The marketing campaign by De Beers was so successful that it created a new reality in the US. It entrenched in the minds of Americans that you must propose with a diamond ring otherwise you simply can't get "officially" engaged. All over the country, retail jewelry stores started to pop up to accommodate this new trend.
How much should you pay for a particular diamond was a common question when access to diamonds became relatively easy. Thanks to De Beers, the question was answered with the equivalent of two months' salary. What should the buyer expect that amount to provide became the new question.
By establishing themselves as trustworthy professionals, respectable American jewelers were able to distinguish themselves from the unscrupulous ones. As common as having a doctor or an attorney whom they trusted, people also had a personal jeweler. Because there was no real way to determine value, the opinion of these personal jewelers were trusted by the public when it came to getting good value with their diamond purchases.
For those engaged in the Diamond trade, the problem of determining value was more pronounced. Negotiations between broker and dealer could go back and forth endlessly. The broker shows a particular diamond to a dealer with a price based on quality and the dealer rejects the purchase with a claim that the diamond had a lesser quality. For things to work out, trust and the individual's experience were important factors.
It became apparent that a system needed to be put in place in order to standardize the quality characteristics of diamonds. The system was created by a non-profit organization founded in 1931, the Gemological Institute of America (GIA). The scale system came to be known famously as the "4C's of diamonds" and the basis for evaluation were Cut, Carat, Color and Clarity.
Traded diamonds were accepted by GIA for evaluation and generation of a diamond grading report. A plotting diagram indicating the size and position of clarity characteristics were included in the report in addition to the comprehensive details about the diamond. The dollar value of the diamond was not, however, shown on the reports. The GIA reports quickly became trusted and respected worldwide because they were seen as objective since the organization was not involved in the buying or selling of diamonds.
Since the qualities of diamonds were no longer an issue, this helped the trade immensely. But the price remained an issue which became an impediment to many transactions.
Martin Rapaport, a diamond cleaver from Antwerp, arrived in the New York diamond market in the mid 1970's. As a broker in New York during the 1980's, he began compiling the NY diamond trade asking prices, monitored these prices regularly and presented them in a weekly report called The Rapaport Price List. Commonly known as the "list", it created a huge stir in the diamond trade market as people alleged that the prices listed were not accurate. Further, some viewed the list as making a commodity out of the diamonds for which people feared that the precious gem would lose its inherent allure if they were treated as such.
Tradesmen began trading diamonds expressed as a percentage off the list, at list and above the list price depending on the rarity of the diamond. The list, nonetheless, was here to stay. As a matter of fact, the list only considered the carat, color and clarity for round shaped diamonds, however, and did not refer to how well the diamonds were actually cut. As a result tradespeople were able to use the diamond's rarity and exceptional cutting to ask for higher prices than the price list, but at least there was a common price base to start from. Later on, price lists were introduced for Pear Shapes and other non-round shapes.
In the next article we will elaborate on the famous 4 C's diamond grading scale created by the GIA.
