HISTORIC EVOLUTION OF THE DIAMOND TRADE | EN

Diamond as well as other precious stones, came to Europe via the old trading routes, the well known silk road, which connected the Indian coastal area with Constantinople and Alexandria and some time later with Rome in its prospering years via Persia and Turkey or the Persian Gulf. This trade diminished when the Roman Empire fell and only revived in the early Middle Ages.
 
The 15th century was noted for the splendour and dynamism of Venice who held the monopoly of the trade in rough diamonds and it is said that the Venetians first tried to polish stones because some polished stones dating from that time were found there. In reality they were stones with a few facets polished on the flat planes.
 
Bruges became a diamond centre because of its active trade with Venice and was soon known for its cut. It absorbed the major part of the stones exported by Venice. All this led to the new name of Bruges, "Venice of the North". It is only when Vasco da Gamma discovered the sea routes to Portugal via the Cape of Good Hope that the land routes, controlled by the Persians and the Arabs, lost their monopoly and Lisbon became the centre for rough stones. But till the 18th century the “silk road” was used. The most famous stones from India travelled with the well known traveller and trader J. B. Tavernier to France through this way.
 
Antwerp, already renowned for its famous ruby polishers, became a diamond centre in the 15th century. The Portuguese merchants came to the city of Bruges to have their stones polished according to the new techniques of the Lode van Berckem. At the same time, other polishing centres were established in Paris, Germany and Alexandria.
 
At the end of the 15th century, diamond activities shifted from Bruges, which as a port was declining, to Antwerp, which was in full expansion thanks to its port. In 1583 the diamond and ruby cutters guild was established. From then on, Antwerp thanks to its relations with Lisbon, which had become the main importer of Indian goods surpassing Venice, became the largest diamond centre. Almost half of the Indian goods passed through Antwerp and most of them were cut there. But wars, political intrigues and the religious intolerance of the Spaniards ended all of this and at the end of the 15th century many diamond and ruby cutters, protestant, Calvinist and Lutherans left the city and went to work in Amsterdam. They were preceded by many Portuguese Jews diamond dealers and financiers, who fled the country to escape the religious persecution of the Inquisition. Without completely losing its diamond tradition, Antwerp had to leave its first place as a diamond cutting and trade centre to Amsterdam. Meanwhile, London ousted Portugal and Holland from the Indian trade and in the 17th century it became an important diamond centre. Despite the discovery of alluvial deposits in Brazil, which lead to a bumper production, the diamond trade did not undergo any noticeable changes till 1870 when the South African mines came on stream. This gave London the opportunity to confirm its leading position in the diamond trade and Antwerp was given the opportunity to regain its name as diamond cutting centre because, despite the long period of crisis it went through, a few cutting factories had continued there.
 
The next years were characterised by the succession of periods of boom and recession, and a revival just before the Boers War in 1899, which lead to a short¬age of rough goods. The expansion preceding 1905 collapsed again in 1907. Only a year later the discovery in South-West Africa (then in German hands) of large amounts of small rough stones of good quality triggered off another revival, which, however, was soon wiped out by the First World War. At the end of WWI, the diamond trade revived once more till 1920, when the first symptoms of the world economic crisis became visible and everything was once more compro¬mised.
 
In the years preceding the Second World War, there was a great demand for polished stones. In between the two wars, Amsterdam declined, caused by the fiscal reorganisation and high labour costs. This benefited Antwerp, which had a lower fiscal pressure and where credits were more easily obtained. Many Dutch diamond dealers left Amsterdam for Antwerp to enjoy better working conditions. Both in Antwerp and Amsterdam, the Dutch guilder remained the currency of the trade. This often caused confusion regarding the exchange rate of the Dutch guilder versus the Belgian franc. The diamond dealers decided to end speculation by unanimously fixing the rate at 20 Belgian francs to 1 guilder. Hence the "Diamond Guilder" was born. The Diamond Guilder continued to be used for several decades in the diamond sector, especially thanks to the mentality of older diamond dealers who had got very attached to this "imaginary" currency. The collapse of the English pound in December 1967, lead De Beers to decide to use US dollars for all transactions. Nowadays the dollar is the only currency used for all transactions, maybe in anticipation of the ECU.
 
The years after the war till the end of 1948 were very prosperous for the diamond trade and at the same time the industrial diamond trade expanded considerably as a consequence of technological research, which originated in the war. After a period of reasonable peace and quiet, the Korean War caused a spec¬tacular revival in diamond sales. The period of the "Golden Sixties" was one of unusual stability and prosperity for the diamond business. It ended with the crisis in 1973 and the beginning of the oil crisis. At the same time the polished diamond sector had to face profound changes as a consequence of competition from the low wage countries such as India, Israel and a few years later Russia. These countries all specialised in the cutting of small stones, which obliged Antwerp to turn to the more difficult larger stones. In addition to all of this, De Beers started its vertical integration by setting up its own workshops in the Campine. This lead to a small revolution in the smaller and medium-sized work¬shops.
 
After the 1975-76 declines, there was a sharp increase in the sales of eight cuts and melees till about 1977. This was the consequence of Israeli speculations. It was soon followed by a collapse of prices of these goods. 1980 was the year of speculation for the one carat stones with certificates, which reached tremendous high prices. They collapsed, however, to return to more normal prices in 1982 (they are still low, see chart).
 
The end of the 19th century and the beginning of the 20th century may be consid¬ered as turning points in the diamond trade. Diamonds which for centuries had been reserved for the elite, became more democratic because of the evolution of modem capitalism and gradually came within reach of the bourgeoisie and after¬wards even for middle class people. Industrial development and new technolo¬gies both lead to the increase in the production of industrial diamonds in the years that followed.
 
Despite wars and speculations, diamond prices have been relatively stable since the twenties and have not known the fluctuations other raw materials experi¬enced. This unique fact is the result of the determined commercial policy followed by De Beers, whose name is tied to the diamond industry in the same way Ford's name is tied to the car industry.