...rmed into a commodity for the mass. At this time the vast change of supply of Diamonds had little effect on their price because there as a deeply ingrained perception tief verurzelte Auffassung around the stones even they ere cascading into the markets of Europe. Realising that Diamonds ould be virtually orthless once they appeared commonplace, a young Englishman named Cecil Rhodes orked to consolidate the entire Industry and keep the supply of gemstones Edelsteine sharp limited. Under his guidance the international Diamond Cartel as born. Folloing his philosophy it became one of the most successful cartels of all time.Since then this cartel has regulated the market for Diamond gemstones and maintained the fragile illusion of their scarcity.The cartels reach is legendary. It controls a significant number of the orlds diamond mines it sorts and classifies a large percentage of the orlds rough stones and through its Central Selling Organisation CSO in London it determines bestimmt ho can buy hich stones and ho much each buyer must pay.Its strategy is as simple no as it as in Rhodess time To balance the number of diamonds released freigegeben into the market in any given year and thus to perpetuate the illusion of diamonds as a scarce and valuable commodity. Cecil Rhodes and the discovery of Diamonds in South AfricaIn 1866 the accidental discovery of Diamonds in South Africa changed the Diamond Industry. The first stone, picked up on the Banks of the Gariep River by a 13-year-old boy, as generally dismissed as a geological fluke.The 2nd find, a stone of 83 carats, as too tempting verfhrerisch to ignore.In 1869 the Diamond Fever hit South Africa10.000 Miners had rushed to the plains of the Cape Province to stake their claims and make their fortune.Then, in 1872, five separate Mines had been established These Mines produced an avalanche of gem-quality stones. As the diggers delved deeper and deeper into the Kimberlite the miners tapped into underground ater tables, flooding the claims and rendering hinterlassen them virtually unorkable.In 1874 the Steam-Poered Pump as introduced by Cecil Rhodes, a young sick Englishman. He rented out his pump to several Miners, and ithin a year Rhodes as serving all of the mines in the area. ith this ne found ealth he started to buy small claims in the 1880 nely formed De Beers Mining Company to control his groing stake in the mine. In 1887 he had bought out all the other Claimholders.From the start he realized that success in the Diamond Trade as contingent on abhngig von the resolution of to serious problems First The very productivity posed a threat to the long-term profitability of the Diamond Industry and Secondly there as a conflict beteen buyers and sellers. The Sellers Diggers have little control over the types and Qualities of stones they produce, thus, they need to secure a buyer to purchase ererben the smaller and less attractive stones as ell as the large and best ones. The buyers meanhile kno that profitability rests ith the ability to obtain a constant stream of stones and sell them at consistently high prices.The only relationship that serves both sides interests is an ongoing arrangement beteen a single producer and a single distributor in hich both benefit - keeping supplies lo and prices high.The solution Rhodes devised as ingenious. After having achieved full control over production at the De Beers Mine, he formed a coalition of merchants in Kimberley to hom he sold the hole output of the Mine. In 1890 this Merchants Association as formed as the Diamond Syndicate ith all members pledged to buy Diamonds from Rhodess Mines and sell them in specific quantities and at set prices.In 1902 Rhodes dies after he has completed his consolidation of the Diamond Industry by purchasing all the major South African Mines.Evolution of the CartelAfter Rhodes death his vision of a diamond empire as taken up by Ernest Oppenheimer, a German Diamond buyer ho had maneuvered himself into a position of poer ithin the industry. He formed an Idea of a Ne Syndicate because he realized that control over the diamond trade entailed a monopoly of distribution as ell as of supply. It folloed the Buying out of the old De Beers Syndicate 1925 and it as intimately linked to Oppenheimers Company hich had also Corporate Links to Anglo-American. This from no on built Ne Syndicate as made to exert ausben unbearable pressure on the existing group of DistributorsThe Cartel in actionIn the 1950ies De Beers as no longer alone on the market. The yields Ertrge from the once miraculous South African Mines began to decline abnehmen hile discoveries in Siberia and different other parts of the African continent opened up rich ne fields for exploration.By 1960 South African diamonds accounted for only 19 percent of the total orld gemstone production. To maintain its grip on the market De Beers as obliged to reach out the other major producers of rough diamonds, urging bedrngen them to sell their production to De Beers. Realizing the benefits of cooperation and the dangers of oversupply, most diamond-producing states signed contracts ith De Beers, agreeing to sell their rough diamonds solely to the De Beers and its agents. The arrangement as that the countries sell its rough diamonds only to De Beers and at a price that De Beers set.The countries generally also agreed to accept loer prices in times of less demand and to refrain absehen from polishing any of their on diamonds.In exchange for this rather rigid restrictions, the other producers ould earn the returns of a cartel stable prices, guaranteed purchases, and a buffer against competition.The poer of the Cartel did not rest simply ith its control of diamond supplies, it extended throughout the length of the Diamond Pipeline and into the distribution and marketing of rough diamonds.After De Beers had obtained erhalten its diamonds it sent them to its Central Selling Organisation CSO located in LondonThe CSO acted as the central distribution point for the orlds diamond trade.Stockpilinghenever the Market for luxury goods gave the possibility De Beers and the CSO ould buy up the best stones and add them to their stockpiles. henever Diamonds from outside found their ay to market, De Beers ould buy again, alays ensuring that the basic balance beteen supply and demand as compensated.Stockpiling as thus the final tool in De Beerss box. It as a ay to keep prices high by not permitting the Demand to falter schanken and by convince berzeugen the public that diamonds ere indeed special and scarce.It as very much a family company, run by the Oppenheimers, their relatives and long-time associates. Even the shareholders ere tightly interlocked verzahnt, linked by a complex eb to a series of firms that together composed the Oppenheimer empireDe Beers as to be sure a publicly-oned corporation, but a half of its shares had historically been held by Anglo American, Ernest Oppenheimer and Son, and other friendly members of South Afr...
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