WEBVTT - What Makes Something Valuable? (Part Two) 0:00:03.160 --> 0:00:07.240 This is Red Pilled America. A quick question before we 0:00:07.280 --> 0:00:10.000 start the show. How many shows are there out there 0:00:10.080 --> 0:00:12.959 like Red Pilled America. You know the answer, it's zero 0:00:13.160 --> 0:00:16.360 and why because it's hard to produce a storytelling show. 0:00:16.880 --> 0:00:20.640 Join the fanbam and support storytelling that aligns with your values. 0:00:21.040 --> 0:00:24.040 Just go to Redpilled America dot com and click join 0:00:24.079 --> 0:00:26.680 in the top menu. You'll get add free access to 0:00:26.720 --> 0:00:30.640 our entire back catalog of episodes. Help us save America, 0:00:30.680 --> 0:00:31.800 one story at a time. 0:00:33.640 --> 0:00:35.240 Previously on Red Pilled America. 0:00:35.280 --> 0:00:38.560 What makes something valuable? It's a deceptively simple question. 0:00:40.800 --> 0:00:44.080 Prior to the eighteen hundreds, the entire world production of 0:00:44.159 --> 0:00:47.960 gem quality diamonds amounted to only a few pounds a year. 0:00:48.120 --> 0:00:51.000 By around six or seven hundred BC, the first standardized 0:00:51.040 --> 0:00:54.080 coins using gold and silver, making really the birth of 0:00:54.160 --> 0:00:56.000 money as it's recognized today. 0:00:56.160 --> 0:01:00.040 Diamonds began to develop a second identity is tiny, portable 0:01:00.080 --> 0:01:01.240 storehouses of wealth. 0:01:01.280 --> 0:01:05.120 By the late eighteen eighties, really minds, we're producing staggering 0:01:05.240 --> 0:01:06.399 volumes of diamonds. 0:01:06.440 --> 0:01:09.280 If you want to have something very strong over long 0:01:09.319 --> 0:01:11.600 periods of time, it needs to have some sort of 0:01:11.640 --> 0:01:12.360 limited supply. 0:01:12.560 --> 0:01:16.360 Rhodes decided there was only one solution, monopoly. The first 0:01:16.360 --> 0:01:22.759 true diamond cartel was born. I'm Patrick Carelci. 0:01:22.720 --> 0:01:24.240 And I'm Adriana Cortes. 0:01:24.520 --> 0:01:27.680 And this is Red Pilled America, a storytelling show. 0:01:28.720 --> 0:01:31.240 This is not another talk show covering the day's news. 0:01:31.640 --> 0:01:33.440 We're all about telling stories. 0:01:34.080 --> 0:01:37.200 Stories. Hollywood doesn't want you to hear stories. 0:01:37.280 --> 0:01:41.800 The media mocks stories about everyday Americans at the globalist ignore. 0:01:42.760 --> 0:01:45.679 You can think of Red Pilled America as audio documentaries, 0:01:45.720 --> 0:01:55.200 and we promise only one thing, the truth. Welcome to 0:01:55.240 --> 0:02:06.080 Red Pilled America. It's March twelfth, nineteen thirty eight, and 0:02:06.200 --> 0:02:12.400 German tanks are rolling through the streets of Vienna. Columns 0:02:12.440 --> 0:02:16.359 of soldiers march in perfect formation. Swastika banners hang from 0:02:16.400 --> 0:02:20.560 balconies and government buildings unfurled like stage curtains for history. 0:02:21.360 --> 0:02:23.760 This is not an invasion in the way the world 0:02:23.800 --> 0:02:27.600 expected one. No shots are fired, no army rises to 0:02:27.639 --> 0:02:31.799 meet them. Instead, millions of Austrians flood the streets, and 0:02:32.000 --> 0:02:36.400 women children they cheer, wave and salute. Adolf Hitler has 0:02:36.440 --> 0:02:39.120 come home to the place he was born and raised, 0:02:39.440 --> 0:02:41.840 and now he returns as the fearer of the German 0:02:41.919 --> 0:02:45.200 Reich intent on the nexing Austria and folding it into 0:02:45.200 --> 0:02:49.400 a greater Germany, a peaceful takeover. That's how it's described, 0:02:53.560 --> 0:02:57.359 a family reunion between nations that share a language, a culture, 0:02:57.440 --> 0:03:01.680 and a past. Across Europe and the United States, many 0:03:01.720 --> 0:03:04.440 are shocked by the aggressive ads, but then breathe a 0:03:04.520 --> 0:03:08.880 sigh of relief when the annexation happens without bloodshed. Maybe 0:03:08.919 --> 0:03:12.200 this isn't the start of another World war. After all, 0:03:12.480 --> 0:03:15.760 no one fired a single shot. But while the crowds 0:03:15.840 --> 0:03:18.640 cheer in Vienna, there is one man who