per carat till 1877. At that time, an English pound had a purchasing power thatwould equal about 200 euros today.The beginning of diamond mining in the De Beers farm region and the Kimberly mine was chaoticand unorganised. There was hardly any systematic connection to the outside world. Till 1877,there was no telegraphic connection to the city of Kimberley and the region became accessibleby train only in 1885. Buyers, mainly from London and Amsterdam came to the mining fieldsin droves tried to buy stones from the prospectors for as low prices as possible. Prospectors,who had made a good find and were not satisfied with the buyers’ offers, travelled to the coastwith their stones and tried to sell their diamonds in Cape Town, or even took the next steamer toLondon. It was not uncommon for the prospectors to obtain an even lower price there than whatthe buyers had offered and to bring their stones back to South Africa.In all this chaos, where buyers and prospectors underbid and overbid, where the prices fordiamonds constantly dropped, where the costs for pumps and devices and for the taxes that weresuddenly imposed on diamond prospecting suddenly increased, there was sudden panic amongthe claim holders. The fear was that the value of diamonds would drop so much that diamondprospecting would become unprofitable.

In 1872, a buyer from London called “Anton Dinkelsbuhler” came along with many others. He wasoperating on behalf of the company “Mosenthals”. What his position in this company was, and whatthe financial arrangements for his actions were, was never very clear. But he gradually becamethe most important local buyer. Dealing with diamond buyers in diamond mining regions is ascientific art in itself. It is completely uncontrollable and often, the buyer, who is only an employeeof the purchasing company, makes more money than the company he works for. This is becausethe transactions only work with cash and whether the buyer passes on the same cheap pricesthat he has negotiated to his company or keeps a profit margin for himself cannot be controlled.Anyway, the respectable Mr. Dinkelsbuhler remained in South Africa for four continuous yearsbefore making his first trip to London by ship. According to some claims, he spent over a millionpounds for diamonds in these four years. Ultimately, there was also a lawsuit against him forbuying an unlawfully acquired diamond. When he returned to England, he was one of the richestmen in the diamond sector and opened his own diamond company in London.After succeeding in reconciling the diamond prospectors and uniting them in a single miningcompany and finally having the control of all diamond prospecting activities in South Africa underthe De Beers Consolidated Mines, Cecil Rhodes now pulled off a second coup that completedthe power of the De Beers Company. In the same year, he founded the “Diamond Syndicate” inKimberley, which was the only organisation that sold the diamonds of the De Beers Company.This organisation in turn signed an agreement with the buyer Anton Dinkelsbuhler, who now tookover a large share of the De Beers diamonds and sold them in London.Thus, two activities were monopolised: the prospecting of diamonds and the sale of thesediamonds. Thus, from 1887 onwards, the worldwide price of diamonds was not a free marketprice anymore. The De Beers Consolidated Mines and the Kimberley Diamond Syndicateinterrelatedly controlled the extraction and sale of diamonds, and thus their price. If there weredifficulties in the sale, De Beers withheld the diamonds; if the market demanded more stones, itincreased the sale.However, what aggravated the situation was that more and more diamond deposits werediscovered. And De Beers was compelled to bring more and more mines under its control.In 1902, the power of the De Beers Consolidated Mines began to falter again. A new diamondmine in South Africa, the “Cullinan” mine stubbornly refused to work together with De Beers andinsisted on independently marketing its diamonds. The mine soon becomes so successful thatit yielded more diamonds than all other South African mines put together. In 1905, the famousCullinan diamond was discovered; a 3106 carat rough diamond, of excellent colour and purity.There was a threat of the power of the De Beers Consolidated Mines and the Diamond Syndicatebeing crushed.

But then, an initially completely insignificant newcomer, whom nobody had expected and whomnobody trusted and hardly anyone could bear, made his appearance: Ernst Oppenheimer. AGerman immigrant to South Africa, who was the eighth child of his parents and born in Friedheimin 1880 He had good contacts in the worldwide diamond business because of his family, andsurpassed all others as far as intelligence and business acumen were concerned: Cecil Rhodes,Anton Dinkelsbuhler, the directors of the De Beers Consolidated Mines and the reputable dealersthat were united in the Kimberley Diamond Syndicate.Two of Ernst Oppenheimer’s 4 older brothers were employed in the diamond business and hisyounger brother Luis was a partner in Anton Dinkelsbuhler’s company. Moreover, there werefamilial ties with Dinkelsbuhler: one of Ernst Oppenheimer’s cousins was married to a cousin ofAnton Dinkelsbuhler.When Ernst Oppenheimer travelled to South Africa in 1902, he came as a representative of thefirm Dinkelsbuhler. He purchased diamonds, not only from the Diamond Syndicate in Kimberley,but also from the new Cullinan mine in particular. Oppenheimer started on a very small scale inSouth Africa and began his career as an insignificant office employee. However, he had sufficientcontacts because of his oldest brother Bernhard and his brother Luis, who was 10 years younger;he eventually began to earn a reputation in not just the diamond but also the gold business.Although he entered the scene as a small scale employee, he made a huge amount of money ina short span of time and finally founded the “Anglo American Corporation of South Africa”, whichhad a significant holding in South Africa’s gold mining. However, his true ambition was alwaysto procure a seat in the bank of directors of the De Beers Mining Corporation. But the De Beersdirectors did not trust him, viewed him as a strange nouveau riche and blocked his advancementinto the board of directors for several decades.But Ernst Oppenheimer secretly purchased all the shares of the De Beers Consolidated Minesthat were available for sale and eventually obtained a majority of the De Beers shares. Shortlythereafter, Ernst Oppenheimer had purchased all the shares of the De Beers Consolidated Minesand thus made the company into a private concern belonging to the Oppenheimer family.In 1926, he made further progress and founded the “Central Selling Organisation”, i.e. the CSO,in London. From then onwards, the South African diamonds were only sold in London and that,ten times in the year to a small number of “sightholders”.Even today, a good 80 years later, the business still runs as it did at that time. All concessionaires,the so-called “sightholders” meet once a month in London and take their “box”. The number ofsightholders is strictly limited. At present, it is approximately forty. Every sightholder has to paya specific amount for his/her box, which does not vary, for e.g. 35 million dollars.

