For an institution that turns the grand old age of 75 this year, the Diamond Dealers Club of New York had an inauspicious beginning. Its founder, Harry Sigman, wanted a bourse in New York that replicated the diamond exchanges in Europe, because—according to legend—he found a diamond in his pants one night and wanted a place to trade it safely and securely. The club’s first meeting in 1931 attracted only 12 people, but it was enough to draw up articles of incorporation.
A generation later, the DDC became the hub of the New York diamond industry, and it remains an important trade institution today. For the Diamond Dealers Club’s 75th anniversary, JCK spoke to a variety of people about their memories of the club. Some of these interviews are also featured in a booklet that was given out at the club’s anniversary dinner last month. Many of the interviewees have been members for more than 50 years and received a special honor at the DDC dinner.
The first club was at 80 Nassau St., which at the time was the center of New York’s diamond trade. Its first year’s expenses amounted to less than $2,000. The original club was not as big, or as noteworthy, as it is today. It outgrew its first headquarters in three years and moved down the street to 93-99 Nassau.
Saul Nathanson, arbitrator: The Nassau Street was a very small club, with a small membership, maybe 100 people.
Leon Finker, veteran member: They didn’t have an automated elevator. You had to pull on it with your hands. But it had a great restaurant. The food was delicious.
The Diamond Dealers Club received a big boost from the Second World War. Many Jewish refugees from Nazi persecution in Europe who were schooled in the diamond business settled in New York. Many were instrumental in harmonizing the rules of the New York Club to the rules of the bourses in Europe, including the now-standard bylaws regarding ethical dealing and settling disputes through arbitration.
Sam Schick, former club secretary: There was a big boom in New York in the 1940s. There was no cutting in Europe, and there was a real shortage of cutters in the United States. But then after the war, Belgium said we want the cutters back. They give them the funds to buy rough and were able to reestablish the cutting industry. Antwerp reestablished itself, and all the small goods that were cut here went back to Antwerp. From 6,000 cutters in 1944 we went down to 1,000. That was the end of the first boom.
After the war, a lot of refugees came into the business. Some of them didn’t speak much English, so they cut diamonds. In Europe, they were accountants and lawyers. And sometimes they left the business once their command of the language got better. One of the guys I used to cut with eventually became my lawyer. Eventually, the refugees took over the business. The Herman Davids, the Louis Glicks, the E. Schreibers all became sightholders. The club was very important then, but it was a small club.
In the 1940s, the Diamond Dealers Club got a sibling—the Diamond Center (later the Diamond Trade Association and then the Diamond Trade and Precious Stone Association), which closed in 1998. The DTA was started by mostly Belgian and Dutch immigrants who wanted their own institution. It was the first bourse to move to Midtown, where it was closer to jewelers like Tiffany and Harry Winston. The DDC soon followed and established itself at what is now the heart of New York’s diamond business—47th Street.
LF: When the club first moved up to 47th Street, all the shops on the street were elegant tailors. When I moved into my office, it had an enormous table; it had to be sawed in half.
Throughout the 1950s and 1960s through the 1980s, the DDC experienced rapid growth. The demographics of the industry began to change, and Hasidic dealers became a major part of the diamond trade. Membership grew from fewer than 100 to nearly 2,000. At that time, the DDC wasn’t just a place to do business—it was the business.
Ray Perlman, former club vice president: When I first started coming to the club, it was always crowded. There was always a lot of hubbub with brokers running around. The tables were always full and everyone knew everybody. It was important to be in the club. It wasn’t easy to be a club member. You needed endorsements.
Martin Rapaport, price sheet publisher and former DDC director: The clubs were fantastic in their heyday. It was business from morning till night. People would wait on line to make sure they got a table in the morning, and they would literally buy and sell diamonds all day. And people would argue and fight and haggle, and it was just amazing. You didn’t mess around with a memo and credit and a million problems. You went to buy a diamond and you could buy it, bang! It was a real marketplace.
LF: For a long time the busiest day in the club was Saturday. All the diamond cutters worked all Fridays, and Saturday you would try to sell the diamonds. But when they took in more [observant Jews], they voted to stop Saturdays.
During that period, New York was still a major manufacturing center, with thousands of cutters and more than 10 sightholders.
LF: The whole world would come to New York to buy—from Mexico, from Italy.
SS: When I started, it was easy to get established in this business and prosper in it. At that time, rough was very available. We had 10 dealers that got a dealer’s sight in America. I had a wide choice and could find out the best pieces. That’s how you learned the business—by looking at stone after stone. I don’t know if you can do that anymore.
In the 1970s came one of the most unsettling roller-coaster rides in the club’s history—the late ’70s boom followed by the early 1980s crash.
MR: Real interest rates in the mid-1970s were low. If you had money in the bank, you didn’t do well. People wanted hard assets, so they bought diamonds and gold and collectibles
RP: The late 1970s were almost mythological. You could buy something in the morning and sell it in the afternoon for a profit. Diamonds were very liquid; anything you bought was salable at a price. The peak for D Flawlesses went up to about $65,000 a carat. The prices would go up with each new price list and each new sight. You didn’t have to be smart; whatever you bought went up.
Isidore Schindelheim, veteran member: The stock- market people took over. A lot of people who had no love for diamonds came into the business.
SN: I had a psychiatrist in Tennessee who bought diamonds. I sold diamonds to a Viennese guy who sold pools. I had a folk singer buying diamonds. It was crazy.
