Speaker 1: This is Red Pilled America. A quick question before we
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Speaker 1: and why because it's hard to produce a storytelling show.
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Speaker 1: one story at a time. Throughout recorded history, humans have
Speaker 1: ascribed value to countless items. They become so coveted that
Speaker 1: accumulating them assures life changing wealth. I want to get
Speaker 1: Lucy some real pearls. I just love finding new places
Speaker 1: to wear.
Speaker 2: Diamonds go gentlemen, which can be melted down and recast.
Speaker 2: Its virtually untraceable.
Speaker 1: You look for oil, that's right when you pay for
Speaker 1: a place that has it, it depends.
Speaker 3: You can buy bitcoin. It's the global asset, it's the
Speaker 3: biggest brand.
Speaker 4: It's actually the best thermodynamically sound investment.
Speaker 1: Whether it be pearls, diamonds, rubies, gold, oil, or bitcoin.
Speaker 1: At one time or another, all of these things have
Speaker 1: been considered extremely valuable? But why? What makes something valuable?
Speaker 1: I'm Patrick Carelci.
Speaker 3: And I'm Adriana Cortes.
Speaker 1: And this is Red Pilled America, a storytelling show.
Speaker 3: This is not another talk show covering the day's news.
Speaker 3: We're all about telling stories.
Speaker 2: Stories.
Speaker 1: Hollywood doesn't want you to hear stories.
Speaker 3: The media mocks stories about everyday Americans. If the globalist.
Speaker 1: Ignore, you can think of Red Pilled America as audio documentaries,
Speaker 1: and we promise only one thing, the truth. Welcome to
Speaker 1: Red Pilled America. What makes something valuable? It's a deceptively
Speaker 1: simple question, and like many Red Pilled America stories, it
Speaker 1: surfaced in an unexpected way. Towards the end of twenty
Speaker 1: twenty five, we watched the price of gold and silver skyrocket.
Speaker 1: The price of gold it has soared into over four
Speaker 1: thousand dollars an ounce for the first time ever, with
Speaker 1: silver also making unprecedented gains. Then a few days later,
Speaker 1: we heard an argument about, of all things, lab grown diamonds.
Speaker 1: One side insisted that they were nothing like their natural counterparts.
Speaker 1: The reasoning was straightforward. Lab diamonds may be chemically identical,
Speaker 1: but they're created in days, while natural diamonds take millions
Speaker 1: of years to form deep within the earth. That argument
Speaker 1: immediately brought to mind a scene from the movie Now
Speaker 1: You See Me, Now You Don't.
Speaker 2: Diamonds created in laboratories.
Speaker 4: They purported to her value, but they're neither natural nor red.
Speaker 2: What honest woman wants a falsehood on her finger. One
Speaker 2: of the great truths left is the power behind us
Speaker 2: natural jib real diamonds full people with passion.
Speaker 1: The discussion got us curious, so we looked up the
Speaker 1: price of natural diamonds and were stunned by what we'd learned.
Speaker 1: Over the past three years, the price of natural diamonds
Speaker 1: has dropped roughly thirty percent, and what was perhaps most
Speaker 1: surprising was that near the end of twenty twenty five,
Speaker 1: lab grown diamond engagement rings accounted for nearly sixty percent
Speaker 1: of the US market. More than half of new engagement
Speaker 1: rings featured a lab grown diamond, with gold and silver
Speaker 1: skyrocketing while natural diamonds are plummeting in price. It got
Speaker 1: us to wondering what makes something valuable. To find the answer,
Speaker 1: we're going to tell the story of Debier's, the multinational
Speaker 1: diamond company that built the most successful monopoly in modern history.
Speaker 1: Along the way. We'll hear from Kevin de Merritt, founder
Speaker 1: of Lear Capital, one of the largest precious metal firms
Speaker 1: in the United States. When you strip away the romance,
Speaker 1: the marketing, and the carefully crafted illusions, the question of
Speaker 1: value becomes surprisingly difficult to answer. And what you discover
Speaker 1: again and again is that many of the things that
Speaker 1: humanity has prized most highly weren't naturally valuable at all.
Speaker 1: Their value was manufactured.
Speaker 3: It's eighteen seventy one in the northern cape of South Africa.
Speaker 3: Wind is blowing through the uncultivated grassland. Cattle is shuffling
Speaker 3: lazily in the distance, while a young mix raced laborer
Speaker 3: is doing what he always does, walking the same dusty
Speaker 3: path on the farm of two brothers. He's not searching
Speaker 3: for anything, He's just working. Then he kicks a stone.
Speaker 3: It catches his eye, a flash of light in the
Speaker 3: South African dirt. He bends down, brushes away the soil,
Speaker 3: and lifts the tiny rough stone in the palm of
Speaker 3: his hand to him. It just looks different. But little
Speaker 3: did he know that the stone in his hand is
Speaker 3: about to set off a chain reaction that will lead
Speaker 3: to one of the most powerful monopolies in human history,
Speaker 3: because what this laborer is holding is one of the
Speaker 3: rarest gems in existence, a diamond, and he found it
Speaker 3: on a farm that would come to be known as Debir's.
Speaker 3: To understand the significance of this moment, we must go
Speaker 3: back way back to a time when diamonds were first
Speaker 3: recorded in human history. For most of human civilization, if
Speaker 3: you wanted a diamond, you had one place to go, India.
Speaker 3: For more than two thousand years, India was the only
Speaker 3: known source of diamonds on Earth. These durable stones came
Speaker 3: from the river gravels of a region called Golconda, and
Speaker 3: they were nothing like those found in the massive mines
Speaker 3: of South Africa. They were any rare, hard, and almost
Speaker 3: impossible to get. Imagine this, hundreds of laborers standing waist
Speaker 3: deep in muddy rivers, scooping gravel into baskets, sifting and
Speaker 3: washing hour after hour, day after day, all for the
Speaker 3: chance that maybe one in tens of thousands of pebbles
Speaker 3: would flash back a hard, cold light that was a diamond.
