Once Saudi Sheik Yamani, one of the OPEC founding fathers, when asked to what extent the oil price was hinged on OPEC decisions and to what on market factors said, “The first two figures (before the dot) are determined by OPEC and the last figures (after the dot) by fundamental factors.” The idea that modern markets can be managed in varying degrees is shared by almost all their participants and analysts and this should not be taken as some revelation. The problems come when you attempt to guess the motivation of those market players who are capable to generate the driving pulse. The postulate of evident economic expediency providing the behavioral basis for any market participant permits to produce more or less reliable prognostic frameworks using the conceptual instruments of technical and fundamental analysis. However, occasionally one can come across data running counter to usual models. At “bifurcation points” of the historical process, there happen events permitting to suggest that long-term strategies in market management pursue the aims in some way different from just getting profit for the shareholders’ sake.
Almost all reliable sources are forthright in saying De Beers refused to collaborate with Nazi Germany. The central trading agency of the diamond monopolist blocked the sales of diamonds to the Third Reich. This move had an utterly negative impact on the development of the German military industry and it was one of the circumstantial reasons serving to destroy the Nazi State.
Indeed, the De Beers Corporation has always been and remains to be a pearl of the British Crown headed by the Oppenheimer Family – the ethnic Jews who came from Germany and who traditionally maintained close ties with banking houses established by the Rotshields and the Morgans. These were certainly serious circumstances giving ground to cureless contradictions with the author of “Mein Kampf”. It was right in 1933 (by the time Hitler came to power) when the London Diamond Syndicate was transformed into the Diamond Trading Company presided by De Beers’s owner Ernest Oppenheimer. In the 1930s and 1940s, DTC accounted for about 94% of trade in world diamond output, so De Beers was undoubtedly capable to cut all diamond supplies to Germany.
Meanwhile, Germany was the pioneer in application of industrial diamonds initially using them as abrasives to polish the world’s best optics produced by Zeiss. In 1927, Krupp patented the Widia material (wie Diamant – as diamond). This agglomerate of tungsten carbide and cobalt produced a revolution in metal working bringing the speed and finish of cutting the hardest steels by several orders of magnitude. However, only diamond tools could be used to grind Widia cutting bits. About the same time German machine-building companies made up and introduced techniques and diamond tools for finish honing permitting to increase the life span of engines for vehicles, aircraft, tanks and submarines in several times. The turn was coming for diamond dies to produce radio electronic wires and for other tens, if not hundreds, of fields where diamonds could find their application in the military industry. All these techniques turned to be in great demand starting exactly from 1933, when Hitler severed the Versailles Treaty and provided a historically unheard-of defense order for Krupp, Thyssen, Siemens, Zeiss and other grandmasters of the German industry.
Of course, one cannot miss the Knight’s Cross - the highest degree of the Iron Cross, with oak leaves, swords and diamonds – the coveted dream of cutthroats briskly gearing up for a “stroll” across Europe.
Germans were pioneers in diamond techniques, but other participants of the forthcoming battle were also able to evaluate the opportunities they offered. In 1939 and in 1940, the world diamond output reached 10.5 and 11.2 million carats respectively. This was three times up against the result of 1933. For the first time on market record, the sales value of borts could be compared with that of gem quality diamonds. In terms of weaponry, Germany kept abreast of its future adversaries and in some areas, like artillery, optics, aviation and motor building, it gained the lead.
So, 94% of the world diamond output was controlled by De Beers, while Germany having at its disposal the most advanced industrial techniques with a diamond component pursued the aim to produce multitudes of tanks, aircraft and ships – tens of thousands of most perfect machines for the time being – all in the course of five years. Not even in five, since the first ME 109 appeared in the Spanish sky in 1936. Was it possible to achieve this technological breakthrough using the 6% of diamonds uncontrolled by the world monopoly and scattered among petty dealers on the three continents? Or did the macabre German genius manage to cope with this task without diamonds?
In March 1935, Germany and the USSR entered a credit agreement for the value of 200 million marks. This was a tied loan – the Soviet Union was to use this amount to get industrial equipment primarily indispensable for developing its military industry, in particular more than 1100 metal-cutting machines. Using this and other credits as well as direct purchases, the USSR obtained an enormous amount of German metal-cutting machines; only in 1940 and in the beginning of 1941 their supply accounted for 6430 pieces!
In 1936, the first pieces of this equipment were installed in military plants located in Moscow and Leningrad. The machines were equipped with diamond tools to grind cutting bits, to dress thread grinding wheels, etc. They would never work without such tools. Moreover, similar Swiss-made machines bought in this period by the Soviet Union were also equipped with German diamond tools. Germany was a large-scale exporter of diamond tools! All this was happening along with its own stupendous development of military industry.
It is well known that Albert Schpeer, the armaments minister of the Third Reich, reached an amazing result making the German military industry to churn out armaments on an ever increasing scale during the whole war period: in 1940 it produced 1803 tanks and self-propelled guns, while in 1944 and early in 1945 their number was 23478, and those were more advanced and technologically more sophisticated models. In Schpeer’s “Memoirs”, you may find bitter complaints related to shortage of tungsten, molybdenum or nickel. There is not a single world about diamonds there. The Vaterland did not experience any need in diamonds – its precision machine tools were operating at their full capacity up to the spring of 1945.
From where did diamonds come to the Third Reich?
To be continued.