understands that 0:03:18.720 --> 0:03:22.000 this moment is anything but peaceful, because he is watching 0:03:22.080 --> 0:03:25.320 something the rest of the world cannot see. Not tanks 0:03:25.400 --> 0:03:28.880 or troops, but massive orders for a material without which 0:03:29.000 --> 0:03:40.280 modern warfare cannot function, industrial diamonds. For years now, governments 0:03:40.280 --> 0:03:44.120 across Europe have been buying them in silence, not for jewelry, 0:03:44.200 --> 0:03:48.080 but for machines used to cut hardened steel, shaped blades 0:03:48.320 --> 0:03:52.280 and grind precision parts used in aircraft, engines, artillery, and 0:03:52.440 --> 0:03:57.160 armed vehicles. Every modern military depends on them. Nearly all 0:03:57.200 --> 0:04:00.960 of these industrial diamonds come from one company, overseen by 0:04:00.960 --> 0:04:04.600 one man, Ernest Oppenheimer, head of De Beers, the company 0:04:04.640 --> 0:04:09.080 that controls the global diamond supply, and Oppenheimer understands that 0:04:09.120 --> 0:04:12.560 these orders are not the actions of nations preparing for peace. 0:04:13.080 --> 0:04:16.960 They're preparing for war, which means the European market, the 0:04:16.960 --> 0:04:19.960 beating heart of the diamond trade, is about to go dark. 0:04:21.320 --> 0:04:24.000 We're at part two of our series of episodes entitled 0:04:24.160 --> 0:04:27.080 what makes something Valuable? We're looking for the answer to 0:04:27.120 --> 0:04:30.640 that question by telling the story of diamond powerhouse de Beers. 0:04:31.720 --> 0:04:33.280 So to pick up where we left off in our 0:04:33.320 --> 0:04:36.800 last episode. In nineteen oh two, the head of de Beers, 0:04:37.000 --> 0:04:40.520 Cecil Rhodes, died, as did his dream to extend the 0:04:40.520 --> 0:04:46.960 British Empire from Cairo to the southern tip of Africa, 0:04:47.360 --> 0:04:50.200 just forty eight years old, his body worn down by 0:04:50.279 --> 0:04:53.960 chronic heart and lung disease. He never married, he left 0:04:54.120 --> 0:04:56.960 no children, and when he was gone there was no 0:04:57.120 --> 0:05:01.760 obvious successor waiting in the wings. Instead, Cecil Rhoades did 0:05:01.800 --> 0:05:04.440 something fitting for a man, one who believed history was 0:05:04.480 --> 0:05:08.000 shaped by elites. He left most of his fortune to 0:05:08.040 --> 0:05:13.000 Oxford University, endowing what would become the Rhodes Scholarships, a 0:05:13.040 --> 0:05:16.360 pipeline to train future leaders in his image. But de 0:05:16.440 --> 0:05:19.719 Beer's was not a personal estate, it was a machine. 0:05:20.080 --> 0:05:22.920 By the time of Rhodes's death, De Beer's had already 0:05:22.960 --> 0:05:27.400 grown into a vast mining conglomerate, sprawling, profitable, and deeply 0:05:27.560 --> 0:05:31.800 entrenched in global trade. Its diamonds flowed almost entirely through 0:05:31.800 --> 0:05:36.320 a single buyer, the London Diamond Syndicate. That syndicate absorbed 0:05:36.440 --> 0:05:40.320 more than ninety percent of the world's diamond production. London 0:05:40.400 --> 0:05:43.280 was the beating heart of the diamond world. From there, 0:05:43.400 --> 0:05:47.520 stones moved outward to royal courts in France, Germany, Belgium 0:05:47.600 --> 0:05:52.480 and Russia, to aristocratic salons, to bankers, nobles and dynasties 0:05:52.560 --> 0:05:56.240 whose names filled the history books. British aristocrats and the 0:05:56.320 --> 0:06:00.480 upper middle classes drove demand, so did wealthy elites in 0:06:00.560 --> 0:06:03.840 India and the Middle East, where diamonds were still symbols 0:06:03.880 --> 0:06:07.599 of ancient prestige. By the nineteen thirties, as a whole, 0:06:07.839 --> 0:06:11.040 Europe accounted for nearly seventy percent of the global gem 0:06:11.080 --> 0:06:16.039 grade diamond consumption. Diamonds were a European luxury, refined Old 0:06:16.120 --> 0:06:21.760 World aristocratic and America America barely mattered. In the United States, 0:06:21.880 --> 0:06:25.760 diamonds were not yet the symbol they would become. Americans 0:06:25.800 --> 0:06:30.680 preferred pearls, rubies, and sapphires, colored stones with visible presents, 0:06:30.960 --> 0:06:35.039 jewelry that felt tasteful rather than regal diamonds. Too many 0:06:35.080 --> 0:06:41.240 Americans seemed foreign. The ornament of European courts, not American life. Engagement. 