In the early parts of European history, diamonds were primarily used only as talismans or charms for improving the love between couples. In time, diamonds became the favored symbols of affection in the form of engagement and wedding rings. Also eventually, diamonds became the king of gem stones and jewelries with diamonds became the coveted possessions of the wealthy and powerful. During the 20th century, the diamond industry flourished as a result of a tight control over diamond prices by a cartel that monopolized both the supply and distribution of diamonds all over the world.
Throughout the last 1,000 years, diamond trade was very active in Europe and the Middle East. The supply of diamonds wholly came from India until supply dwindled in the early parts of the 18th century.
Crossing the Arabian deserts, caravans of diamonds coming from India were being traded to Jewish merchants living in Egypt in exchange for gold and silver. These Egypt-based Jewish merchants then resold the diamonds to other Jewish merchants that live in major European cities like Venice, Lithuania and Frankfurt.
Diamonds mined in India continued to flow into Europe until Indian mines ran dry. Brazilian mines took over until supplies there also ran dry in 1725. By 1800, a new source of diamonds has been discovered. It is South Africa.
In the 1800s in Europe, different diamond trading companies and established jewelers were loosely working together and form the core of the diamond industry. These companies are: A. Dunkelsbuhler, Beit&Company, Barnato Brothers, Feldheimer & Company, F. F. Gervers, I. Cohen & Company, Joseph Brothers, Martin Lilienfeld & Company, Mosenthal Sons&Company, S. Neumann, and Wernher,
These companies were all owned by Jews and are usually interconnected by many different family ties. For many years, the diamond industry had been almost entirely controlled by Jewish merchants. This all changed when man named Cecil Rhodes came into the picture.
In April of 1880, the British imperialist Cecil Rhodes consolidated the diamond mines operating at that time into one company that would eventually become DeBeers. Rhodes formed a single cartel with the diamond merchants scattered all over the world. Each diamond trading company was guaranteed a supply (which is a certain percentage or portion) of the diamonds that would be coming from the mines of DeBeers. In return, the diamond merchants provided Rhodes with the vital data about the prevailing market conditions so that Rhodes could effectively ensure a steady and controlled supply of diamonds.
For the most part of the 20th century, DeBeers has about 85 to 90 percent share in the all the diamonds mined worldwide. DeBeers was able to keep a stable control on diamond prices by carefully matching the supply of diamonds to actual world demand. DeBeers has its own sales and marketing arm which it owns. It is called the Diamond Trading Company.
If a merchant wants to buy diamonds from DeBeers, that merchant needs to buy a box of diamonds that may cost in the range of 1 to 25 million dollars. DeBeers kept a few rules to maintain its tight control over the diamond industry. DeBeers developed these rules over time in order to control the price and supply of diamonds.