Cochise College Student Papers in Geology

Geology Home Page physical geology historical geology planetary gems

Roger Weller, geology instructor

wellerr@cochise.edu

Diamond Industry
Deborah Adams
Physical Geology
Spring 2007

47^th Street, New York: the Jewish Connection

In order to discuss the subject of the Jewish involvement in the New York diamond trade one has to be parts historian, anthropologist and gemologist. In order to keep this presentation from becoming too unwieldy, I will first give a brief history of the relationship between the Jews and diamonds, then jump to 47^th Street, New York and ultimately into the home of diamond trading in New York, the Diamond Dealers Club where million dollar deals are sealed with a handshake and the Yiddish words Mazal und brucha (luck and blessing).

The Jewish people and diamonds have been a great match for centuries. Although the Jews were restricted from many occupations because of the guild system in Europe, they could work in fields such as banking and commerce. They could become moneylenders, pawn brokers or appraise and repair jewelry. Because the Jews were routinely expelled from the countries in which they lived, diamonds were a great way for them to hold on to their wealth. They were small, easy to conceal, portable, and could be readily exchanged for any currency.

R.Weller/Cochise College

During the Spanish Inquisition of 1492 the Jewish diamond merchants were forced to leave Lisbon and Antwerp and set up shop in Amsterdam. Because diamond cutting required very little equipment other than some hand tools, the Jews soon made it the diamond capitol of Europe. The Dutch East India Company was partially financed by the Jewish diamond merchants.

By the mid eighteenth century London had become the new trading center for uncut diamonds and many Sephardic Jews moved from Amsterdam to London, but Amsterdam still remained the cutting center. They received permission to import diamonds from India and exported silver and coral to India. Diamond clubs were formed in Antwerp and Amsterdam. Diamonds were discovered in South Africa in the 1860’s and eventually the De Beers cartel ultimately controlled the flow of diamonds.

During WWII, the Germans took over the diamond bourses in Amsterdam and Antwerp. The Jews that escaped fled to the United States, Palestine, South America, Cuba and Puerto Rico. Sadly, most of the European diamond community was destroyed during the Holocaust.

Ninety five percent of the diamonds imported to the United States come through New York City. 47^th Street between 5^th and 6^th Avenues is the heart of New York’s diamond district although it extends from 45^th to 52^nd Streets and along part of East 5^th Avenue. There more than 2,000 independent businesses in the area. On the street level there are small booths and retail spaces. Business is also conducted on the street itself, although the traders risk being robbed and the consumer hustled. Above the street there are offices for wholesale business and factories for faceting and polishing diamonds, and jewelry is manufactured for private customers or jewelry stores.

About 95% of the traders and workers are Jewish and many are Hasidim. Hasidism began in eastern and central Europe two centuries ago to revive Orthodox Judaism. The Hasidim like to live and work together in jobs that respect their religious customs. Although dominated by Hasidic Jews, the ethnic mix is changing slowly to include Indians, Chinese, Thais, Filipinos, Israelis and Iranians.

The Diamond Dealers Club is located at 11 West 47^th Street, but it also fronts on to 5^th Avenue. It is the central market for diamond trading in the United States and the DDC itself is located on the tenth floor. Above the DDC are hundreds of wholesale diamond offices. The DDC is an ideal location for the small trader to conduct business as they can avoid the high overhead of an office. It is also well suited to the Hasidim traders as the DDC includes a shul (synagogue) where they can say their afternoon prayers, a kosher luncheonette, and most trading is done with other Jews. There are few women (Hasidic men are forbidden contact with any woman other than their wives and female family members) and they may schmooze in English or Yiddish. Foreign traders will also use it for an office if they don’t have one elsewhere in Manhattan.

The NYDDC belongs to the World Federation of Diamond Bourses (exchange) of which there are only twenty in the world. The WFBD coordinates the activity among the bourses and provides oversight by enforcing ethics and trading rules. If you are expelled from one exchange you are essentially “blacklisted” and cut off from the entire network. The DDC is a nonprofit organization that also has a taxable corporation for the club’s traders. Members' dues pay for the building’s maintenance, utilities and security.

