The Diamond Empire

The Diamond Empire(1994)

Original Air Date: February 1, 1994
Produced by Laurie Flynn
Directed by Gavin MacFadyen



ANNOUNCER: Last year Americans spent more than $10 billion on diamond jewelry.

HERBERT CHAO GUNTHER, Marketing Consultant: Nobody's aware that diamonds and all the associations we have with diamonds is a product of a marketing strategy. It's completely invisible, transparent. If you measure it in terms of how all the myths associated with this advertising campaign have been deeply inculcated in people -- it's reached deeply into the popular imagination -- this is probably the most successful campaign in history.

ANNOUNCER: Tonight on FRONTLINE--

PARTY GUEST: Diamonds? Aren't they a girl's best friend? Did something change?

ANNOUNCER: --are diamonds what we think they are, precious and rare?

EDWARD EPSTEIN, Author, "The Rise and Fall of Diamonds": I wound up discovering it was just the opposite. Everywhere where there's carbon, which is everywhere, you find diamonds.

ANNOUNCER: FRONTLINE examines the cartel that controls the diamond trade -- the supply, the price and the myth.

THOMAS HELSBY, Kroll Associates, Corporate Investigators: What makes this cartel different is it's controlled by a single company.

ANNOUNCER: Tonight, "The Diamond Empire."

NARRATOR: In the spring of 1992, more than 100 wealthy benefactors from around the world were invited to the Hotel Pierre in New York City, to a fund-raiser for AIDS research. Elizabeth Taylor, the high priestess of the mystique of diamonds, had invited them personally to an auction of fine jewelry that raised more than a half million dollars. The evening itself was a glittering tribute to the allure of diamonds.

1st PARTY GUEST: I'm wearing the diamonds because my sweetheart has given them to me and it means love and it means forever.

2nd PARTY GUEST: Diamonds? Aren't they a girl's best friend? Did something change?

3rd PARTY GUEST: Diamonds? Diamonds! They're a woman's best friend.

NARRATOR: But what we think about diamonds is, in fact, a myth. At the center of that myth is an illusion, that diamonds are valuable because they are rare. When writer Edward Epstein set out to investigate the diamond trade, he discovered that diamonds aren't rare at all.

EDWARD EPSTEIN, Author, "The Rise and Fall of Diamonds": Well, what I learned was that the diamond business wasn't a business of extracting, as I originally expected, something of enormous value and then simply seeing how much of this object you could get out of the ground and selling it. That was what the business appeared to be when I started my venture. But their real business was restricting what came out of the ground, restricting what was discovered, restricting what got cut, restricting what actually found its way into the retail market and, at the same time, through movies, through advertising, through Hollywood, through the manipulation of perceptions, creating the idea that there was this enormous demand for these shiny little objects that they seemed to have in abundant supply. So I wound up on this voyage of discovery starting off with the idea that there was this object of great value, and it was just a question of how many could you get out, and I wound up discovering it was just the opposite.

NARRATOR: This is the story of how that grand illusion was created, and the story of how one family gained control of the world's diamond trade and for nearly a century has maintained its hold on an empire that defines the very idea of what diamonds really are.

New York is the center of the world's richest diamond jewelry market. It's a $10.8 billion industry. Around 47th Street there are 25,000 people buying, selling, cutting, polishing and marketing diamonds, from the most glamorous jewelry to cheap mail-order.

Very few in the diamond business will talk freely about what they do. There is a great deal of money at stake. There is also a great deal of uncertainty, but that's something top dealers like William Goldberg take in their stride.

WILLIAM GOLDBERG, William Goldberg Diamond Corp.: It's fascinating. It's amazing that a lot of men that I know that are 10 years younger than I am can't wait to retire and I can't wait to get here in the morning at 8:00 o'clock to produce these beautiful works-- you know, these beautiful pieces of art from what looks like a pebble on the beach. And then to nurse it through all its stages and then to finally come up with some of these wonderful things is just a joy. NARRATOR: Goldberg is one of the elite dealers who specialize in rare and precious stones. He has a team of cutters working just off 5th Avenue. Some of the diamonds they handle will sell to royalty and movie stars for a million dollars or more.

Mr. GOLDBERG: This stone took us one of the longest ever, eight or nine months. It was-- it was the most impossible task we-- every time, we had new surprises. Nature is very funny when it comes to these things. You know, there were new hidden imperfections, which we didn't think existed before, which always seemed to sneak in. And we paid in excess of $10 million for this diamond.



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