Speaker 3: Prior to the eighteen hundreds, the entire world production of
Speaker 3: gem quality diamonds amounted to only a few pounds a year.
Speaker 3: Their rarity gave them an instant mystique. They weren't just
Speaker 3: pretty stones. They were strange. They would scratch any other material.
Speaker 3: They were durable enough to where they didn't seem to
Speaker 3: wear down. Like gold, they didn't corrode, decay, tarnish, or degrade.
Speaker 3: And also, like gold, diamonds sparkle. They caught the light
Speaker 3: in a way other gems didn't. For early rulers and priests,
Speaker 3: they felt supernatural, so from the beginning, diamonds were never
Speaker 3: a normal luxury. They weren't like cloth or spices, or
Speaker 3: even gold coins that passed from hand to hand. They
Speaker 3: were whispers from the gods, tiny pieces of indestructible light.
Speaker 3: In the ancient world, almost no one ever saw one.
Speaker 3: They were reserved for royalty, mystics and religious figures. Diamonds
Speaker 3: were mounted into idols, set into ceremonial weapons, or sown
Speaker 3: into robes that only the most powerful humans on earth
Speaker 3: would ever wear. And because they were small and extremely valuable,
Speaker 3: they had another quality as well. They were portable. They
Speaker 3: could be sewn into a hem or slipped into a seam,
Speaker 3: providing the flexibility of carrying a small fortune in the
Speaker 3: lining of a cloak. Long before there was a phrase
Speaker 3: like stock portfolio, diamonds began to develop a second identity,
Speaker 3: not just as symbols of divine power, but as tiny,
Speaker 3: portable storehouses of wealth. Because if something can't be concealed
Speaker 3: or carried in times of upheaval, it struggles to function
Speaker 3: as a long term store of value during times of stress.
Speaker 3: That's why gold and silver, coins and diamonds were considered
Speaker 3: valuable to refugees and land and factories were not. By
Speaker 3: the Middle Ages, those Indian diamonds had made their way
Speaker 3: west along the same trade routes that carried silk, spices
Speaker 3: and porcelain. Muslim merchants baried them through Persia, and the
Speaker 3: levant Italian traders brought them to the courts of Europe.
Speaker 3: Little by little, diamonds began appearing in royal treasuries in France,
Speaker 3: England and the German States. But if you look at
Speaker 3: who handled them, who cut them, and who evaluated them,
Speaker 3: a pattern emerges. Many of the hands holding those stones
Speaker 3: belonged to Jews, and this was not by accident. Medieval
Speaker 3: Europe ran on a system of guilds. If you wanted
Speaker 3: to be a carpenter, mason or goldsmith. You didn't just
Speaker 3: decide one day to open a shop. You joined a guild,
Speaker 3: a powerful fraternity of craftsmen that controlled training prices and
Speaker 3: who was allowed to work. Guilds weren't just labor unions.
Speaker 3: They were social clubs, religious institutions, and protection rackets all
Speaker 3: mixed together, and there was one basic rule. You had
Speaker 3: to be Christian. If you weren't Christian, if you were
Speaker 3: Jewish or any other faith for that matter, you were
Speaker 3: locked out of most of the respectable trades. You couldn't
Speaker 3: become a master carpenter, you couldn't become a guild goldsmith.
Speaker 3: Your options shrank to a tiny list of professions that
Speaker 3: lay outside guild control. Two of those professions were money
Speaker 3: lending and gem polishing, and those turned out to be
Speaker 3: the perfect combination for diamonds. Christian doctrine at the time
Speaker 3: frowned on usury, or lending money at interest, so the
Speaker 3: Church pushed Christians away from the business of high interest lending.
Speaker 3: But economies still needed loans. Kings, princes, and merchants. They
Speaker 3: all needed people willing to extend credit to expand an
Speaker 3: empire or go to war, or corner or market that
Speaker 3: vacuum was filled in large parts by the Jewish community.
Speaker 3: Money lending requires collateral. Something that holds value, is portable
Speaker 3: and can be redeemed in any major city. Land isn't
Speaker 3: practical for that livestock dies. But throughout history gold and
Speaker 3: silver fit that bill.
Speaker 4: I mean, gold has been around for a long time
Speaker 4: and most people kind of remember talking about it in
Speaker 4: the Bible.
Speaker 3: That's Kevin de Merritt, founder of Leer Capital, one of
Speaker 3: the largest precious metal firms in the United States.
Speaker 4: Gold began as a store of value in four thousand
Speaker 4: BC in ancient Egypt, and silver followed very closely after.
Speaker 4: Was widely used as accounting money, where prices and wages
Speaker 4: were denominated in silver by weight. So by around six
Speaker 4: or seven hundred BC, the first standardized coins using gold
Speaker 4: and silver, making really the birth of money as it's
Speaker 4: recognized today.
Speaker 3: Throughout history, gold and silver have been so widely viewed
Speaker 3: as holding value that systems had to be to protect
Speaker 3: coins from scammers.
Speaker 4: A great story about the Romans was in the beginning,
Speaker 4: people would take their gold coins and they would shave
Speaker 4: off a little the edge of the coin, right, you
Speaker 4: would just get the coin to shave off the edge.
Speaker 4: So some people believe that the reeds, the little you
Speaker 4: know things on the edge of the coin, were there
Speaker 4: so you can hold onto the coin. That isn't the case.
Speaker 4: They put the reeds on the edge of the coins,
Speaker 4: the Romans did so you couldn't scrape them off.