0:06:41.320 --> 0:06:46.440 Jewelry was often understated. Pearls and colored gems dominated. De 0:06:46.560 --> 0:06:49.880 Beers knew this and for decades didn't care because the 0:06:49.960 --> 0:06:54.239 system still worked. But with roads gone, something essential was missing. 0:06:54.440 --> 0:06:57.800 There was no single mind driving the cartel forward. The 0:06:57.839 --> 0:07:01.240 board of directors and senior partners kept the operation running. 0:07:01.560 --> 0:07:05.920 Production was managed, prices were protected, and stockpiles were guarded. 0:07:06.440 --> 0:07:10.080 But without roads, de Bier's was no longer aggressive. It 0:07:10.160 --> 0:07:14.560 was powerful but conservative, and that made it vulnerable. Vulnerable 0:07:14.600 --> 0:07:18.280 to new diamond discoveries beyond the mines in Kimberly, South Africa, 0:07:18.800 --> 0:07:23.080 Vulnerable to independent producers who refused to play by cartel rules, 0:07:23.200 --> 0:07:25.960 Vulnerable to shifts in global politics and markets that could 0:07:26.040 --> 0:07:30.480 no longer control through habit alone. The diamond empire still stood, 0:07:30.720 --> 0:07:34.120 but the throne was empty. Into that vacuum stepped a 0:07:34.120 --> 0:07:36.400 man who didn't see Debiers as a tool of empire, 0:07:36.680 --> 0:07:40.800 but as the empire itself. Within fifteen years of Rhodes's death, 0:07:41.040 --> 0:07:44.200 a new figure would begin assembling power from the edges 0:07:44.280 --> 0:07:48.200 of the diamond world. His name was Ernest Oppenheimer, and 0:07:48.280 --> 0:07:51.400 he would turn to Beers into something far more powerful 0:07:51.520 --> 0:07:55.760 than even Roads imagined. For years, de Biers believed it 0:07:55.840 --> 0:07:59.160 understood diamonds, where they came from, where they didn't, and 0:07:59.240 --> 0:08:02.960 who controlled them. Kimberly was the center of the diamond universe. 0:08:03.320 --> 0:08:06.679 Everything else was a rumor. Then, in the early years 0:08:06.680 --> 0:08:10.840 of the twentieth century, a bricklayer challenged that certainty. His 0:08:10.960 --> 0:08:15.120 name was Thomas Major Cullinan. Colinan claimed that hundreds of 0:08:15.160 --> 0:08:19.040 miles north of Kimberly, he had discovered something impossible, a 0:08:19.160 --> 0:08:22.960 vast oval of yellow earth, unlike anything the diamond world 0:08:22.960 --> 0:08:26.360 had ever seen. He insisted it was a diamond pipe, 0:08:26.520 --> 0:08:30.560 a deep column, a volcanic rock bearing diamond rocks. To 0:08:30.640 --> 0:08:34.800 the men running to Beers, this was nonsense. Their geologists 0:08:34.839 --> 0:08:38.880 dismissed it outright. Diamond pipes didn't exist outside of Kimberly, 0:08:39.120 --> 0:08:42.360 not like that. And the man who succeeded cecil Roads 0:08:42.400 --> 0:08:45.920 at the helm of De Beer's, Frank Oates was openly contemptuous. 0:08:46.280 --> 0:08:49.720 He declared that Colinan's so called discovery was a fraud. 0:08:50.320 --> 0:08:53.360 He accused him of seating the earth with diamonds smuggled 0:08:53.360 --> 0:09:03.160 in from Kimberly to create the illusion of a find. 0:09:03.040 --> 0:09:07.800 The Oats was wrong, painfully wrong. The ground colonin had 0:09:07.840 --> 0:09:11.160 identified became known as the Premier Mind, and it was 0:09:11.240 --> 0:09:14.640 unlike anything the world had ever seen. The pipe was 0:09:14.800 --> 0:09:18.320 four times larger than Kimberly's Big Hole mine, and the 0:09:18.400 --> 0:09:23.240 diamonds it produced weren't just plentiful, they were enormous, larger 0:09:23.240 --> 0:09:26.880 than any stones ever recovered from the Kimberly fields. When 0:09:26.880 --> 0:09:30.200 the full scale of the Premier Mind became clear, shock 0:09:30.440 --> 0:09:34.199 rippled through De Beer's leadership. According to accounts from the time, 0:09:34.480 --> 0:09:38.160 one senior figure, a governor of the company, collapsed after 0:09:38.200 --> 0:09:41.120 hearing the news, suffering a heart attack from which he 