KIMBERLEY, South Africa -- In a modest, two-story brick building here is the headquarters of an empire that doles out diamonds to the world the way the National Football League hands out franchises to American cities -- with absolute authority.
De Beers is the name on the highly polished brass plaques outside the well-worn wooden doors, the name of a poor dirt farmer now associated with the world's most sought-after gem.
Johannes Nicholaas De Beers, an Afrikaner who came to this dusty plain for the privacy and solitude so precious to the Boer, sold his farm in the 1870s for about $10,000 when it was overrun by thousands of people digging up the world's richest diamond find.
The name might have been forgotten forever if Cecil Rhodes, the 19th-century adventurer and entrepreneur, had not chosen it a few years later for the corporation that finally gained control of the mines in Kimberley and eventually of the world.
Rhodes used his riches as a springboard to empire building, getting a country -- Rhodesia, now Zimbabwe and Zambia -- named after him.
Ernest Oppenheimer, who was sent out from England by a London diamond brokerage house around the turn of the century, eventually went on his own and consolidated gold mining enterprises under the Anglo-American Corp. and took over De Beers Consolidated Mines Ltd.
A worldwide web
Today, De Beers is a complex and lucrative worldwide web that controls 80 percent of the world's diamond market. The Oppenheimers are still deeply involved in running their company and the cartel.
De Beers' control of the world's uncut diamonds depends on a concept called "single channel marketing," which basically means that if you are going to buy diamonds, you have to buy them from De Beers.
Most of the purchases are made in London at the De Beers Central Selling Organization.
Authorized diamond buyers show up about 10 times a year for what are called "sights." Although there are U.S. "sight holders," as the authorized buyers are known, the sales could not be held in the United States because of antitrust laws.
Placing orders for several million dollars' worth at a time, the buyers request diamonds of certain sizes and color and quality. The De Beers' representative hands them a velvet pouch in a shoe box-size container holding the diamonds.
There is no negotiation over the contents or the price. It is a take-it-or-leave-it proposition.
"It's like offering a box of chocolates," said Alan Campbell, deputy general manager of De Beers Centenary in Russia. "You get your orange creams, but you have to have a few nuts and toffees to balance it out.
"If you allow people to come and pick out the best, you'll be stuck with some."
Facing uncertainty of a post-apartheid era in South Africa, De Beers Centenary was established in Switzerland in 1990 to run the De Beers interests outside of South Africa.
The De Beers Central Selling Organization is set up to deal with diamond gemstones.
Much of the world's diamond production is used for industrial purposes, and separate arrangements exist for the distribution of industrial diamonds.
Control of the sort De Beers wields is possible only with the cooperation of such diamond-producing countries as Russia.
When diamonds are found anywhere in the world, if De Beers didn't make the find, it is soon on the scene, welcoming a new producer country to the diamond club.
One of the biggest recent diamond finds was in Australia, which was ready to start producing by 1982 and was part of the De Beers cartel before the end of that year.
The producer trades freedom for security, discarding the possibilities and volatility of an open market for a reliable return, assured of help from De Beers when the market becomes glutted or depressed.
Despite the potential of short-term gain from selling independently, members of the club have rarely broken out.
Costly clout
But maintaining its clout can be costly for De Beers.
In 1992, when peace briefly broke out in Angola, former soldiers swarmed over diamond fields.
De Beers dispatched its representatives to stop the leak. It cost De Beers about $500 million to make sure that the Angolan diamonds didn't upset worldwide pricing arrangements.
The problem with Russia today is not the first between that country and De Beers.
There was a similar emergency more than 60 years ago, when the new Bolshevik rulers of Russia were selling off the diamonds confiscated from that country's ruling elite.
L De Beers spent millions buying them to maintain its control.
Control is particularly strict in South Africa. If you find a diamond in your back yard in South Africa, you have to take it to the police. They will then see that it is sold through a licensed dealer.
The official De Beers line is that tight control is needed for a commodity like diamonds.
"Diamonds aren't like wheat or coal," explains Brian Roodt, a company spokesman at the Kimberley headquarters. "People have no real need for them.
"If the economy goes bad, the demand for diamonds plummets. Control is needed to keep price stable."
Those against the cartel's monopoly argue that, as with any other intrinsically worthless, aesthetically appealing product -- a bottle of first-growth Bordeaux wine, for example, or an Impressionist painting -- diamonds would find a true market value if free enterprise were allowed to flourish.
But in defense of the unusual monopoly, Mr. Roodt borrows an oft-quoted remark by Harry Oppenheimer, former De Beers chairman and son of the founder.
If the cartel amounts to a monopoly, Mr. Oppenheimer asserted, "There is no one concerned with diamonds, whether as producer, dealer, cutter, jeweler or customer, who does not benefit from it."
In most monopoly situations, the customer loses, but with diamonds the buyer wants the gem to be rare, the price to be high and get higher.
"If diamonds did not cost a certain amount, it is not clear that the ladies of the world would want to put them on their fingers," said Hilton Ashton, who analyzes the diamond industry for the Johannesburg financial firm of Senekal, Mouton and Kitshoff.
"What is a diamond worth?" he asked. "No one really knows. But if there were a free market, I think the price would be lower than it is now."