The payment is made in advance. A sightholder can refuse to accept the box only once. Thesecond time, he/she is automatically removed from the sightholders’ circle. The sightholdercannot decide what is inside the box. This is decided by De Beers. Depending on whether DeBeers increases or reduces the price of the diamonds, the Central Selling Organisation packsmore or less into the box.The sightholders are completely dependent on De Beers and have no say or power of veto. Theymust submit annual reports about their operations to De Beers and are compelled by the DeBeers managers to be a part of every new sales strategy.In the meantime, the world situation in the diamond business has undergone serious change.At the beginning of the great diamond discovery in South Africa and in the first half of the 20thcentury, it seemed as if there was a vast amount of diamonds in a market with limited absorptivecapacity. De Beers systematically withheld the amounts of diamonds and only supplied the worldmarket with the quantity of diamonds needed to always keep their price stable. Today, the tide hasturned. There are hardly any new diamond-prospecting regions discovered any longer. However,the global market for diamonds is constantly increasing and the old mines are getting depleted.The Indian diamond mines were the first to get exhausted. From 1726 to 1866, the Braziliandiamond deposits were the only ones to supply the world market. But today, even these depositsare almost entirely exhausted and are insignificant in comparison to other mines. Even a majorityof the South African deposits have been mined. The Kimberley mine was disused as early as1914, and there has been no diamond found on the De Beers brothers’ farm for a long time now.After a rapid upswing of the diamond discovery regions and output in the last century, diamondproduction has now reached its limit and is now slowly declining. This also led to a shift inthoughts of the managers at De Beers and the Central Selling Organisation. The Oppenheimerfamily is now simply trying to obtain the maximum for its remaining deposits. The motto is nomore: “the market is limited and the diamond deposits are unlimited”. The motto is now: “thediamond deposits are limited and the market is unlimited”.Thus, De Beers doubled the price for its rough diamonds in many categories in 2007 and at thebeginning of 2008. And the Central Selling Organisation pulled though this change in the companypolicies with brutal severity. Since De Beers now has only about 30% of the worldwide diamondmines under its control, an increasingly wide discrepancy between the prices by De Beers forits sightholders and the so-called “outside goods”, the free diamond mines, not controlled by DeBeers. In order to correct this discrepancy, De Beers unceremoniously dismissed about one-thirdof its sightholders and stopped supplying to them – overnight, without any notification or reason.Some of the biggest and most powerful diamond companies of the world were among them.

The manoeuvre became clear: the 23 former sightholders now had to stock up from the freemarket that was not controlled by De Beers, and thus, in one go, enormous demand was createdin the free market.This resulted in a shortage of rough diamonds and naturally in increasing process in the marketnot controlled by De Beers. Thus, De Beers could continue to control the price spiral.In the economic crisis of 2008/2009, De Beers drastically reduced its diamond production andeven temporarily disused some mines. The monthly volume, which amounted to 700 to 800million dollars, was brought down to 110 to 115 million dollars to prevent the worldwide diamondprice from falling drastically. Now, after a break of about a year, diamond prices are on theincrease again. Where this path will lead to, is uncertain. It is however evident that De Beersstands to reap the maximum profits if the diamond prices increase as much as possible. Sincethe deposits are limited, everybody in the sector is trying to obtain the most they can and De Beersis also making profits like every other company. In the past, De Beers always had to keep roughdiamond prices at a realistic level; otherwise its competitors would have yielded huge profits andextensively increased their production. But now, it need not worry about this any longer. Theproduction can no longer be increased. Now, the strategy is a clever marketing ploy in order towring out the most for the remaining deposits.

Diamond trade todayThe world trading centre for diamonds today in Antwerp The largest diamond bourses in the worldare located there. Schematically seen, the world diamond trading runs as follows:Structure of the global diamond industry:

Structure of our company with branches in Antwerp, India and Germany:Both the Central Selling Organisation (De Beers) and the diamond mines that are not affiliatedwith De Beers supply mainly to diamond trading companies, which have their headquarters in theAntwerp bourse. The largest diamond bourse in the world for rough diamonds is the “AntwerpscheDiamantkring”.