It is not easy to become a member of the NYDDC. A prospective member must having been working in the diamond trade for at least two years. An admissions committee evaluates the applicant and a majority vote is needed for admission. Before being formally admitted, a photo of the perspective member is posted in the other clubs world wide for member input. Once accepted, a member is placed on probation for two years. Everyone admitted to the club must agree to abide by the club’s and international rules.

Business in the DDC is conducted using rules that have been around for generations. The deals are based on honesty and trust and there are no written contracts. DDC bylaws state “Any oral offer is binding among dealers, when agreement is expressed by the words ‘Mazel and Broche’ or any other words of accord.” The DDC trading area is one long room separated by a corridor with long tables with four sets of fluorescent lamps and a half a dozen chairs on each side. A broker, who acts as a go-between, tries to connect a buyer to a trader with the desired stones. Trade is carried out only in fairly tight circles so the broker is a key source of information. The parties are introduced; parcels (lots) are passed back and forth, accompanied by joking, schmoozing and small talk. The atmosphere can become boisterous, charged. Many times the stones are not accepted and the buyer will move on to
another table.

R.Weller/Cochise College

If the stones are accepted, prices and terms are discussed and many times stones are lent on consignment or credit (thus the need for close trading circles). Once an offer has been accepted, the parcel is placed in a small envelope, which is sealed, and the buyer’s information and the terms are listed on the envelope. The terms are considered binding until 1 PM the next business day. The cachet is sent to the official weighing office. If everyone agrees with the terms the exchange is finished with a handshake and the words Mazal und Brucha or just Mazal.

As in any other trade, disputes will arise and the bourses have an excellent system for settling these disputes: arbitration. Every member of the DDC must agree to use arbitration to settle their disputes and the arbitration panel’s ruling is binding. Talmudic law prohibits the use of secular courts, although there are exceptions for gentiles who may not wish to go before a Jewish court. At that point a Jewish litigant may use a regular court. The emphasis is on resolving disputes and 85% are resolved in prearbitration.

The arbitration panel operates in the same manner as the secular courts. Unlike secular courts, no notes are taken and no audio or video recordings are made. The proceedings are kept secret. One person files a claim and the claim is studied to determine its merit. The arbitrators hear arguments, review evidence, and witnesses are cross-examined. Either litigant may have an attorney present. The panel listens to a case and will come to a decision within ten days. If a majority vote is not reached, then a new panel is called. Judgments can be appealed but they can be very costly. Damages are based on the value of the stone, Jewish law, and common sense. A DDD appeal can be appealed to the NY state court but decisions are rarely overturned except for procedural problems.

This system is preferred for a variety of reasons. Arbitration is feared and is reserved for the most serious cases so it acts as a deterrent. If a litigant does not comply to a decision their picture is posted in the bourses around the world and their reputation is immediately damaged. Another benefit is that the proceedings are kept secret and the litigant’s privacy is ensured. Arbitration avoids the cost of the regular court system and there are fewer delays in the proceedings and the financial remedy won’t be tied up in endless appeals.

Things change slowly on 47^th Street, but change is unavoidable. More women are traders; these days they no longer work exclusively in retail or as sorters or secretaries. Fewer sons are interested in following their fathers into the business; they can go into other trades and make more money. Less business is occurring in the DDC and more is going on in the offices upstairs or elsewhere. Profit margins are tighter and the trade has become more global. Two of the biggest changes have been the use of the Gemological Institute of America’s grading reports and the Rapaport price lists. The GIA grading certificates can actually help the trader’s profit, as the stones are usually priced higher with one. On the other hand, the Rapaport price lists have forced traders to accept terms that are not as favorable to them. The price lists are readily available to consumers and buyers alike. And the advent of technology, with the use of the Internet, fax machines, cell phones, and overnight delivery, has expedited trade between wholesalers, retailers and the consumer. The middleman gets squeezed out and fewer people are needed to complete a deal. And China and India have become huge players.

But for every son that decides to become a doctor rather than a trader, one will decide corporate life isn’t for him and will return to the family business. The more things change, the more they stay the same. And life and the Jewish trader will continue to work their deals on 47^th Street.

RESOURCES

Diamond Stories: Enduring Change on 47^th Street

Renee’ Rose Shield

Cornell University Press 2002

WWW.rac.org

Religious Action Center of Reform Judaism