0:09:41.240 --> 0:09:45.839 never recovered. For a company built on manufacturing scarcity, the 0:09:45.840 --> 0:09:49.840 Premier Mind was an earthquake. It proved something to Beer's 0:09:49.840 --> 0:09:54.000 had refused to believe. Kimberly was not unique. Diamonds were 0:09:54.080 --> 0:09:58.800 not confined to one controlled geography and scarcity the very 0:09:58.840 --> 0:10:02.199 foundation of the diamond value was more fragile than anyone 0:10:02.240 --> 0:10:07.560 wanted to admit. Watching all of this unfold, was a 0:10:07.600 --> 0:10:13.079 man who understood the danger immediately, Earnest Oppenheimer. At the time, 0:10:13.240 --> 0:10:16.440 Oppenheimer was not inside de Beer's. He was a diamond 0:10:16.480 --> 0:10:21.719 broker turned industrialist, observant, patient, and ambitious. Where Debier saw 0:10:21.720 --> 0:10:25.960 an embarrassment, Oppenheimer saw a pattern. He saw arrogance. This 0:10:26.080 --> 0:10:32.400 monopoly believed its own mythology. He saw new diamond fields, uncontrolled, undisciplined, 0:10:32.640 --> 0:10:37.120 threatening the delicate balance that kept prices high. But most importantly, 0:10:37.360 --> 0:10:42.040 Earnest Oppenheimer saw opportunity. Because the real threat to diamonds 0:10:42.080 --> 0:10:46.080 was never discovery itself. It was what happened after discovery, 0:10:46.240 --> 0:10:49.840 when production ran wild, prices collapsed, and the illusion of 0:10:49.960 --> 0:10:55.520 rarity shattered. Oppenheimer understood something fundamental. A diamond monopoly didn't 0:10:55.520 --> 0:10:59.800 survive by owning minds alone. It survived by controlling behavior, 0:11:00.120 --> 0:11:02.640 and De Beer's for the first time since Roads was 0:11:02.679 --> 0:11:06.760 shown cracks. But Oppenheimer didn't act at the first signs 0:11:06.760 --> 0:11:10.400 of these cracks. He waited because empires don't fall all 0:11:10.440 --> 0:11:14.959 at once. They weaken first. Ernest Oppenheimer knew the diamond 0:11:14.960 --> 0:11:18.600 world from the inside out. He was a Jewish German immigrat, 0:11:18.920 --> 0:11:22.240 descended from families that had once served as court Jews 0:11:22.320 --> 0:11:26.640 in Vienna, trusted financiers and gem experts to Europe's royal 0:11:26.720 --> 0:11:30.920 houses that went back centuries. He had been trained not 0:11:31.040 --> 0:11:35.480 in mining, but in distribution, valuation, and finance, the arteries 0:11:35.520 --> 0:11:39.200 of the diamond trade itself. He understood every step of 0:11:39.240 --> 0:11:43.439 the pipeline from African soil to London syndicates, to European 0:11:43.520 --> 0:11:47.600 jewelers and royal buyers. And he understood something Cecil Roads 0:11:47.600 --> 0:11:51.200 had intuited decades earlier. The true power in diamonds was 0:11:51.240 --> 0:11:53.120 not the mine, it was control. 0:11:54.160 --> 0:11:59.160 In nineteen seventeen, Oppenheimer founded the Anglo American Corporation in Johannesburg, 0:11:59.240 --> 0:12:02.079 South Africa. He did it with the backing from one 0:12:02.120 --> 0:12:06.120 of the most powerful financial institutions in the world, J. P. Morgan. 0:12:06.679 --> 0:12:10.880 This was not a prospecting venture, It was a strategic challenge. 0:12:11.080 --> 0:12:15.920 Anglo American moved quickly, acquiring promising minds, including diamond fields 0:12:15.960 --> 0:12:20.160 in Southwest Africa, places that sat outside De Beer's carefully 0:12:20.160 --> 0:12:29.079 managed orbit. Almost overnight, Oppenheimer had become more than a broker. 0:12:29.240 --> 0:12:33.000 He was now a rival. Like Rhodes before him, Oppenheimer 0:12:33.080 --> 0:12:37.120 understood that mining power without political power was fragile. In 0:12:37.200 --> 0:12:40.760 nineteen twenty four, he entered politics, winning election to the 0:12:40.800 --> 0:12:44.080 South African House of Assembly as the member from Kimberly, 0:12:44.320 --> 0:12:47.560 the symbolic heart of the diamond world. From there he 0:12:47.679 --> 0:12:51.480 shaped mining policy from the inside. But his most brilliant 0:12:51.480 --> 0:12:57.840 move came quietly. Whenever Oppenheimer acquired diamond fields that threatened 0:12:57.840 --> 0:13:02.280 to Beer's