“Love the trade which you have learned, and be content with it”
– Marcus Aurelius, Emperor of Rome, 161 – 180 A.D.
Old World Bazaar
The 2019 Netflix film ‘Uncut Gems’ is set in New York City’s 47th Street neighbourhood, where million-dollar deals are sealed by handshakes. A diamond jeweller played by Adam Sandler, frantically tries to cover his bad business bets by making bigger ones.
The film brilliantly captures the manic energy of New York’s Diamond District. With its barter economy, this small slice of the city has sustained a unique way of life. It has withstood the rise of modern finance and e-commerce, and adapted to the flows of global migration.
Manhattan’s significance grew as refugee diamond merchants fled to New York during World War II. When Belgium and Israel established themselves as diamond hubs, the industry was dominated by Jewish merchants moving between Antwerp, Tel Aviv and New York. In the 1970s you would hear as much Yiddish and Hebrew as American English. In the 1990s, a surge of Indian diamond merchants entered the industry, making Mumbai the capital of today’s diamond world.
Business practices have remained unchanged – a 17th-century industry in the middle of a 21st-century city. On 47th Street today, you’ll see ultra-Orthodox Jews wearing black overcoats and fedoras alongside south and central Asians with polished moccasins.
Diamond merchants openly do business on the street, negotiating terms for bundles of gemstones, like fruit-sellers in an open-air market. Others bark on cell-phones and hold briefcases handcuffed to their wrists, sealing deals using a coded language.
Practically all diamonds on 47th Street are new ones. They arrive in New York by multiple pathways. The diamond giant DeBeers mines stones in Africa and then sells them uncut in London. These are resold in Antwerp. Then most go to Mumbai and Gujarat, India for polishing and cutting, before arriving at 47th Street, where they are sold to dealers.
NYC’s jewellery quarter is a network of middlemen, buying and selling large batches of diamonds. Traders rarely pay for stones in cash. They rely on credit.
Other industries can use the law to secure their sales of expensive items. Banks attach mortgages on homes, which enable recovery if payment is missed. But none of these modern instruments are available to diamond sellers, meaning that if a party were to cheat, there is no legal recourse. Diamond sellers operate outside the law.
Your reputation is all you have. Merchants trust each other not to walk away with the world’s most valuable, easily concealed commodity. Mutual trust is “the real treasure” of the diamond industry.
My word is my bond
The industry imposes economic sanctions on those who fail to uphold their financial obligations. A trade association publicises anyone who has cheated. A bulletin board – like the “Wanted” posters in the Old West – displays pictures of individuals who haven’t paid their debts. They’re shunned by the industry.
Also, communities tend to police their own operations. Family businesses form the backbone of the industry – reputations are inherited. Those who break the code of trust bring harm to the reputation of their family. Many plan to bequeath their lucrative businesses to their children. They’re also sources of employment for extended family and ethnic compatriots. There is so much to gain by everyone behaving honourably.
It allows old world commerce to outperform modern capitalism on its home turf – and the Diamond District is a reminder that family businesses and community enterprises still have a place in the 21st century.
(Source: Barak Richman, Professor of Law, Duke University)
James Neophytou