Speaker 3: So gold and silver have been viewed as valuable for
Speaker 3: thousands of years. They were used in money lending as
Speaker 3: collateral because they held value, were portable, and could be
Speaker 3: redeemed in any major city. When diamonds came along, they
Speaker 3: were added to gold and silver as collateral for lending.
Speaker 3: That's because they were all globally recognizable wherever you went.
Speaker 3: They were viewed as valuable, and in some ways in
Speaker 3: medieval Europe, diamonds had an added benefit. If you were
Speaker 3: Jewish in a Christian kingdom, your safety was never guaranteed.
Speaker 3: Edicts could be announced, crowds could turn, you could be
Speaker 3: expelled on a short notice from the place your family
Speaker 3: had lived for generations. In that world, wealth that can
Speaker 3: be moved overnight is more than just convenient, it's life saving.
Speaker 3: So diamonds served two roles at once, collateral for loans
Speaker 3: and an emergency vault. That could be stitched into your
Speaker 3: clothing over generations that created expertise. Diamonds were not as
Speaker 3: fungible as gold or silver. Fungible, meaning one diamond gem
Speaker 3: couldn't just be traded for another of the same size,
Speaker 3: unlike a gold or silver coin that could be traded
Speaker 3: for another gold or silver coin of the same weight.
Speaker 3: Diamonds come in different colors and qualities. Jewish traders and craftsmen,
Speaker 3: locked out of the guild system began developing a deep
Speaker 3: familiarity with these stones, how to evaluate them, how to
Speaker 3: cut them, how to move them quietly from one royal
Speaker 3: court to another. As one historian put it, by the
Speaker 3: early modern period, diamonds and Jewish communities had become intimately connected,
Speaker 3: and once that connection was established, it shaped the entire
Speaker 3: global diamond trade.
Speaker 1: From the outside, it looks almost accidental. Jewish communities were
Speaker 1: scattered across the map in Lisbon, Antwerp, Venice, Hamburg and Vienna.
Speaker 1: They were connected by family ties, by letters sent from Afar,
Speaker 1: and by trade. They already had this skeleton of a
Speaker 1: cross border network. At the exact moment the world needed
Speaker 1: a cross border network to move tiny, high value objects,
Speaker 1: so diamonds began to flow along the Jewish trade routes.
Speaker 1: Lisbon and Antwerp became early hubs ports where Indian stones
Speaker 1: entered Europe, got evaluated and cut, then made their way
Speaker 1: into the crowns and jewelry boxes of kings and queens.
Speaker 1: Then history intervened. In fourteen ninety two, the Spanish monarchy
Speaker 1: issued the Alhambrad Decree expelling Jews from Spain. In Portugal,
Speaker 1: similar pressures followed across the Iberian world. Jewish communities faced
Speaker 1: a simple choice convert or leave. Many left. When Jews
Speaker 1: were forced out of Lisbon and Antwerp, they carried their
Speaker 1: skills with them and their hand tools. A factory wasn't
Speaker 1: needed to cut diamonds. All that was needed was a bench,
Speaker 1: a wheel, and some powder, all of which could fit
Speaker 1: into a cart. So when those families resettled in Amsterdam,
Speaker 1: they didn't just start over, they remade the industry. Amsterdam
Speaker 1: quickly became the new center of European diamond cutting. At
Speaker 1: the same time, the Dutch Republic was rising as a
Speaker 1: maritime power. Its great trading company, the Dutch East India Company,
Speaker 1: wanted direct access to Indian goods. Jewish merchants helped finance
Speaker 1: those voyages and in return secured their place in a
Speaker 1: lucrative trade. Soon Amsterdam replaced Lisbon as the main European
Speaker 1: portal for Indian diamonds. Stones came in on Dutch ships,
Speaker 1: got cut by Jewish craftsmen, and headed back out in
Speaker 1: refined form into the royal courts of Europe. Then, in
Speaker 1: seventeen twenty five, the world caught a break. For centuries,
Speaker 1: people had worried that India was running out of diamonds.
Speaker 1: The trickle of stones was slowing, prices were rising. There
Speaker 1: was a real fear that diamonds, these symbols of indestructible wealth,
Speaker 1: might actually disappear. Then a discovery was made in an
Speaker 1: unlikely place. In the early seventeen hundreds, miners searching for
Speaker 1: gold and Brazilian river beds started finding unfamiliar stones. They
Speaker 1: were hard, they scratched metal, They looked suspiciously like diamonds,
Speaker 1: or had got back to Europe. Tests confirmed it. The
Speaker 1: world had a second diamond source. For a while, Brazilian
Speaker 1: stones eased the pressure. European elites could keep buying, jewelers
Speaker 1: could keep designing, but the geopolitical balance was shifting. By
Speaker 1: the mid eighteenth century, Britain dominated the seas, its navy
Speaker 1: controlled the shipping lanes, and as a result, its trading
Speaker 1: companies muscled their way into every profitable enterprise. So it's
Speaker 1: no surprise that Britain gradually took control of the diamond
Speaker 1: trade as well. London, not Amsterdam, became the new trading
Speaker 1: center for uncut stones, and once again the merchants followed.