monopoly, he did not fight the cartel had on. Instead, 0:13:02.440 --> 0:13:06.480 he made not He proposed trading those disruptive properties, the 0:13:06.640 --> 0:13:10.600 very minds that could destabilize diamond prices, in exchange for 0:13:10.720 --> 0:13:14.760 large blocks of De Beer's stock. De Biers accepted again 0:13:14.960 --> 0:13:19.440 and again. With each transaction, Oppenheimer gained something more valuable 0:13:19.440 --> 0:13:24.000 than land. He gained ownership. Behind the scenes, his relatives 0:13:24.000 --> 0:13:28.800 and allies also quietly accumulated shares. By nineteen twenty seven, 0:13:29.160 --> 0:13:32.800 Ernest Oppenheimer had become the single most powerful individual in 0:13:32.840 --> 0:13:36.720 the global diamond industry without ever declaring war onto Beer's. 0:13:37.440 --> 0:13:41.720 The final step required one more ally, Lord Rothschild. The 0:13:41.800 --> 0:13:46.079 Rothchild family was Europe's preeminent banking dynasty, and for decades 0:13:46.280 --> 0:13:49.679 they had been deeply embedded in diamond finance. They had 0:13:49.720 --> 0:13:54.760 funded merchants, underwritten syndicates, finance cutters in Antwerp and Amsterdam, 0:13:54.880 --> 0:13:59.720 and even arranged jewel purchases for royalty itself. Oppenheimer appealed 0:13:59.760 --> 0:14:02.720 directly to them, and they hitched up to the Oppenheimer train. 0:14:03.320 --> 0:14:07.760 With Rothchild support. The balance tipped. In nineteen twenty nine. 0:14:08.040 --> 0:14:11.800 Ernest Oppenheimer became chairman of the Beers. Soon after he 0:14:11.920 --> 0:14:15.240 was knighted by the King of England. Sir Ernest Oppenheimer 0:14:15.440 --> 0:14:22.240 now controlled the cartel cecil Roads had built, but he 0:14:22.320 --> 0:14:25.240 did not see it the same way Rhodes had viewed 0:14:25.280 --> 0:14:29.320 diamonds as a tool of British empire. Oppenheimer saw diamonds 0:14:29.520 --> 0:14:32.800 as an empire unto itself, and he intended to make 0:14:32.840 --> 0:14:36.560 De Beers, in his own words, the absolute controlling factor 0:14:36.680 --> 0:14:40.360 in the diamond world. Life can be pretty stressful these days. 0:14:40.520 --> 0:14:43.480 You want to know what makes me feel better? Licorice 0:14:43.520 --> 0:14:47.640 from the licorice Guy. Call me crazy, but it's true 0:14:47.640 --> 0:14:50.920 because I love licorice. 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For Roads, diamonds were 0:16:00.960 --> 0:16:04.680 a tool, a way to finance empire, to project British 0:16:04.680 --> 0:16:08.880 power across Africa, to bend territory and politics to his will. 0:16:09.440 --> 0:16:13.400 Oppenheimer saw something else. Entirely for him, the diamond monopoly 0:16:13.800 --> 0:16:16.720 wasn't a means to an end. It was the prize. 0:16:17.120 --> 0:16:22.840 Rhodes had believed in empire, Oppenheimer believed in systems. In 0:16:22.960 --> 0:16:26.800 the system he envisioned had no flag, no national loyalty, 0:16:27.160 --> 0:16:30.320 and no permanent home. It would be global, it would 0:16:30.360 --> 0:16:34.280 be disciplined, and above all, it would be absolute. In 0:16:34.320 --> 0:16:37.800 a private letter to his brother, Oppenheimer put his ambitions 0:16:38.000 --> 0:16:42.760 in unmistakable terms. His goal, he wrote, was to make debiers. 0:16:42.440 --> 0:16:45.240 The absolute controlling factor in the diamond world. 0:16:47.360 --> 0:16:51.520 That word absolute mattered. Oppenheimer did not mean control of 0:16:51.600 --> 0:16:54.800 a mine, or a region, or even a continent. He 0:16:54.880 --> 0:16:58.800 meant control of everything, from the moment a diamond emerged 0:16:58.840 --> 0:17:02.920 from the ground to the moment it was sordid, priced, cut, marketed, 0:17:03.080 --> 0:17:07.240 and finally sold. Oppenheimer wanted to control every link in 0:17:07.280 --> 0:17:10.880 the chain because he understood something that even Rhodes had 0:17:10.920 --> 0:17:15.080 only partially grasped. Diamonds were not valuable because they were rare. 0:17:15.320 --> 0:17:24.400 They were valuable because they were controlled. In Oppenheimer's view, 0:17:24.600 --> 0:17:27.399 the real threat to diamonds wasn't the discovery of a 0:17:27.440 --> 0:17:29.040 new mine. It was chaos. 