In the early 1980s, the Federal Reserve raised interest rates. Suddenly, holding inventory was a lot more expensive, and many of the short-term investors migrated to other businesses. The result was a slow—but eventually dramatic—spiral downward. From a high of $64,000 per carat, D Flawless diamonds went down to $16,000 per carat.
RP: Everybody felt it would never end, but by 1981, the bottom started to fall out. It started slowly. Things just deteriorated. You would wake up one morning and you wouldn’t make the top price that day. And each succeeding day seemed to go a little worse. Then the mindset began to change. It was a bubble—just like the tech bubble.
LF: People would say they would pay after 30 days, 60 days; but after 30 days, the value of the stones would go down: How could you pay? The DDC had a lot of arbitrations then, oh boy—one every week.
IS: It took a little time for things to settle down. There was a lot of backing from De Beers, and that gave people confidence again. People licked their wounds, took their losses, and slowly started again. They became realistic about working on a smaller level of a profit, and it became a business again.
One of the most notorious political brouhahas in the club’s history happened in this period. Martin Rapaport began publishing his price sheet in the 1970s as prices rose. But in the 1980s, with prices going down, the DDC began to see the list as part of the problem.
MR: When the market crashed, it was bitter, it was upsetting, people were unhappy—and they were particularly unhappy with me. Goods are falling, and the banks were calling people up, saying you owe me 22 percent interest. People were under tremendous pressure to sell. And on top of that, my prices kept going down. I became kind of like a scapegoat.
There was a resolution at the WFDB Congress at Grossinger’s that outlawed price lists. But I kept publishing. [Around this time] I gave an interview to a consumer’s magazine, where I said, in relation to dealers who dealt with companies like [investment company] International Diamond Corp., “Morals, ethics, feh.” So the club latched on to that as an excuse to throw me out, for putting a bad face on the diamond industry, but they really threw me out because we published prices.
It became a big deal. I sued the club and was eventually reinstated by court order. In those days, when the club said you were out, you were out; no one had ever taken them to court before. And to make things more interesting, the FTC ended up hiring me as an expert witness against IDC.
I think that was a big moment in the club’s history, because the club realized it had to enter the modern era. It couldn’t just be a law unto itself.
RP: The whole thing should never have happened. Rapaport is like Tucker, who fought the big automakers. Except Tucker lost. Rapaport’s still around.
The club has not always been just about business. The DDC has always been a very real—and vibrant—democracy, and the leadership of the club has always been the subject of much interest and debate.
RP: The boldest thing I ever saw in the club was when Bill Goldberg became president. Before that, Stephen Korngold was the perpetual president. He was elected again and again. He was an icon, and he ruled the club with an iron fist. But Bill Goldberg went after him. He mounted a tremendous campaign. He had speakers on trucks going down 47th Street—it was quite a campaign. Bill won and at the same time the club voted in the term limits. The club survived and Bill did a wonderful job.
MR: A couple of years after I was kicked out of the club, I was elected to the board of directors as kind of an outsider. One of my main things was to promote transparency—I wanted the club to publish its minutes and its budget. For a long time, all the votes on the board were 19–1 against me. And then finally I remember Marvin Samuels said on one vote, “I’m afraid Rapaport may be right on this one.” And that was the first vote that was 18–2.
And then things begin to turn. Later Eli Izhakoff got elected president and endorsed transparency and many of the things that I talked about.
Jacob Banda, current president: I won my first election by four votes. I wanted to be the kind of leader who doesn’t forget what it’s like to be one of the people on the floor. Probably the most interesting part of my job involves dealing with the members. You don’t need opinion polls in the diamond club; if something goes wrong, you hear about it.
Eli Izhakoff, former president: Being president, you’re kind of like the chief rabbi. Everyone comes and tells you their problems. But you learn from everybody, and it makes you much wiser.
MR: Working on the board, I learned a lot. There were some problems with politics, but ultimately the directors and officials were people who cared about the diamond industry. They had a sense of mission and giving back to the community, and that’s a very positive thing.
As the club turns 75, it seems to be showing its age. New York is no longer a manufacturing hub, and the club is not the central meeting place it was in its glory days. Some think it faces an uncertain future.
Sylvain Ringer, current secretary: Everyone talks about the past, how good it was. But we have to think about the future. I think the bourse system still plays an important role in the diamond world. We have the regulations, we have our traditions, we have more than 100 years’ experience.
The bourses have to open the door to the new generation of people coming into our business—mostly from India. You go to the bourses in the world, there is a real lack of young people. And there are young people in this business. But it is no longer an automatic thing for young people to join a bourse.
MR: I’m not convinced that the era of the diamond clubs is ending. The era of true commodity diamond exchanges may be just beginning. They may be electronic, but I believe we can bring a lot of that back.
Elliot Krischer, current treasurer: A lot of business is done today on the DDC’s electronic trading platform. We have almost the same amount of virtual members as we do regular members.
MR: The challenge is: Can clubs adapt? They are trying. What we have to answer is, Is there a real diamond community or are we living in a world of each man for himself? And what values do we share in terms of a community, and what rules as far as ethics? In a certain way, the diamond industry has regressed because it no longer has the central marketplace it used to. How much poorer we are for that.
Background material for this article came from two books: The Diamond Dealers Club: A 50-Year History by Albert Lubin, and Connections: A Profile of Diamond People and Their History by Russell Shor.