Speaker 1: Jewish diamond traders moved their operations to London, keeping their
Speaker 1: cutting factories in Antwerp, where labor and expertise were established,
Speaker 1: and shipped finished gems to royal courts across Europe. At
Speaker 1: the top of this ecosystem sat a small number of
Speaker 1: elite specialists, expert evaluators, and financers who became known as
Speaker 1: court Jews, trusted Jewish advisers who handled loans, jewels, and
Speaker 1: delicate diplomacy for kings. In Sweden, this role was filled
Speaker 1: by the Isaac family, and Hamburg by the Lippolds, and
Speaker 1: in Vienna by the Oppenheimer's, a name that will hear
Speaker 1: again later in this story. By the late seventeen hundreds,
Speaker 1: Jewish traders controlled virtually the entire world of diamond traffic,
Speaker 1: but there was a problem they couldn't solve. The earth
Speaker 1: seemed to be running out of the shiny stone again,
Speaker 1: Brazilian production began to fade. India's supply was nearly exhausted
Speaker 1: as well. By the eighteen sixties, it looked like the
Speaker 1: age of diamonds was coming to an end. Then a
Speaker 1: boy on the far tip of South Africa picked up
Speaker 1: a shiny rock and it changed everything. Life can be
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Speaker 1: Pilled America. So as the eighteen seventies arrived, there was
Speaker 1: a problem that diamond trade couldn't solve. The earth seemed
Speaker 1: to be running out of the shiny stone. Brazilian production
Speaker 1: began to fade. Handhandlers sifting through the riverbeds were coming
Speaker 1: up dry. India's supply was nearly exhausted as well. By
Speaker 1: the eighteen sixties, it looked like the age of diamonds
Speaker 1: was coming to an end. But then in eighteen seventy one,
Speaker 1: a mixed raced laborer was walking on a farm in
Speaker 1: the Northern Cape of South Africa when he saw a
Speaker 1: glint of light in the dirt. The property he was
Speaker 1: on belonged to two brothers, Dietereric and Johannes de Bier,
Speaker 1: ordinary Boer farmers who thought they owned pasture, not treasure.
Speaker 1: Unknown to the Deber brothers, an onslaught of diamond prospectors
Speaker 1: had been flooding to their area. Four years earlier, a
Speaker 1: shepherd boy was walking on a farm near the Orange River,
Speaker 1: about eighty miles southwest of the Deber property when he
Speaker 1: found a shiny pebble in the dirt. He picked it
Speaker 1: up and took it home. His family treated it as
Speaker 1: a curiosity. Kids played with it. It got passed around
Speaker 1: like a toy. Eventually the stone found its way to
Speaker 1: a neighboring farmer, a man named Schok van Niekirk. He
Speaker 1: had a good eye and a good memory. The stone
Speaker 1: reminded him of a rumor he'd heard about diamonds in
Speaker 1: far off lands. He decided to send it off for testing.
Speaker 1: After bouncing through several hands, it landed on the desk
Speaker 1: of a respected scientist in the Cape Colony of South Africa,
Speaker 1: who inspected it and tested its hardness. He finally issued
Speaker 1: his verdict. It was a diamond. The first major diamond
Speaker 1: recorded in South Africa. It would come to be known
Speaker 1: as the Eureka Diamond. Newspapers wrote a few small pieces
Speaker 1: about this curious find. There was some local excitement, but
Speaker 1: it did not start a stampede. Many people still believed
Speaker 1: diamonds couldn't exist in Africa for centuries, they'd only come
Speaker 1: from the riverbeds of India and Brazil. A lone stone
Speaker 1: in the Cape felt like a freak accident, a geological fluke,
Speaker 1: but two years later that illusion died. In eighteen sixty nine,
Speaker 1: another shepherd was walking near the Orange River, but about
Speaker 1: twenty miles northeast of where the Eureka diamond was found,
Speaker 1: when he noticed a peculiar stone. It was big, about
Speaker 1: eighty three and a half carrots. He wasn't sure what
Speaker 1: it was, but he figured it might be valuable, so
Speaker 1: he traded it away for five hundred sheep, ten oxen
Speaker 1: and a horse. And the buyer it was the same
Speaker 1: farmer that bought the shiny pebble two years earlier, Choke
Speaker 1: von Niekirk. Von nie Kirk, once again, sensing he was
Speaker 1: holding something special, passed the stone along to Cape town merchants,
Speaker 1: who sent it on to Europe. When it finally hit
Speaker 1: the London market, the reaction was explosive. The stone sold
Speaker 1: for a staggering amount. It was then cut and polished
Speaker 1: into a glittering gem that became famous worldwide. It became
Speaker 1: known as the Star of South Africa. The sale sent
Speaker 1: a jolt through the diamond world. If a stone this
Speaker 1: large was pulled out of the ground in South Africa,
Speaker 1: that suggested something far more important than one lucky find.
Speaker 1: It suggested a new source of diamonds. Newspapers in Europe
Speaker 1: and America seized on the story. Headlines shouted about a
Speaker 1: new diamond frontier. In an age obsessed with gold rushes
Speaker 1: and new worlds, the idea of an African diamond region
Speaker 1: was irresistible. Prospectors, fortune hunters, hustlers and drifters started packing
Speaker 1: their bags. They'd come from Britain, Germany, hall in Australia
Speaker 1: and the United States. They boarded ships for Cape Town,
Speaker 1: then treked inland under brutal conditions, heat, dust, disease, and
Speaker 1: all the dangers of a colonial frontier. Which started as
Speaker 1: curiosity quickly became a phenomenon. The diamond rush had begun.
Speaker 1: Prospectors began combing through the Orange River and then the
Speaker 1: val River that fed it. But then something strange happened.
