Walk along West 47th Street near Rockefeller Center, and you're in a noisy bazaar that seems out of place in buttoned-down midtown Manhattan. This is the diamond district, the nexus of the $5.6 billion U.S. gem trade, where 95% of the stones coming into the country are bought, cut, polished, weighed, or sold. Strolling along the block, Hasidic Jews poke their heads into shops to ask whether merchants need any fresh diamonds. Barkers in sandwich boards coax shoppers into arcades jammed with tiny stalls. Inside, fast-talking jewelers swear everything is the bargain of a lifetime.
That's strictly penny-ante stuff. The real action takes place way above street level, in cutting rooms and private offices. In the heavily guarded Diamond Dealers Club bourse, scores of Hasidim, their coat pockets heavy with loose stones, sit at long tables and cut clandestine million-dollar deals with traders from Belgium, Israel, and India. All deals are sealed with a handshake and the Hebrew saying "mazal u'bracha"--luck and blessings. "The street has its own culture. You almost need a passport to work here," says Martin Rapaport, an influential broker.
In the back, the Hasidim now mingle with an occasional Indian or Asian. They play gin rummy and chess, smoke thick cigars, and schmooze. A poster of a Jackie Mason performance hangs next to "wanted" posters identifying at-large criminals the security-obsessed diamond dealers should keep a lookout for.
But the occasional heist is not the district's big worry. The world diamond market is taking a beating. DeBeers Consolidated Mines Ltd., the huge South African cartel that controls about 80% of the international trade, saw sales slip 13% last year. An investment-grade one- carat stone that wholesaled for $63,000 in high-inflation 1980 goes for just $13,500 today. Carat volume has held steady, but the market is increasingly in smaller stones--some just one one-hundredth of a carat--which are cut in low-cost diamond centers in India, Israel, Malaysia, Thailand, and China.
That shift to modest stones threatens the survival of 47th Street's cutters, renowned as the finest in the world. Their labor is expensive, about $200 per finished carat, so only the best stones are cut here. From 1980 to 1992, the annual volume of raw stones imported for cutting dropped 50%, to $496 million. And the number of diamond-district cutters has dwindled to 250, from about 2,500 in 1980.
Richards, as one cutter insists on identifying himself, has been at it for 40 years. His cluttered workshop overlooks Rockefeller Center's ice-skating rink. He and a handful of elderly colleagues spend weeks and even months crafting brilliant shapes out of diamond roughs, which arrive looking like octahedrons of frosted white glass.
Richards has just spent months crafting a flawless heart-shaped 20-carat stone the size of a peach pit, which should retail for about $1.5 million. One of his four sons has followed him into the trade, but Richards says it's tough on novices now. "In my time, I went out and bought myself some diamond," he recalls. "Diamond was cheap at that time, and I learned on my own stones. If I made a mistake, it was my loss. These beginners, they cannot afford to buy this kind of stone," he says, jiggling a large rough diamond in his sooty hand.
By contrast, there are 500,000 cutters and polishers in India alone. Labor is so cheap--about $80 a month--that low-grade diamonds once used for industrial purposes are being cut. India and other countries pour huge subsidies into their growing diamond industries: Israel's fortresslike Ramat Gan compound, near Tel Aviv, is a high-tech, 600,000-square-foot free-trade zone.
'NEW YORK IS SHAKY.' It's a struggle to keep the Manhattan street shopper-friendly. Two police booths, erected at the expense of a 47th Street trade association, are usually vacant. Fear of crime drives many middle-class shoppers and foreign dealers elsewhere, even though street crime in the diamond district is relatively rare. Add in high taxes and the other hassles of doing business in New York, and many see the light going out of 47th Street. "New York is shaky," laments Rapaport, the diamond broker. "The players, if 100 of them left New York, this industry would be finished. There would be nothing here. The diamond industry here would be like the diamond industry in Ottumwa, Iowa."
While 47th Street boosters pooh-pooh talk of a decline, office-rental rates are half what they were a few years ago. If the cutters vanished altogether and lots of dealers moved to Ramat Gan, it would be a crippling blow to the district. A diamond may be forever, but West 47th Street may soon be a footnote in New York's history books.