The NYC diamond district: A window into the past
In 2019, acclaimed filmmakers Josh and Benny Safdie released an electrifying thriller called “Uncut Gems” about a charismatic NY jeweler in the famed Manhattan diamond district. While the district isn’t an area of high-stake bets and chaos, the film captures the hectic pace, energy, and vibrance of the famous bustling commercial stretch on Manhattan’s 47th Street between 5th and 6th Avenue. This small part of the city is a sanctuary that has maintained an inimitable way of life in a trade economy based on personal exchanges where a handshake seals a transaction.
A unique economy
The NYC diamond district comprises over 2,600 jewelers and wholesalers selling and buying diamonds, gemstones, gold, and fine jewelry. The district has survived much during its long history, from urban decay to renewal and gentrification. It has endured the rise of e-commerce and modern finance, defied financial booms and busts, and adjusted to global migration flows.
In his book, “Stateless Commerce: The Diamond Network and the Persistence of Relational Exchange”, Barak Richman, Katharine T. Bartlett Professor of Law, Duke University, explores how despite being surrounded by complex financial institutions and skyscrapers, the diamond district withstands the powers of economic change and continues to thrive and operate “as an ethnic marketplace that operates like a traditional bazaar.” He explains that this “old world” continues in NY city’s heart because its pre-modern economic mechanisms enable the diamond buyers and sellers to thrive in this century. Their means of business is essentially an evolutionary response to the diamond industry’s particular demands and difficulties.
Through the times
From the mid-19th century up to the 1920s, New York’s diamond center was in Maiden Lane, four blocks north of Wall Street. Then, wealthy banks began pushing up rents and the diamond business moved up town to its current location.
The importance of 47th street grew considerably for diamond merchants seeking refuge in New York during the Second World War. When Israel and Belgium became diamond hubs, the industry was led primarily by Jewish dealers from Tel Aviv, Antwerp, and New York. During the 70’s one could hear Hebrew, Yiddish, and U.S. English in the NY diamond district. In the 1990s, many Indian diamond merchants entered the business, ultimately making Mumbai the modern diamond industry’s capital.
Today, although the faces have changed, the way business is done has stayed the same. The diamond district is still a cramped retail island with backroom manufacturing and streets filled with diamond merchants (diamantaires) from all over the world negotiating on the sidewalk, talking on cellphones, holding briefcases cuffed to their wrists, and sealing deals with a handshake.
Since diamonds are so costly that a handful could easily exceed thousands of dollars in value. Diamantaires seldom have enough liquid assets to pay for stones in cash, so they rely on buying on credit, which exposes sellers to massive risk of theft. Also, there is no legal recourse for the business. So, from where does this trust come? The importance of reputation. The punishment for cheaters who do not pay is public exposure by trade associations. These people are shunned by the entire industry and disgrace their families. Those with unblemished reputations can enjoy a lucrative business that they can pass down through the generations.
Bottom line, the real treasure of the NY diamond district is trust!
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