Speaker 1: In eighteen seventy one, a mixed race laborer found a
Speaker 1: shiny stone on the land of the De Beer Brothers,
Speaker 1: which was not near a river bed. This didn't completely
Speaker 1: make sense. For centuries, diamonds were believed to originate in
Speaker 1: river beds because nearly all known stones from India and
Speaker 1: Brazil were recovered from river deposits. This belief was reinforced
Speaker 1: by the Eureka Diamond and the Star of the South,
Speaker 1: both found near river beds. People believed diamonds were somehow
Speaker 1: river related, but what they didn't know was that diamonds
Speaker 1: come from deep within the Earth's mantle, about sixty miles
Speaker 1: below the Earth's surface. Under extreme heat and pressure, carbon
Speaker 1: atoms crystallized to form diamonds, a hard, durable gem. These
Speaker 1: diamonds are transported upward by rare volcanic eruptions through vertical
Speaker 1: conduits of magma that solidify into rock called kimberlight. Over
Speaker 1: millions of years, erosion breaks down this soft volcanic rock,
Speaker 1: releasing diamonds that are then carried and concentrated by rivers
Speaker 1: into gravel. Beds. Rivers act as a kind of natural mind,
Speaker 1: digging into the earth, eroding the volcanic rock, eventually exposing
Speaker 1: the diamonds within the kimberlite pipe, then wiping away the soil.
Speaker 1: But by eighteen seventy one no one identified this process.
Speaker 1: So when that extrace laborer found a diamond on the
Speaker 1: De Beer brother's property property that was nowhere near a river,
Speaker 1: people were a bit shocked. Word of his findings spread
Speaker 1: to the prospectors on the valen Orange River. These diggers
Speaker 1: followed the rumors, then followed each other. Soon men began
Speaker 1: drifting onto the de Beer property, scratching at the soil,
Speaker 1: digging experimental pits, sleeping in tents and makeshift shelters. At
Speaker 1: first it was a nuisance. Then it became a problem.
Speaker 1: These independent diggers began invading the De Beer farm outright,
Speaker 1: squatting on corners of the property, hammering stakes into the earth,
Speaker 1: declaring claims without permission. In the colonial legal system, miners
Speaker 1: had powerful friends that de Beer brothers did not. They
Speaker 1: were not wealthy, they were not politically connected, they didn't
Speaker 1: have private armies, and they were up against a government
Speaker 1: that saw mining as progress and farming as an afterthought.
Speaker 1: So when a series of test pits on their land
Speaker 1: revealed some something staggering, a patch of diamond bearing ground
Speaker 1: called Kolsberg copy, there was nothing the de Beer brothers
Speaker 1: could do to stop what happened next.
Speaker 3: Almost overnight, the farm exploded into chaos. Thousands of men
Speaker 3: poured onto the site, hammering stakes into every square yard
Speaker 3: of ground, marking off claims. Tents sprouted like mushrooms. The
Speaker 3: law did not come to protect the farmers, it came
Speaker 3: to organize the miners. New mining boards were created, colonial
Speaker 3: bodies that overwhelmingly favored prospectors when disputes arose.
Speaker 2: If the de.
Speaker 3: Beer brothers attempted to evict diggers, they were overruled. If
Speaker 3: they tried to protect a patch of land, they were
Speaker 3: told the ground was too valuable to sit idle. In theory,
Speaker 3: they still owned the farm, but in practice they were
Speaker 3: being pushed off of it, one claim at a time.
Speaker 3: Facing the choice between losing everything in a legal fight
Speaker 3: or salvaging what they could, the de Beer brothers began selling. First,
Speaker 3: they sold the rights to the individual claimholders. Then they
Speaker 3: sold larger parcels. As it became clear the invasion wasn't
Speaker 3: slowing down. Their property quickly became completely overrun. They walked
Speaker 3: away from it with what they could because men from
Speaker 3: all over the world were arriving to try their luck,
Speaker 3: and one of them was a sickly young Englishman with
Speaker 3: big ambitions. His name was Cecil Rhads. Rhodes was not
Speaker 3: supposed to be a Titan of industry. He was supposed
Speaker 3: to die young. Born in England in eighteen fifty three,
Speaker 3: Rhodes was a frail child with weak lungs and a
Speaker 3: heart condition. His parents worried he wouldn't survive the British climate,
Speaker 3: so as a teenager they shipped him off to what
Speaker 3: they hoped would be a gentler place, the colony of
Speaker 3: Natal in southern Africa, where his older brother Herbert was
Speaker 3: trying to make it as a cotton farmer. The idea
Speaker 3: was simple, fresh air and light work would lead to
Speaker 3: maybe a few more years of life, but Cecil Roads
Speaker 3: had other ideas. In the mid eighteen seventies, word reached
Speaker 3: Herbert about diamonds being found far Inland on a farm
Speaker 3: owned by two brothers named de Beer. Herbert staked out
Speaker 3: a few small claims, then he wrote to Cecil come quickly. Cecil,
Speaker 3: twenty somethings, sickly but intellectually sharp and wildly ambitious, decided
Speaker 3: to join the rush. He hired an ox wagon, loaded
Speaker 3: it with supplies, and set off on a grueling overland
Speaker 3: trek that would take weeks. When he finally arrived at
Speaker 3: the de Beer's former farm, he didn't find a quiet
Speaker 3: piece of land. He walked into a frenzy. Prospectors discovered that,
Speaker 3: unlike diamonds found in riverbeds, the diamonds found on this
Speaker 3: and nearby properties weren't just on the surface. As they
Speaker 3: dug straight down into the dirt, diamonds were consistently The
Speaker 3: miners were slowly discovering that diamonds weren't a water phenomenon.
Speaker 3: They were found in pipes deep in the ground. Rhodes
Speaker 3: pitched his canvas tent on the edge of what used
Speaker 3: to be a small hill and looked out over a
Speaker 3: sea of humanity. Tents jammed every open space, Smoke from
Speaker 3: cookfires hung low, Men shouted, cursed. Wheelbarrows carried rock, men
Speaker 3: dragged their digging equipment. The ground itself was being eaten,
Speaker 3: sliced into a giant open crater. As hundreds of adjacent
Speaker 3: claims descended in ragged steps towards the center. Rhodes wrote
Speaker 3: home to his mother, trying to describe what he was seeing.
Speaker 3: He told her to imagine.
