During World War II, the United States War Production Board accused De Beers of hoarding industrial diamonds and putting Allied factories at risk to protect its monopoly. The cartel reportedly sat on a substantial stockpile of crushed bort and small industrial stones in London, refused to ship more than a fraction across the Atlantic, and priced Washington’s strategic stockpile prohibitively. American B-17 engines, machined to thousandths of an inch, depended on diamond-tipped dies and grinding wheels that could not be made any other way.
The accusation came from inside the Roosevelt administration, in memos that circulated between the Justice Department, the War Production Board, and the Office of Strategic Services. The charge was blunt: a private South African and British company was, in effect, rationing the United States war effort.
Why a tank factory needed diamonds
Industrial diamonds are not the gem-grade crystals in an engagement ring. They are dark, fractured, almost ugly. They are also the hardest known natural material, and in the 1940s nothing else could shape tungsten carbide tooling, drill jet-engine nozzles, or finish the bearing surfaces on a Wright Cyclone aero engine.
A single Sherman tank required diamond abrasives at dozens of stages of its manufacture. A Pratt and Whitney radial engine could not be built without diamond dies for drawing the fine tungsten wire used in its spark plugs. Multiply that by tens of thousands of aircraft and the math became urgent.
By the early 1940s, the United States consumed a substantial majority of the world’s industrial diamond supply. Almost all of it had to pass through one company.
The cartel in the middle
De Beers Consolidated Mines, founded by Cecil Rhodes in the late nineteenth century, controlled the diamond trade through a marketing arm called the Central Selling Organisation, run out of London by Sir Ernest Oppenheimer. Stones from South Africa, the Belgian Congo, Angola, and Sierra Leone flowed into one set of vaults and were released to the world in carefully metered quantities to keep prices firm.
Industrial diamonds were a smaller, less glamorous part of that business, but the same rules applied. The CSO decided what came out of the vault and at what price.
Washington wanted a war reserve of several million carats of industrial stones held on American soil. Oppenheimer’s organization reportedly offered to sell a fraction of that amount, and only on the condition that the stockpile not be drawn down in ways that disturbed the postwar market. The War Production Board considered the offer insulting.
The 1944 memo
Internal documents from the period reportedly accused De Beers of jeopardizing Allied war production. The cartel, the memos argued, was willing to risk Allied factories running short of grinding wheels rather than let a strategic stockpile sit in American hands where it might one day be sold off and crash the diamond price.
The Justice Department opened an antitrust investigation. De Beers, having no operations or executives on US soil, simply ignored the subpoenas. There was no one in America to serve.
Smugglers, OSS agents, and the Congo
The shortfall was real enough that the Office of Strategic Services, the wartime predecessor to the CIA, ran a covert operation into the Belgian Congo to find out where industrial diamonds were actually going. The Congo was then the largest source of industrial-grade stones in the world, mined at Forminière concessions whose output was funneled through the CSO in London.
OSS investigators concluded that significant volumes of Congolese diamonds were leaving Africa through Portuguese, Lebanese, and Belgian middlemen and ending up on the black market in neutral Tangier, from where some reached Germany. The Reich, cut off from any legal supply, needed diamonds for the same reason the Allies did: to machine engines, drill armor plate, and grind precision optics for tank sights and submarine periscopes.
How many carats reached Nazi Germany, and through whose hands, was never settled. The numbers in the OSS files run from a few hundred thousand carats per year to well over a million. What the agents could not establish was whether the leakage was tolerated by the cartel as the cost of doing business, or actively organized.
The stockpile that never quite filled
The Roosevelt administration eventually built up its strategic industrial diamond stockpile, but slowly and at prices set entirely by the CSO. Stones were shipped from London to New York in small lots, often by courier on Pan American flying boats, insured for sums that look modest now but were enormous in 1943 dollars.
By the time the reserve approached the level the War Production Board had originally demanded, the war in Europe was nearly over. American machinists had spent three years working with grinding wheels that wore out faster than they should have, using substitute abrasives like silicon carbide where they could, and rationing diamond dies between competing aircraft programs.
The Wright Aeronautical plant in Paterson, New Jersey, a major producer of radial aircraft engines, kept a locked room for diamond tools with a sign-out log that was reviewed weekly by management.
The lawsuit that went nowhere
After the war, the Justice Department filed a formal antitrust suit against De Beers, charging the company with conspiring to fix the price of industrial diamonds and with restricting supply during wartime. The case dragged on for years. De Beers continued to operate entirely outside US jurisdiction, refused to appear, and the suit was eventually dropped as legally unenforceable.
The practical consequence was that for the rest of the twentieth century, no senior De Beers executive could safely set foot in the United States without risking arrest on the open indictment. Company officials negotiated American sales through intermediaries and held their meetings in London, Lucerne, and Johannesburg.
The synthetic answer
The wartime shortage convinced the US government that depending on a single foreign cartel for a strategic material was unacceptable. Before American entry into World War II, the Carnegie Institution had begun experiments on making diamonds from graphite under pressure. The work was classified and underfunded, but it never stopped.
In the mid-1950s, a team at General Electric’s research laboratory in Schenectady, led by Tracy Hall, finally succeeded. Using a belt press of Hall’s own design, they squeezed graphite at extreme pressure and temperature and produced small, gritty, unmistakable industrial diamonds.
Hall’s compensation for the breakthrough became a point of controversy. The technology, patented and licensed under tight controls, eventually turned synthetic industrial diamond into a commodity. Today, the vast majority of industrial diamonds used worldwide are synthetic, made in presses descended from Hall’s, and the leverage the wartime cartel once held over American manufacturing simply evaporated.
What the memo really revealed
The wartime accusation was extraordinary not because it was novel but because it was made in writing, by a US government agency, against a private foreign company in the middle of a war. The War Production Board normally spoke the language of tonnages and delivery schedules, not the language of sabotage.
The choice of words mattered. To say that De Beers was jeopardizing Allied war production was to put the cartel in the same rhetorical category as a strike, a U-boat, or an act of espionage. The memo did not lead to prosecution, indictment, or any seizure of assets. It led to a stockpile slowly accumulated at the cartel’s preferred price and, in the longer run, to a Schenectady press that made the whole problem disappear.
For a brief period in the 1940s, a single London office could decide how quickly the United States built its bombers. The men who ran the War Production Board did not forget it, and neither did the chemists at General Electric.
The diamonds in the Wright engine plant in Paterson are long gone, ground down decades ago into the swarf of finished crankshafts. The memos sit in the National Archives. The synthetic stones that replaced the cartel’s hoard are made by the kilogram in industrial parks from Ohio to Henan, and they cost a few dollars a carat, sold by the bucket to anyone who needs to cut steel.