0:17:29.400 --> 0:17:32.479 The danger to the security of the diamond industry is 0:17:32.560 --> 0:17:36.080 not the discovery of a new, rich diamond field, but 0:17:36.200 --> 0:17:38.399 the irrational exploitation of it. 0:17:38.800 --> 0:17:44.080 Unmanaged competition, producers dumping stones onto the market, prices swinging wildly, 0:17:44.320 --> 0:17:48.560 public confidence collapsing. That was how diamonds lost their mystique. 0:17:48.760 --> 0:17:57.000 That was how they became just another rock. So Oppenheimer 0:17:57.080 --> 0:18:02.400 moved methodically the same mining interests he had built through 0:18:02.440 --> 0:18:05.399 Anglo am maamer the ones that had once threatened to Beers, 0:18:05.600 --> 0:18:08.560 were now folded back into it. Through a complex series 0:18:08.600 --> 0:18:12.879 of share swaps and quiet negotiations, Anglo American emerged not 0:18:13.000 --> 0:18:15.720 as a rival, but as the controlling shareholder of de 0:18:15.760 --> 0:18:21.400 Beers itself. The monopoly didn't fracture, it hardened. Ownership consolidated, 0:18:21.520 --> 0:18:29.240 decision making centralized. By the end of the nineteen twenties, 0:18:29.480 --> 0:18:34.120 the diamond world had a new ruling family. Oppenheimer now 0:18:34.160 --> 0:18:37.520 sat where roads once had, but with a different philosophy 0:18:37.760 --> 0:18:40.919 to rule through restraint, and for a time it worked. 0:18:41.320 --> 0:18:45.400 The diamond cartel became more sophisticated than ever before, quieter, 0:18:45.720 --> 0:18:53.000 more international, and far more resilient. But even the most 0:18:53.000 --> 0:18:56.800 perfectly engineered system has one weakness. It depends on the 0:18:56.840 --> 0:19:00.639 world's staying predictable, and in the nineteen thirties the world 0:19:00.920 --> 0:19:04.600 was about to become anything but The diamond cartel had 0:19:04.640 --> 0:19:09.119 survived wars, revolutions, new minds, and political upheaval, but it 0:19:09.200 --> 0:19:12.200 was about to face something far more dangerous, a collapse 0:19:12.240 --> 0:19:16.240 in belief. In October nineteen twenty nine, the global economy 0:19:16.320 --> 0:19:22.680 gave away. Markets crashed, credit evaporated, and gold was increasingly accumulated, 0:19:22.760 --> 0:19:26.280 primarily by central banks and individuals seeking safety. 0:19:28.600 --> 0:19:31.240 The thing that people need to understand about central banks is, 0:19:31.440 --> 0:19:34.760 first of all, they don't speculate. They prepare for failure, 0:19:34.960 --> 0:19:38.920 they prepare for war, they prepare for their country having issues. 0:19:39.040 --> 0:19:41.720 That's Kevin de Merritt, founder of Lear Capital, one of 0:19:41.760 --> 0:19:44.360 the largest precious metal firms in the United States. 0:19:44.640 --> 0:19:47.239 And so when you prepare for failure, you need to 0:19:47.280 --> 0:19:50.919 have something stored in your central bank that is going 0:19:50.960 --> 0:19:53.359 to match up with that. Gold and silver match up 0:19:53.359 --> 0:19:56.720 with that almost perfectly. Gold and silver have no counterparty risk. 0:19:56.800 --> 0:19:58.679 They don't rely on a promise. They don't rely on 0:19:58.720 --> 0:20:01.720 technology or a grading system or a marketing campaign to 0:20:01.720 --> 0:20:05.719 make them valuable. Gold as universally accepted. It's instantly liquid. 0:20:05.840 --> 0:20:09.120 It functions outside of the financial system right you can 0:20:09.160 --> 0:20:12.840 barter with it in times of crisis, wars, currency collapses, 0:20:12.960 --> 0:20:17.719 debt defaults. Gold is what remains when confidence disappears. Diamonds 0:20:17.760 --> 0:20:20.600 and pearls are electric goods. Gold is a monetary insurance, 0:20:20.760 --> 0:20:24.000 so central banks don't store what's fashionable. They store what 0:20:24.240 --> 0:20:26.040 works when everything else breaks. 