Speaker 2: A small round hill about one hundred eighty yards broad
Speaker 2: and one hundred twenty yards long. All around it a
Speaker 2: mass of white tents.
Speaker 3: He said, it looked like an immense number of ant.
Speaker 2: Heaps covered with black ants as thick as can.
Speaker 3: Be, except the ants were men. This encampment, chaotic, dangerous, filthy,
Speaker 3: and feverish, was second only to Cape Town and population
Speaker 3: around fifty thousand. Diggers swarmed to this patch of ground.
Speaker 3: This place would later become the city of Kimberly. The
Speaker 3: pipes that carried the diamonds from deep below the earth's
Speaker 3: surface would be named Kimberlight after the city. But as
Speaker 3: Rhads wrote his mother, the town more resembled a human beehive.
Speaker 3: Roads Like everyone else, began with a claim. He purchased
Speaker 3: a small plot on the former De Beer land and
Speaker 3: started digging. But he wasn't just a prospector. He was
Speaker 3: an observer. It didn't take him long to notice something crucial.
Speaker 3: A fortune could not only be found in the dirt
Speaker 3: It could also be found in the needs of the
Speaker 3: men digging it. Life in the Kimberly diggings was brutal.
Speaker 3: The African sun was merciless, The dust got into everything.
Speaker 3: Water was scarce and often foul. Food needed to be
Speaker 3: brought in from long distances. Almost every comfort costs money.
Speaker 3: Rhodes watched the lines at the water. He saw how
Speaker 3: much men were willing to pay for a cold drink,
Speaker 3: a meal, and a basic tool. So he started small,
Speaker 3: importing ice cream and selling it to the exhausted diggers.
Speaker 3: He sold jugs of water at a profit. He became,
Speaker 3: in a sense, a miner of miners, and as he did,
Speaker 3: he noticed one more thing. Water was not just a
Speaker 3: comfort issue. It was an engineering nightmare. The deeper the
Speaker 3: diggers got in their individual claims, the more they hit
Speaker 3: groundwater pits flooded, walls became unstable, collapses killed workers. Each
Speaker 3: claim owner needed two kinds of water solutions at once,
Speaker 3: fresh drinking water for laborers and a way to get
Speaker 3: rid of the water filling their pits.
Speaker 1: Enter the steam pump, want to listen to Red Pilled
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Speaker 1: save America one story at a time. Welcome back to
Speaker 1: Red Pilled America. So for the Kimberly miners of the
Speaker 1: late eighteen seventies, water was not just a comfort issue.
Speaker 1: It was an engineering nightmare. The deeper the diggers got
Speaker 1: in their individual claims, the more they hit groundwater pits flooded,
Speaker 1: walls became unstable, collapses killed workers. Each claim owner needed
Speaker 1: two kinds of water solutions at once, fresh drinking water
Speaker 1: for laborers and a way to get rid of the
Speaker 1: water filling their pits. Enter the steam pump.
Speaker 3: At that time, there was only one steam pump in
Speaker 3: all of South Africa. Rhoades realized that whoever controlled that
Speaker 3: pump controlled the survival of the Kimberly mines. So he
Speaker 3: made a wild play. He scraped together everything he had,
Speaker 3: every bit of profit from his ice cream and water ventures,
Speaker 3: and bought that one pump. Almost immediately his Gambol paid off,
Speaker 3: water began to flood the central mine. The walls of
Speaker 3: the big Hole started to cave. Thousands of workers had
Speaker 3: to be pulled out With Ropes, claim owners were staring
Speaker 3: at financial ruin. There was only one machine capable of
Speaker 3: saving their pits, Rhades pump. He could now charge whatever
Speaker 3: he wanted. The money poured in. He reinvested his profits
Speaker 3: into more pumps from England. When his competitors tried to
Speaker 3: follow his lead and import similar equipment, he used every
Speaker 3: trick he could, undercutting, out, maneuvering, leveraging relationships to squeeze
Speaker 3: them out. Before long, Roads had something new in Kimberly,
Speaker 3: a water pumping monopoly. If you wanted to keep your
Speaker 3: claim dry, you paid Cecil Roads, but some claim owners
Speaker 3: couldn't afford to pay in cash, so they paid him
Speaker 3: in shares. Over time, as more pits flooded and more
Speaker 3: owners fell behind, Rhodes began to accumulate slivers of ownership
Speaker 3: in dozens of claims. When a mine was in serious trouble,
Speaker 3: he took it over outright. By the age of twenty seven,
Speaker 3: Cecil Rhodes was no longer just the sickly younger brother
Speaker 3: of a cotton farmer. He was one of the largest
Speaker 3: individual mine owners in Kimberly, and this was just the beginning.
Speaker 3: Despite the chaos of the Diggings, Rhades still dreamt beyond
Speaker 3: the pit. He had an almost mystical belief in the
Speaker 3: destiny of the British Empire. He wanted Britain to stretch
Speaker 3: uninterrupted from the Cape of Good Hope to Cairo. He
Speaker 3: even fantasized about one day bringing the United States back
Speaker 3: under the British Crown. To work on those ambitions and
Speaker 3: to cement his status, he returned to England to study
Speaker 3: at Oriel College, Oxford. He'd spend terms at the university
Speaker 3: absorbing the language and ideas of imperial philosophy, then would
Speaker 3: rush back to South Africa to keep an eye on
Speaker 3: his businesses. When he finally he decided to consolidate his holdings,
Speaker 3: he did something symbolically powerful. He formed a new mining
Speaker 3: company and named it after the farm where he bought
Speaker 3: his first claim, the De Beers Mining Company. But Rhodes
Speaker 3: didn't just want a company. He wanted a kingdom with
Speaker 3: a corporate logo. So he went to London and applied
Speaker 3: to the British Colonial Office for something called a royal charter.