The dealers, who are members of the Antwerpsche Diamantkring, retail the rough diamonds tothe diamond polishing plants. For the most part, these are in India, Israel, China or Belgium.From the polishing plants, the polished stones go back to Antwerp and are now further sold in theother two other large Antwerp diamond bourses, the “Diamantclub van Antwerpen (Diamond Clubof Antwerp)/Vrije Diamanthandel” and the “Beurs voor Diamanthandel”. From these two bourses,the polished stones are then transported to places all over the world, mainly to the USA. Theyare first sold to local wholesalers, who then retail them to jewellers, goldsmiths and jewellerymanufacturers. These in turn, supply them to the end users.Normally, a diamond passes through the following levels of trade before it reaches an end user:Diamond mineêRough diamond trader – member of the rough diamond bourse “Diamantkring”êDiamond polishing plantêMember of the Antwerp Diamond Bourse for polished diamonds (diamond club or bourse)êWholesalers in the country of consumption such as USA, Germany, etc.êJewellery manufacturer, goldsmith, jewellerêFinal consumerThus, end users have seven different levels of trade, before a diamond finally finds its rightfulplace on a pretty lady’s finger. Our company combines these seven levels in one single companyand thus, we can do away with the unrealised profit of three levels of trade.We are one of only two German full-fledged members of the largest rough diamond boursein the world, the Antwerpsche Diamantkring.We have our own diamond polishing plant in India, where about 1000 brilliants are cut andpolished every day.We have our own office in the Antwerp bourse for polished diamonds, the “Diamantclub vanAntwerpen” (DiamondClub of Antwerp). We have our own diamond wholesale trade in Deggendorf, from where we supply to about1000 jewellers and goldsmiths in Germany, Austria, Hungary, the Czech Republic, Slovakia,Denmark, Sweden, Finland and Norway.

Normally, each of these levels of trade is an independent unit, which purchases, sells and therebyyields its profit. By combining four levels in a vertical chain, we are in a position to serve jewellers,without handing over profits to intermediaries. We buy the rough diamonds, so to speak, from thesource and deliver the finished product directly to the jeweller.The central basis for the activities of every polishing plant is the procurement source for roughdiamonds. Our polishing plant has already been in existence for over 25 years and we havenaturally experimented a lot during this period. We travelled to the mining regions of Venezuelaas direct purchasers, we made an arrangement with one De Beers sightholder and shared asight with him, we have directly purchased from a company in Namibia, which practises offshoremining.Every procurement source is ideal for only a specific time; after a while, circumstances changeand what was affordable a short time ago is suddenly more expensive than other sources. Thus,the good rough diamond deposits in Venezuela are almost exhausted and it hardly makes senseanymore to invest the time and flight to go looking for raw material there. Even the time, whenthe De Beers raw materials were really more affordable than the so-called “outside goods” isover. At present, the best motto is to be flexible. In the present, somewhat chaotic time, the bestprocurement source is “liquidity”. If immediate payment is possible, there is always someone atthe bourse, who urgently needs money and provides rough diamonds at a reduced rate for spotcash, just like every good, elaborate long term arrangement.Such “deals” often take place in the large hall of the “Diamantkring”, the largest rough diamondbourse in the world. All the members belong to the few who are actually at the source. But it isnot easy to be a member. There are only two German full-fledged members for many years now:we and another German company. New members are only incorporated under strict conditions.For instance, one of the conditions for a new incorporation is that a full-fledged member vouchesfor the new entry. This guarantee covers all deals between the new entrant and every memberof the bourse. It acts as a guarantor for 100% of the amount and is irrevocable – for life. Thisrule in the bourse makes it easier to carry on transactions among the brokers. This is because ofthe assurance that when money is not received from a business partner, there is another brokerbehind, who can be held liable for the payment – a credit of trust, which every member of thebourse automatically has. Naturally, such conditions for being incorporated as a candidate inthe bourse are virtually insurmountable. Who wants to take lifetime guarantee for a new entrantfor all transactions with other brokers? Moreover, three full-fledged members must vouch forthe moral quality of the new entrant and so on. These protective barriers finally result in onlythe sons of full-fledged members being newly incorporated in the brokers’ circle. A full-fledgedmember of the “Antwerpsche Diamantkring”, the largest and most important diamond bourse inAntwerp automatically has access to the other two diamond bourses, the “Diamantklub” or “VrijeDiamanthandel” and the “Beurs voor Diamanthandel”.

A small computer-chipped plastic card opens a door to all the three bourses of Antwerp:the membership is always person-related, and not company-related. The owner of our company,Michael Bonke, has been a full-fledged member of the Diamantkring for more than 20 years.The Kring has a total of 1253 members, out of which only two are German. The members ofthe Diamantkring must comply with an ethical code which defines the moral and commercialguidelines for transactions at the bourse. This code is called the “Deontology Code”. This codeis redefined from time to time.

After signing the Deontology Code, the title of “Diamond Trader, recognised by the Federation ofBelgian Diamond Bourses” is awarded by the bourse.