Industrial Diamonds

In their rich, paneled offices off an awninged terrace overlooking the Hudson in downtown Manhattan, officials of the Dutch diamond firm of J. K. Smit & Sons were solemn last week. Amsterdam and their home office were in Nazi hands. So, too, they feared, were snow-haired Johan Smit, head of the firm, and Joop, the second of his three partner-sons, who was with the Dutch Army. Suddenly came a cablegram, signed by Johan's oldest son, Jan: how soon could Smit's Manhattan office get and ship 500 diamond-cutting saws to London?

Joyfully the Smitmen of New York, including third son Piet, concluded that some of The Netherlands' skilled cutters had escaped (without their equipment) to London. With relief they got busy on the saw order. It meant that Amsterdam's great diamond-cutting industry had not fallen entirely into enemy hands. To firms like Smit & Sons, which specialize in industrial diamonds, it meant that they could still supply the Allies' war-pressed industrial machine with indispensable diamond tools.

For diamonds are not merely gems; they are also the hardest substance known to man, therefore the keystone of machine-tool production. In making automobile, aircraft, other products based on complete interchangeability of parts, only diamonds can bore pistons and connecting rods, dress grinding wheels to the necessary exactness. Diamond dies draw ignition wire to uniform size. Diamonds test the hardness of alloys in razor-blade and ice-skate factories. Diamonds tip the big drills that find gold under layers of rock. Diamonds cut tombstones and glass. Of the world's diamond production of around two and a half tons a year, 75% goes to industry.

More than half of this comes to the U. S. A single New England machine-tool maker uses 100 carats a year (current price: $10-$50 per carat); the annual diamond bill of Detroit is in the millions. Hence many a U. S. industrialist had another reason for worrying about the news from Europe last week. The disruption of the Dutch and Belgian industry seemed sure to boost prices on industrial diamonds--some thought by as much as 250%. But worse than that: the conquest of England could tie the entire world diamond industry into a Nazi-controlled sheepshank.

For absolute control of the world's new diamonds lies in a dull, grey building at No. 8 Charterhouse Street, London, offices of Diamond Corp. and its subsidiary, Diamond Trading Co. There, on an upper floor, the lords of Britain's cushiest monopoly linger over luncheons washed down with fine hock, occasionally notify their approved customers (and them only) that their application for a "sight" (buying visit) has been approved. "Sights" are no occasions for unbending. Customers look over parcels of stones, good and bad, take all or none, and take them at Diamond Corp.'s price. Widespread among buyers is the impression that when the price is too high, and no sale is made, Diamond Corp. men seem relieved.

First Lord of Diamonds is mustached Sir Ernest Oppenheimer, who lives grandly at Johannesburg, makes occasional visits to London. Sir Ernest, knighted in 1921 for services to the Empire, is chairman of Diamond Corp., which controls 95% of the world's diamond production, chairman of De Beers Consolidated Mines, world's most important diamond mining company. As boss of both ends of Britain's diamond cartel, he always lets his left hand know what his right is doing. When buyers get languid, Sir Ernest's tight little combination turns off the diamond supply like a kitchen tap. The supply: British and Belgian Africa, whose "pipes" (blue clay mines) and alluvial deposits yield 97% of the world's output. The other 3%, including black diamonds, is sifted haphazardly by natives from river alluvium in Brazil.

When World War II began, the British cartel cut the Germans out of the market, black-listed dealers who could not convince Sir Ernest's executives they would not let their purchases into the Reich. When the British held the Pan-American Clipper at Bermuda and seized U. S. ship mail at Gibraltar, one big object of their search was diamonds headed for Nazi factories. Last week U. S. industrialists might well ponder what a Hitler-dominated cartel could do to mass production in the U. S.

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