Speaker 3: In theory, a charter is just a legal document, a
Speaker 3: grant from the Crown that recognizes a company. In practice,
Speaker 3: for a certain class of imperial corporations, it's a license
Speaker 3: to behave like a government. A royal charter can give
Speaker 3: a private company the power to build railroads and telegraph lines,
Speaker 3: and to treaties, annex and administered territories, raise its own
Speaker 3: police and even armed forces. The British had given charters
Speaker 3: like this to the companies that ruled whole swaths of
Speaker 3: India and Africa. Now Cecil Roads wanted one for his
Speaker 3: mining enterprise, and in eighteen eighty he got it to
Speaker 3: be was no longer just a collection of claims in
Speaker 3: a muddy hole. It was a chartered company with quasi
Speaker 3: governmental powers, a corporate state embedded inside the British Empire.
Speaker 3: And Roads had even bigger plans because there was a
Speaker 3: problem looming on the horizon, too many diamonds.
Speaker 1: By the late eighteen eighties, the Kimberly mines were producing
Speaker 1: staggering volumes of diamonds. What began as a trickle became
Speaker 1: a flood. With so many competing mine owners, everyone was
Speaker 1: racing to dig faster, go deeper, sell more, and that's
Speaker 1: when basic economics kicked in. When supply explodes, prices fall.
Speaker 1: This explosion in diamond supply was violating one of the
Speaker 1: primary rules of value. We asked Kevin de Merit of
Speaker 1: Lear Capital why gold has been viewed as valuable over
Speaker 1: thousands of years.
Speaker 4: I think the biggest reason is because it takes effort
Speaker 4: to pull it out of the ground and there's a
Speaker 4: limited supply. So from a monetary standpoint, if you want
Speaker 4: to have something very strong over long periods of time,
Speaker 4: it needs to have some sort of limited supply.
Speaker 1: But with this massive amount of diamonds coming out of
Speaker 1: the Kimberly mines, diamonds were breaking this limited supply rule.
Speaker 1: Rhodes looked at the numbers and saw the nightmare scenario.
Speaker 1: If the world saw diamonds pouring out of South Africa,
Speaker 1: if the public began to think of diamonds as common,
Speaker 1: the entire myth would collapse. These stones didn't have intrinsic
Speaker 1: utility like oil or iron. They weren't being used as
Speaker 1: currency like gold and silver had been for thousands of years.
Speaker 1: They were no longer rare and couldn't be melted down
Speaker 1: and molded into coins that were identical to one another.
Speaker 1: Like gold and silver, Each gem diamond was different, Their
Speaker 1: value depended on scarcity and status. If the industry kept
Speaker 1: behaving like a free for all, this scarcity illusion would
Speaker 1: vanish and diamonds would never be considered rare again. Rhodes
Speaker 1: decided there was only one solution monopoly. The diamond business,
Speaker 1: he believed, must be controlled by a single hand, his hand.
Speaker 1: Only a centralized authority could throttle supply, hold back production,
Speaker 1: and maintain the idea that diamonds were scarce and precious.
Speaker 1: But there was a problem. He was not the only
Speaker 1: king in Kimberly. Standing across from him was another empire builder,
Speaker 1: a man named Barney Barnado. Barnatto controlled the Kimberly Mine,
Speaker 1: one of the richest diamond pipes in the region. Roads
Speaker 1: through de Beers controlled other major mines, including the one
Speaker 1: on the original de Beer farm. Between them, they sat
Speaker 1: on top of roughly ninety five percent of the world's
Speaker 1: diamond production. Whoever won this duel would control the global
Speaker 1: diamond market. Rhoades knew he couldn't win a straight fight
Speaker 1: with his own money. He needed deep pockets, someone with
Speaker 1: the capital and the appetite to bet on a monopoly,
Speaker 1: So he went to a banking dynasty that had already
Speaker 1: been quietly intertwined with the global gem trade for decades.
Speaker 1: Cecil roads went to the Rothschilds. By the nineteenth century,
Speaker 1: the Rothschild family was a financial superpower. From their founding
Speaker 1: in Frankfort, they had built a network of banking houses
Speaker 1: in London, Paris, Vienna and Naples. The under rote government loans,
Speaker 1: financed railways, backed industrial ventures, and importantly for our story,
Speaker 1: they had been involved in the diamond trade for years.
Speaker 1: Rothschild's bank had financed European gem merchants, backed London syndicates
Speaker 1: that bought rough diamonds, loaned money to cutters in Antwerp
Speaker 1: and Amsterdam, and appraised stones for royalty. They understood diamonds
Speaker 1: not as romance, but as numbers. Nathaniel or Natty Rothschild
Speaker 1: sat at the center of the London branch and m
Speaker 1: Rothschild and sons, with access to enormous pools of capital.
Speaker 1: Rhodes approached him with a pit. If Kimberly remained divided
Speaker 1: between competing companies, diamonds would flood the market, prices would fall,
Speaker 1: the illusion of rarity would be destroyed. Everyone would lose,
Speaker 1: including the Wrothchilds. But if the Beers could swallow its rivals.
Speaker 1: If one company could control production, stockpile excess stones, and
Speaker 1: release them in measured quantities, then diamonds could keep the
Speaker 1: illusion of being permanently scarce, prices could be kept high,
Speaker 1: and the wroth Childs could own a piece of a
Speaker 1: cartel that manufactured rarity. Wrothchilds agreed with their backing Roads
Speaker 1: had the financial artillery to go after Barnardo. What followed
Speaker 1: is not a gunfight, but a stock market war. Roads,
Speaker 1: in his banking allies, began quietly accumulating shares in Barnado's company,
Speaker 1: Kimberly Central. At the same time, they used another tactic.