0:20:26.400 --> 0:20:30.840 This gold accumulation phenomenon is seen throughout history. During times 0:20:30.840 --> 0:20:35.480 of great uncertainty, when systems become unstable, people consistently gravitate 0:20:35.520 --> 0:20:39.520 toward things they trust or remain valuable, regardless of who's 0:20:39.520 --> 0:20:48.840 in charge. Value isn't created and calm, it's revealed in crisis, 0:20:49.000 --> 0:20:51.639 and during the onset of the Great Depression, the smart 0:20:51.640 --> 0:20:57.200 money began accumulating gold, but luxury spending vanished almost overnight, 0:20:57.600 --> 0:21:00.800 and diamonds once whispered about in royal courts and locked 0:21:00.840 --> 0:21:04.720 away in velvet line Safes only had no buyers. The 0:21:04.800 --> 0:21:08.200 London Diamond Syndicate, the financial heart of the cartel, could 0:21:08.240 --> 0:21:11.080 no longer absorb the steady flow of stones coming out 0:21:11.080 --> 0:21:16.439 of Africa. Diamonds kept arriving, but demand had disappeared. By 0:21:16.520 --> 0:21:21.040 nineteen thirty one, the situation had turned desperate. From London, 0:21:21.160 --> 0:21:24.360 a cable was sent to Kimberly. It was blunt, panicked 0:21:24.359 --> 0:21:26.080 and unprecedented. 0:21:25.560 --> 0:21:26.720 No sell possible. 0:21:27.080 --> 0:21:32.359 Best offers for small quantities were well below cost price. 0:21:32.920 --> 0:21:37.280 Market quite demoralized. Inform Sir Ernest Oppenheimer. 0:21:37.520 --> 0:21:40.080 For the first time in modern history, diamonds were in 0:21:40.160 --> 0:21:43.520 danger of becoming worthless. If de Beers released even a 0:21:43.560 --> 0:21:47.040 fraction of its stockpile onto the open market, prices would 0:21:47.119 --> 0:21:51.960 collapse completely. The illusion of rarity, carefully maintained for decades 0:21:52.080 --> 0:21:55.760 would shatter. But if Deber's refused to sell, the company 0:21:55.800 --> 0:21:59.520 would run out of cash. The cartel was strapped. This 0:21:59.720 --> 0:22:03.439 was the moment Ernest Oppenheimer fully understood the difference between 0:22:03.480 --> 0:22:07.800 diamonds and true stores of value. Gold had survived crashes 0:22:07.880 --> 0:22:12.080 before silver had survived empires rising and falling. They had 0:22:12.080 --> 0:22:16.000 been money openly publicly for centuries they had deep markets, 0:22:16.240 --> 0:22:20.280 universal acceptance, a long memory of trust. Diamonds had none 0:22:20.320 --> 0:22:23.880 of that. Before the discoveries in South Africa, diamonds were 0:22:23.920 --> 0:22:27.520 indeed rare, precious and held their worth, so they became 0:22:27.560 --> 0:22:31.120 a storehouse of wealth. Only a few pounds were gathered 0:22:31.200 --> 0:22:34.760 per year from riverbeds in India and Brazil. But once 0:22:34.840 --> 0:22:39.200 diamonds were discovered in Kimberly, their rarity became from managed scarcity. 0:22:39.560 --> 0:22:44.400 If that manufactured belief died, diamonds would not recover. Oppenheimer 0:22:44.400 --> 0:22:47.399 saw the truth clearly. Diamonds were not money. They were 0:22:47.440 --> 0:22:51.399 a confidence game, and confidence, once broken, does not come back. 0:22:52.000 --> 0:22:54.440 So he made a decision no one else could make. 0:22:54.760 --> 0:22:58.200 It took over the London Syndicate himself. The Beers would 0:22:58.240 --> 0:23:01.960 no longer merely mine diamonds. It would sell them, sort them, 0:23:02.200 --> 0:23:06.680 stockpile them, release them, or withhold them at will. Production 0:23:06.840 --> 0:23:10.720 and distribution would now sit under one roof, managed by 0:23:10.800 --> 0:23:13.879 one mind. From that moment on, to Beers was no 0:23:13.960 --> 0:23:17.240 longer just a mining company. It was the market and 0:23:17.400 --> 0:23:20.639 Ernest Oppenheimer had just placed his hands on the lever 0:23:20.840 --> 0:23:24.760 that controlled the entire diamond world. But even absolute control 0:23:24.800 --> 0:23:28.359 would not be enough, because something else was coming, something 0:23:28.359 --> 0:23:30.600 that would force de Beers to do what it had 0:23:30.760 --> 0:23:35.000 never done before, create demand, not in Europe but somewhere 0:23:35.200 --> 0:23:35.920 entirely new. 0:23:36.680 --> 0:23:40.199 By the early nineteen thirties, Ernest Oppenheimer had done what 0:23:40.400 --> 0:23:43.520 no one before him had ever attempted. He had seized 0:23:43.600 --> 0:23:47.080 control not just of the mines, not just of distribution, 