BRAZIL

A History of Diamond Production: Brazil: New World Diamonds for a New World of Diamonds

Historians know now that exploration of the New World was motivated by greed not glory. If Columbus hadn’t been able to persuade his royal patrons that India—the land of riches to which he was hoping to find a short cut—wasn’t a vast repository of mineral and metal wealth, it is doubtful he would have ever been given the money to set sail for the first of his three voyages.

Believe it or not, gem wealth was considered more important than gold wealth. On the eve of setting sail in 1492, Columbus asked Ferdinand and Isabella for a want-list of booty to bring back. Pearls were at the top. And even though Columbus himself never found the great pearl-oyster beds off Venezuela and in the Gulf of Mexico, his successors did—and made vast fortunes. South and Central America were the world’s chief source of pearls from the early 16th to well into the 18th century. And let us not forget the emeralds of Colombia, which became the most prized the world has ever known after their discovery in the early 16th century.

Around 1730, the New World became as famous for diamonds as it was for pearls and emeralds. Glittering stones found by prospectors in the hills and on the plains and rivers of Brazil that had long been used for barter were finally identified as diamonds in Lisbon, a chief trading center for Indian and New World goods. A funny thing happened here, however. Instead of sparking the excitement that the onrush of pearls and emeralds had done, the sudden surge of South American diamonds triggered pandemonium. By 1739, prices for diamond rough were half of what they had been ten years earlier when all stones were still thought to originate in India. The diamond trade experienced its first panic.

Incredibly, it took only a trickle of diamonds to send the market into a tail spin. Diamond historian Godehard Lenzen estimates Brazilian production in the 1730s at around 20,000 carats annually. Between 1740 and 1772, he puts mine output at 50,000 carats annually, dropping by half in the years between 1772 and 1806, and half again from 1811 to 1822. [Compare these figures to modern annual production that has been 120 million carats-plus for a decade.]

Yet there’s a silver lining in this crisis. By 1740, there was a distinct two-tier market for diamonds. Tier One was a distinct forerunner of the De Beers cartel and consisted of Dutch syndicates that bought rough direct from the Brazilian mines through a concession granted by the Portuguese crown. Hence the rough market was under separate, monopolistic, shock-absorbing control in Amsterdam. Tier Two consisted of a rapidly proliferating network of cutters, dealers and jewelers who were competing for goods to cut and sell to the courts of Europe and to an emerging market of wealthy businessmen. With the rough trade in Dutch hands, it is no accident that Amsterdam became the world’s leading cutting center—eclipsing Antwerp until it re-emerged a century later. New World diamonds were the underpinning of the new world of diamonds.