Speaker 1: They opened up the taps. De Beers ramped up production.
Speaker 1: Diamonds flooded the market, prices slid. Panic rippled through investors
Speaker 1: who owned Kimberly stock. Some sold, others pledged shares as collateral.
Speaker 1: Rhodes groups stood ready to buy. Barnado fought back, securing
Speaker 1: his own financing to consolidate his position, but slowly, almost invisibly,
Speaker 1: control began to tilt. In one bold move, Rhads offered
Speaker 1: to buy a crucial piece of the Kimberly mine from
Speaker 1: French shareholders at an eye watering price, not because the
Speaker 1: ground was worth that much, but because owning it would
Speaker 1: block Bernado from turning his big mining hole in Kimberly
Speaker 1: into a unified operation. Barnado countered raising his bid. It
Speaker 1: seemed like he'd won, until Rhodes proposed a new deal.
Speaker 1: He suggested that instead of torching each other with higher
Speaker 1: and higher offers, Bernardo could withdraw his bid. Roads would
Speaker 1: then buy the property at the lower price than immediately
Speaker 1: resell it to Bernardo in exchange for cash and, more importantly,
Speaker 1: a large block of Kimberly central shares. Bernardo, thinking he'd
Speaker 1: outsmarted his rival, agreed. He saved money, gained operational control,
Speaker 1: and handed Rose a trojan horse a significant foothold into
Speaker 1: his company. From there, the squeeze intensified. With Rothschild's capital
Speaker 1: and allies across Europe. Rhodes continued buying stock in Barnado's
Speaker 1: company as he and his partners quietly passed key thresholds
Speaker 1: of ownership. Barnardo started to realize what was happening, but
Speaker 1: by March eighteen eighty eight, it was too late. Rhodes
Speaker 1: block controlled enough shares to dictate terms Barnardo, was forced
Speaker 1: to agree to a merger. Kimberly Central into Beer's joined
Speaker 1: into one new entity. De Beer's consolidated minds. By eighteen
Speaker 1: ninety cecil Roads, through Debiers and his alliance with Rothschild,
Speaker 1: controlled more than ninety five percent of the world's diamond production.
Speaker 1: The first true diamond cartel was born. With his rivals absorbed,
Speaker 1: Rhodes could finally do what he'd wanted all along. He
Speaker 1: could make diamonds scarce. He ordered mines to reduce output,
Speaker 1: closed some operations and slowed others. Instead of dumping everything
Speaker 1: on the market, de Beers began selling only what the
Speaker 1: world could absorb at high prices. The excess millions of
Speaker 1: carrots of stones were put into volts. De Beer's stockpiled
Speaker 1: when demand dipped, the stockpile grew when demand rose. A
Speaker 1: carefully measured trickle was released. The public never saw the
Speaker 1: full scale of production. They saw only what De Beers
Speaker 1: wanted them to see. At the same time Roads consolidated distribution,
Speaker 1: he created a single channel for selling De Beer's diamonds,
Speaker 1: a London syndicate that bought the entire output at fixed prices.
Speaker 1: They resold stones to cutters in Antwerp and other centers.
Speaker 1: If you wanted South African diamonds, you bought them from
Speaker 1: this channel at De Beer's terms. Anyone who tried to
Speaker 1: operate outside the system, a rogue producer, a merchant with
Speaker 1: acts access to off market stones, they found themselves squeezed
Speaker 1: or forced into a buy out, or maybe they would
Speaker 1: discover that their access to credit dried up, or their
Speaker 1: shipments mysteriously struggled to find buyers. Bit by bit, the
Speaker 1: Beers extended its reach from the pit to the jeweler's bench, mining, stockpiling, pricing, distribution,
Speaker 1: all governed by one company's strategy. It was the early
Speaker 1: blueprint of what would later be called the central selling organization,
Speaker 1: the command center of the diamond cartel. And as if
Speaker 1: this corporate power wasn't enough, Rhodes added political power to
Speaker 1: the mix. In eighteen ninety he became Prime Minister of
Speaker 1: the Cape Colony. He controlled not just mines and markets,
Speaker 1: but laws and borders. He would go on to carve
Speaker 1: out two colonies, Rhodesia and Northern Rhodesia that bore his name. Then,
Speaker 1: in nineteen oh two, at the age of forty eight,
Speaker 1: and the pinnacle of his power. Cecil Rhads died, his body,
Speaker 1: exhausted by the same frailties he'd been sent to Africa
Speaker 1: to escape. He left no wife, no children, no direct errors.
Speaker 1: He left his fortune to Oxford University to fund scholarships
Speaker 1: in his name, and he left behind something else, a
Speaker 1: diamond machine powerful enough to shape the global perception of value.
Speaker 1: For the first time in history, one company had the
Speaker 1: practical ability to decide how rare diamonds feel and how
Speaker 1: much they were worth. But Rhodes would not be the
Speaker 1: last mastermind to sit at the center of this machine,
Speaker 1: because within a year of his death, another young entrepreneur
Speaker 1: arrived in South Africa, a German Jewish immigrant who looked
Speaker 1: at the diamond cartel Roads built and decided to turn
Speaker 1: it into something even more formidable. If Cecil Rhodes created
Speaker 1: the diamond monopoly, Ernest Oppenheimer would perfect it.
Speaker 3: Coming up on Red Kildameer.
Speaker 1: The diamond cartel had survived wars, revolutions, new minds, and
Speaker 1: political upheaval, but it was about to face something far
Speaker 1: more dangerous, a collapse in belief.
Speaker 3: Red Pilled America's a iHeartRadio original podcast. It's owned and
Speaker 3: produced by Patrick Carrelci and me Adriana Cortez for Informed Ventures.
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