0:23:47.480 --> 0:23:51.040 but of the very flow of diamonds into the world. And, 0:23:51.160 --> 0:23:55.280 now facing the greatest economic collapse in modern history, he 0:23:55.400 --> 0:23:58.919 reached for the most extreme lever of all. He slammed 0:23:58.960 --> 0:24:07.560 the brakes. In nineteen thirty the world's diamond mines produced 0:24:07.680 --> 0:24:11.840 more than two million carrots. By nineteen thirty three, Oppenheimer 0:24:11.920 --> 0:24:17.280 reduced production to just fourteen thousand, not fourteen thousand per mine, 0:24:17.520 --> 0:24:21.680 fourteen thousand carrots total. One by one, de Beers shut 0:24:21.720 --> 0:24:26.520 down South Africa's diamond operations. Entire mining towns went dark, 0:24:27.040 --> 0:24:31.280 shafts were sealed, workers were sent home. The richest diamond 0:24:31.320 --> 0:24:35.360 fields on Earth were deliberately silenced, not because the diamonds 0:24:35.359 --> 0:24:38.120 were gone, but because there were too many of them. 0:24:38.480 --> 0:24:43.520 Yet even that wasn't enough. As prices continued to slide, 0:24:43.720 --> 0:24:48.199 new threats emerged. Far from Kimberly diamonds were discovered in 0:24:48.240 --> 0:24:53.960 the Belgian Congo, then in Portuguese and Gola. Under normal circumstances, 0:24:54.119 --> 0:24:58.360 new discoveries would have met prosperity. Under these conditions, they 0:24:58.440 --> 0:25:02.439 met catastrophe. If those stones reached the open market, they 0:25:02.480 --> 0:25:06.359 would confirm what Oppenheimer feared most. The diamonds were not 0:25:06.600 --> 0:25:13.280 rare at all. So debiers did what only a cartel 0:25:13.320 --> 0:25:16.760 could do. It scooped them up. Anything to keep those 0:25:16.800 --> 0:25:20.639 diamonds from being dumped into a collapsing market, and still 0:25:20.800 --> 0:25:25.800 the numbers were terrifying. By nineteen thirty two, total global 0:25:25.840 --> 0:25:30.200 diamond sales had fallen to roughly one hundred thousand dollars. 0:25:31.400 --> 0:25:35.560 Between nineteen thirty and nineteen thirty two, diamond prices plunged 0:25:35.600 --> 0:25:39.359 by about fifty percent, and by nineteen thirty seven, de 0:25:39.440 --> 0:25:43.119 Beers was sitting on a mountain of unsold stones forty 0:25:43.240 --> 0:25:47.919 million carrots locked away in bolts. That wasn't a seasonal surplus. 0:25:48.280 --> 0:25:51.680 That was the equivalent of twenty years of supply, even 0:25:51.760 --> 0:25:56.080 by pre depression standards. At one point Oppenheimer considered a 0:25:56.080 --> 0:26:00.760 solution so drastic it bordered on madness. If creditors forced 0:26:00.760 --> 0:26:03.720 de Beers into liquidation. If the vault we pride open, 0:26:04.119 --> 0:26:07.679 he would dump the diamonds into the ocean. Tons of 0:26:07.680 --> 0:26:11.400 them sunk into the North Sea to preserve the value 0:26:11.480 --> 0:26:15.960 of what remained. Diamonds once symbols of eternity were now 0:26:16.040 --> 0:26:20.159 treated like toxic waste. But just as it appeared to 0:26:20.200 --> 0:26:23.080 Beers was going to drown under the weight of its stockpile. 0:26:23.440 --> 0:26:27.560 The modern industrial world stumbled into a problem only diamonds 0:26:27.600 --> 0:26:31.840 could solve. For decades, mass production had relied on steel, 0:26:32.440 --> 0:26:37.080 steel tools to cut steel parts, Steel dyes stamped steel components, 0:26:37.280 --> 0:26:41.960 but steel wore down quickly, Blades dulled, dies cracked. Accurate 0:26:42.000 --> 0:26:46.680 machining required constant replacement and maintenance. Then, in the early 0:26:46.760 --> 0:26:51.200 nineteen thirties, engineers at the German industrial giant CRUP introduced 0:26:51.240 --> 0:26:56.000 something radically new, tungsten carbide. It was harder than steel, 0:26:56.359 --> 0:26:59.399 far more resistant to heat, able to withstand stress that 0:26:59.440 --> 0:27:07.640 would shatter traditional tools. Tungsten carbide, dies and blades promised 0:27:07.680 --> 0:27:13.320 a revolution in manufacturing, faster production, tighter tolerance's, longer tool life. 0:27:13.560 --> 0:27:17.280 There was just one problem. Tungsten carbide was too hard. 0:27:17.680 --> 0:27:21.000