Founded in 1888 by Cecil Rhodes with financing from Alfred Beit and N. M. Rothschild & Sons, De Beers built one of the most powerful supply monopolies in the history of luxury goods. By the early twentieth century, the company controlled roughly 90 percent of global diamond production, and Ernest Oppenheimer—who joined the board in 1926 and became chairman in 1929—consolidated that dominance into a worldwide distribution system. In 1889, Rhodes negotiated an agreement with the London Diamond Syndicate to purchase fixed quantities at agreed prices, allowing De Beers to restrict output during downturns rather than let falling demand destroy prices. Oppenheimer later summarized the strategy bluntly: diamonds became more valuable when they were made scarce.
The company used several methods to discipline producers outside its system. It attempted to force independent mines into its single sales channel, bought and stockpiled surplus stones, purchased diamonds when prices collapsed, and—when producers refused cooperation—released comparable stones into the market to depress the rivals' returns. The 1902 Premier Mine, which produced the 1905 Cullinan Diamond, initially resisted the cartel and sold through Bernard and Ernest Oppenheimer, exposing the vulnerability of De Beers's grip. During the twentieth century, the firm's practices attracted accusations of price fixing and anti-competitive trust behavior. Its attempted expansion into the United States during the 1960s and 1970s eventually forced it to divest American assets in 1975 because of antitrust concerns. De Beers's market share later fell from as high as 90 percent in the 1980s to about 25 percent in 2021, but its supply-control model permanently shaped the economics and mythology of luxury diamonds.
