At its height -- for most of this century -- it not only either directly owned or controlled all the diamond mines in southern Africa but also owned diamond trading companies in England, Portugal, Israel, Belgium, Holland, and Switzerland.De Beers proved to be the most successful cartel arrangement in the annals of modern commerce.The diamond invention is far more than a monopoly for fixing diamond prices; it is a mechanism for converting tiny crystals of carbon into universally recognized tokens of wealth, power, and romance.To achieve this goal, De Beers had to control demand as well as supply.Oppenheimer and the bankers believed that an advertising campaign could persuade Americans to buy more expensive diamonds.Oppenheimer suggested to Lauck that his agency prepare a plan for creating a new image for diamonds among Americans.
To stabilize the market, De Beers had to endow these stones with a sentiment that would inhibit the public from ever reselling them. Ayer had been recommended to Oppenheimer by the Morgan Bank, which had helped his father consolidate the De Beers financial empire.
The major investors in the diamond mines realized that they had no alternative but to merge their interests into a single entity that would be powerful enough to control production and perpetuate the illusion of scarcity of diamonds.
The instrument they created, in 1888, was called De Beers Consolidated Mines, Ltd., incorporated in South Africa.
Similarly, young women had to be encouraged to view diamonds as an integral part of any romantic courtship.
Since the Ayer plan to romanticize diamonds required subtly altering the public's picture of the way a man courts -- and wins -- a woman, the advertising agency strongly suggested exploiting the relatively new medium of motion pictures.
In fact, in 1938 some three quarters of all the cartel's diamonds were sold for engagement rings in the United States.