Chapter Five. Oh, what a profitable war. Rationing the US and keeping profits high.

Diamonds were not only sold as jewellery during the war - they were absolutely vital for the war industries - they cut steel with little wear and are ideal for manufacturing the wires needed for radio and radar - many De Beers diamonds were used and De Beers today expresses its pride in its wartime achievements -.. but the real story, as revealed by formerly secret US Government documents we had declassified, tells a very different and very unpatriotic story.

Excepts from the chapter -

... the United States was critically short of the diamonds needed to arm itself and its allies. The Arkansas deposit was not being mined and there was no other source of diamonds in the US. Nevertheless, However, given the enormous number the Syndicate had in its London vaults, it should have been relatively easy for the United States to get the diamonds it needed as long as the Atlantic trading routes were not closed by the German U-boats. . In 1939 the US Justice Department estimated De Beers held 40 million carats, eight tonnes of diamonds. Other estimates were still higher. A British Government memo estimated that in December 1941 the Syndicate held 49 million carats. 29 million of these in its London vaults and the rest 'elsewhere' - probably at its mines in Africa.

... A memorandum written for the US Assistant Attorney General, Thurman Arnold, on 16 April 1942 stated: 'The 14% of the [diamond] stockpile we have was not obtained until it was said unofficially that we would not give planes to England if the syndicate [De Beers] would not sell us the diamonds with which to make them.'

...a former head of the CIA, Admiral Stansford Turner, in an article published in the Washington Post on 18 October 1988. 'We should not forget that during World War Two the De Beers diamond mining company that is part of the Oppenheimer empire refused to sell the US a large quantity of industrial diamonds for war production.'

Sir Philip Oppenheimer, Ernest Oppenheimer's brother and a director of De Beers, angrily retorted in a letter to the editor on 2 November 1988: 'Our records show that strenuous efforts were in fact made by De Beers to ensure the availability of war supplies. Notwithstanding the inevitable increase in demand, our prices were maintained at the levels that had applied during the pre-war period. Furthermore sales of industrial diamonds during the war years were carried out through London under the supervision of the British government and it defies belief that the British government would have permitted a company under its jurisdiction to act in a manner that would have hampered war production in any way. The insinuation by Mr. Turner that De Beers acted in such a way is not only totally unsubstantiated, but also deeply offensive to a family that was profoundly affected by the War.... the family also suffered the disappearance of relations who were living in Germany at the time.... I wish to counterbalance the implication that people vitally involved in the defeat of Hitler would have taken commercial decisions that might have impeded this overriding objective.'

In South Africa the Financial Mail responded by attacking the 'ludicrous assertions that De Beers hampered the war effort 40 years ago.' The South African Sunday Times wrote 'De Beers did not refuse to sell, it merely objected to the US creating a stockpile so great that it might be used to undercut the market after the war.' It called Stansford Turner 'the cretinous admiral...'

The Oppenheimers were clearly deeply disturbed by this allegation, despite it being made many years after the events transpired. I devoured thousands of pages of Justice Department files and interviewed those I could find that had first hand knowledge of the events or access to official records. Slowly a picture of what transpired formed.

... The US Justice Department came to a very different conclusion when it investigated De Beers supplies of industrial diamonds to the United States to meet its military requirements. It summarised its findings accordingly:

'Agencies of the US government have been prevented from obtaining industrial diamonds and boart and establishing a stockpile in the United States, which they desired for military reasons.' 'While the Syndicate has not completely succeeded in stopping our stock pile activities, it has placed every conceivable obstacle in our way and our current procurement program must anticipate even more intense opposition by the SYNDICATE . In its negotiations with the Procurement Division, the SYNDICATE gave one excuse after another for failing to supply our requirements...

... Thomas Daly, Special Assistant to the Attorney General, then suggested it was time for legal action, noting that: 'under present Syndicate regulations, our stockpile of diamonds can never be more than 50% complete. This shortage is a dangerous threat to a successful war effort...

Another assertion made by Sir Philip Oppenheimer in his defense of his family's actions during the war was that: 'Notwithstanding the inevitable increase in demand, our prices were maintained at the levels that had applied during the pre-war period'. Indeed in April 1941, Sir Ernest Oppenheimer had stated that industrial diamonds were 'being made available to Great Britain and the United States without any increase in pre-war prices.' A Justice Department report verified this pledge: ' A meeting of the Board of the syndicate attended by representatives of US State Department, said this was being done as a 'patriotic' gesture.'' But is this what really happened?