There is a common misconception that diamond engagement rings are an ancient tradition. Sure, there is a rich history of rings being exchanged during marriage ceremonies, and there have also been a variety of circumstances where royals and other elite gave diamond jewelry for an engagement. But, it wasn’t until the De Beers diamond cartel decided to funnel millions into marketing and advertising campaigns that the diamond ring became deeply embedded into the culture.

The inflated price of the engagement ring seems unjustified when many casual observers cannot even tell the difference between a real diamond and that which is moissanite and cubic zirconia (CZ). This has already prompted some to opt for cubic zirconia engagement rings over real diamond ones.

The engagement ring scam is one that pressures men all around the world to believe that love means that they must spend thousands of dollars on a diamond engagement ring. Perhaps those funds could be better allocated to another use? The diamond didn’t become the symbol of love that we associate it with today on its own, it had to get help from the De Beers diamond cartel.

The Diamond Engagement Cartel

De Beers was founded in 1888 by Cecil Rhodes, and financed with help from the London-based NM Rothschild & Sons Bank. This involved mining operations in Canada, South Africa, Namibia, and Botswana. In 1927, after his company Anglo American plc (founded with J.P. Morgan in 1917) became a majority stakeholder, Ernest Oppenheimer took over De Beers and it went on to flourish as one of the most successful international diamond cartels in the world. They have been able to restrict the supply of diamonds on the market to raise the price of diamonds far above what would have been market levels. They were able to do this because De Beers was successfully persuading the worlds diamond miners to market almost all diamonds through the De Beers Central Selling Organization (CSO). Today the Anglo American Group owns 85% of De Beers, while the Government of the Republic of Botswana owns the other 15%, they are the only two shareholders.\

De Beers was successful in making diamonds appear rarer than they are, by aggressively restricting the supply of diamonds on the market. The cartel was largely successful thanks to the South African government who long ago decided to nationalize all diamond mines. Anyone in South Africa who finds a diamond mine on his property will discover how quickly it becomes property of the government. The government then decides who will receive licenses to operate the mines.

The majority of licenses had been handed to De Beers, this is a classic example of the corruption involved with crony capitalism. De Beers even purchased illegally smuggled diamonds in order to maintain their grip on the market. Currently, they no longer hold a monopoly on the diamond market. As more mines were discovered around the world in the second half of the 20th century, it become more difficult to purchase all global production. The multiple lawsuits didn’t help either.

Multiple lawsuits were filed in 2001, alleging that De Beers unlawfully monopolized the supply of diamonds, and conspired to fix, raise, and control diamond prices, as well as issued false and misleading advertising advertising. After 100 years of holding a successful monopoly, making billions in profit, the US Supreme Court ultimately denied the final petition for review following numerous appeals. A class action settlement against the corporation was agreed upon at $295 million, along with an agreement to refrain from engaging in certain conduct which violates antitrust laws.

The De Beers cartel made sure to market diamond engagement rings as a timeless symbol of love, introducing the phrase "a diamond is forever" in 1947. Since then it has consistently been shown throughout their ad campaigns. In 1939, roughly 10% of engagement rings had diamonds, and by 1990 80% of them did. By the early 1940’s, engagement rings had become the leading line of jewlery in most department stores. The value of diamonds has slowly continued to climb since the late 1980’s.

In 2012 there was roughly $11 billion in diamond engagement and wedding jewelry sales. Many couples are putting themselves into debt to be able to purchase themselves the biggest rock possible. Some might say that for a couple who just got married, it’s a poor financial decision to spend thousands of dollars on a ring when you are just starting out your life together and could use that money for something more efficient.

There are also far more meaningful ways to show love.

The idea that a man should have to spend his annual income was also a suggestion that was originated by the De Beers diamond cartel. It was later reduced to two months income by the 1930s. They enlisted the catchy advertisement: “how else could two month's" salary last forever.” In 2012, the average cost of an engagement ring was around $4,000. With the resale value of diamond engagement rings being questionable at best, many hold the position that they make for a bad investment and perhaps that money would be better spent elsewhere.