Part II: Disappearing Business

Read about The Inquirer's investigation.

by Andrew Bast

The diamond industry already bears a horrible scar from its by its tendency to look the other way. For years what are known as blood diamonds flooded the world’s markets. Essentially, traders bought rough stones in Africa from warlords in Angola, Sierra Leone and the Democratic Republic of the Congo and in turn funded the horrific insurgencies against the countries’ respective governments. In 2000, the United Nations General Assembly unanimously adopted a resolution banning “conflict diamonds,” and the BBC quipped, “Diamonds are a warlord’s best friend.”

Since the Diamond District in Manhattan relocated to 47th Street from the Bowery around the time of World War II, the neighborhood’s role has changed immensely. Over the last ten years, as outsourcing, Internet trading and market consolidation by the De Beers cartel has sent shockwaves up and down 47th Street, it could even be said that the Diamond District’s role has dwindled.

Tradesmen have simply become too expensive. According to a recent report in the New York Times, the number of diamond cutters in the Diamond District has dropped from 3,000 fifteen years ago to just 300 today. Places like the Venus Jewel Factory in Surat, which employs more than 1,000 Indian diamond cutters, usurp the work once traditionally a mainstay on 47th Street. The same goes for polishers, setters and casters. These craftsmen once populated the same kind of second-floor shop where Kim’s Jewelry ran its racket. Storefronts have gone dark. Booths in many of the jewelry plazas are abandoned.

The Internet has turned diamond trading on its head. Traditionally, a cadre of diamond brokers made a living buying and selling stones. The Diamond District was famous for its lack of a paper trail. Dealers arrived from Antwerp with rough diamonds folded in white paper. Though they might sell a handful for hundreds of thousands of dollars, the deal was sealed with only a handshake and an utterance of, “Mazel und Brocha,” Yiddish for “luck and blessing.” It was an insular world that functioned entirely on trust. However, after a string of bankruptcies shook the industry, dealers turned away from the practice to a more secure home on the Internet.

Even the father figure of the trade is shifting out of the old school. De Beers, who was a monopoly throughout the 20th Century, has consolidated its business. In 2000, chairman Harry Oppenheimer engineered, in his words, “one of the most significant developments the diamond industry has seen since the 1930s,” and created a “Supplier of Choice,” program that seeks to cut out the middlemen of the diamond trade. Small to mid-sized retailers and resellers are being weeded out. They’re now seen as weak links in De Beers’ chain. Traditionally, they’ve been the heart and soul of 47th Street.

According to Jeffrey Levin, owner of Firenze Jewels and chairman of the 47th Street Business Improvement District, many brokers and dealers left the diamond business entirely and went into real estate.

Looking closer, it's clear something else has taken its place.

Tune in to Part III for the intricate workings of a jewelry fence . . .

 

Full investigation: Part I, Part II, Part III, Part IV and Part V.

(Photo of 47th Street storefront from flickr and snapshot of 47th Street from flickr.)