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Diamond history: The problem of sources

09 september 2019

Diamond history: The problem of sources

“In 1949, the Soviet geologist Fainshtein found the first Yakut diamond. This is how a new page was opened in the history of the diamond Russia development as a leader in the world’s diamond industry.”

And finally on August 7, 1949, one of the geological field party headed by G. Kh. Fainshtein found the first Viluy diamonds and discovered a diamond alluvial deposit on the Viluy known as the Sokolinaya’ Kosa [tongue of land].”

“The country highly appreciated the diamond geologists’ achievements. In 1957, geologists A. P. Burov, V. B. Belov, G. Kh. Fainshtein, Yu. I. Khabardin, V. N. Shchukin, R. K. Yurkevich became laureates of the honorable Lenin Prize. The same year, a big group of the workers of the Amakinskaya geological field party were decorated with high state awards for the discovery and exploration of the primary and alluvial diamond deposits. M. N. Bondarenko, the Head of the Amakinskaya geological party and the discoverer of the Yakut diamonds G. Kh. Fainshtein, the discoverer of the Zarnitza (Summer Lightning) kimberlite pipe L. A. Popugayeva and others were awarded the Order of Lenin.”

“However, the happiness lasted till the day when Ruzhitsky finished his annual geological record and submitted it to the Vostsibgeolupravlenie with detailed description of everything that had happened on the Viluy. Now, the most interesting began - G. Kh. Fainshtein, alone or together with someone, I cannot say, sent a letter to Moscow to the Old Square where the Central Committee of the CPSU - it was no longer the VKB(b) - was located, in which he positively affirmed that Ruzhitsky was an ‘enemy of the people,’ and using his party membership card as a cover he ‘stole’ the findings obtained by the Irkutsk geologists from them and claimed those as his own results. This letter fell into the hands of a good acquaintance of V. O. Ruzhitsky, and after reading it, he did not forward it to the Lubyanka but invited Ruzhitsky ‘to have a talk’. It appears that the talk was rather long and after the talk, Ruzhitsky who turned gray went to the Ministry of Geology and asked to transfer him from the Siberian Platform to the Russian one where he worked successfully and could even defend his doctorate thesis. Since that time, his name has never been mentioned in the Amakinskaya geological field party. And Grigory Khaimovich Fainshtein was firmly considered to be a discoverer of the Viluy diamonds at the Sokolinaya Kosa. Running ahead, I would like to mention that Fainshtein’s name was not mentioned among the candidates for the Lenin Prize for the discovery of the primary diamond deposits by the management of the Amakinskaya geological party or by the Union’s Complex of enterprises No.2 or by the USSR Ministry of Geology and Protection of the Mineral Resources. Then, Grigory Khaimovich went to Moscow and headed for the Presidium of the USSR Academy of Sciences where Ruzhitsky was a chief of one of the departments and asked him to support his nomination as a prizewinner. A loud roar ‘Get out of here, scoundrel!’ was heard in the building of the Presidium of the USSR Academy of Sciences, which did not make Grigory Khaimovich lose his cool. He left Moscow and went to Yakutsk, where his friend was the second secretary of the regional party committee. The result was that G. Kh. Fainshtein became one of the Lenin prizewinners without opening neither alluvial deposits nor primary diamond ones!”

The most striking in the above citation records is that they were taken from the same book! A large two-volume book ’A diamond Book of Russia’ was released by the publishing office ‘Gornaya kniga’ in 2014-2015 with the purpose to ‘Show the place of Russia in the world’s diamond market and show the history of creation of the Russian rough and polished diamond industry’. While the aim declared was achieved partly only, the book is a significant contribution to the diamond historiography, the more especially as editors and many authors of this collection could not be taxed with dilettantism – those were the people who dedicated many years of their lives to the diamond industry and knew its finer points. However, as we see, the points of view even of the direct participants involved in the key events of the diamond history could be contrary.

Let us give one more quotation: “At all times, the diamond market was too narrow and specific - even when money was available, not always there was an opportunity to purchase the required quantity of precious crystals. The purchase of large parcels of rough diamonds was a real covert operation – the USSR used a rogue firm in Portugal for this purpose. However, in 1939, when World War 2 started, the British Intelligence closed this loophole, too. The Soviet Union was left without industrial diamonds. The government urgently initiated the exploration to find this strategical mineral - the old story had it that in 1940, Lavrenty Beria addressing the first geological field team from the All-Russian institute of mineral raw materials with words of encouragement promised to shoot them down by himself in case of their failure.” And this is not cheap literature. This was published on the official website of ALROSA!

I spent several years looking for the documents on the diamond topic in three Russian federal archives, in two archives of particular institutions, one regional archive as well as in the CIA’s archive. I can substantiate that the fragment cited is an accumulation of incongruous make-believe stories in every sentence. The USSR had no need to set up rogue firms ‘in Portugal’ or somewhere else, make illegal channels, etc. to purchase industrial diamond. Rough diamonds and diamond tools were bought absolutely freely, in fact, the purchases were excessive, which allowed the USSR to build up a huge strategic reserve by 1953 that enabled to satisfy the needs of the industry for the next 15 years. The British intelligence service were quite indifferent to the USSR purchases of rough diamonds before the War, and did not ‘close’ anything, and after the War, they actively supported the Soviet record purchases of rough diamonds directly from England. The first alluvial diamond deposits were discovered in the USSR back in 1937 by the artisan miners and not by geologists. In 1940, L. P. Beria was a People's Commissar for Internal Affairs and had nothing to do with geology on the whole and the All-Russian institute of mineral raw materials, in particular. The Beria’s signature was put on the ‘rough diamond’ documents for the first time in 1946 in connection with the case of the Teplogorsk diamond mine director M. F. Shestopalov.

Let’s sum up these two small examples: in the book published by the periodical most reputable among the miners, the prizewinner and order bearer Grigory Khaimovich Fainshtein was shown both as a devoted hero-discoverer and a mean swindler who misappropriated the discovery that he did not make, and the official site of the Russian diamond industry flagship miner translates the out-and-out false stories in the style of a pulp crime novel. That said, both sources cited, certainly, are considered as ‘authoritative’ ones for historians, columnist and journalists specializing in diamond issues. And these are just two examples, in fact, they are dozens and consequently, the researchers face the problem of the source reliability that arises to the utmost.

Publicly available source of the Soviet period (including the memoirs) can hardly give anything for understanding the real motives and mechanisms of the diamond industry development - they are just the embodiment of the industry legend ‘polished up’ by censors. For example, A. I. Mikoyan mentioned the ‘rough diamonds’ two times only in connection with insignificant episodes, and he had been supervising this industry for thirty years! The same was true for the A. G. Zverev’s memoirs who had been the minister of finance of the USSR for many years.

The today’s political essays can only be taken into account with big reservations, as practically they all bear the impress of the political environment and corporate factors. In fact, we have two valuable source arrays only: the post-Soviet memoirs of the direct participants in the establishment and development of the diamond industry, and the archive documents.

From 1991, a huge number of ‘diamond’ memoirs were published written by geologists, manufacturers, Soviet and party officials. Thanks to these memoirs, today we know in details who and how discovered the diamond deposits, set up the respective organizations and production units and mined the gems, as well as those who and how ‘stole’ the decorations and the prizes that were awarded for these heroic deeds.

However, there are no memoirs left by the people who were involved in the foreign contacts in the Soviet days, who accumulated and sold rough diamonds. I do not know the memoirs of the officials from the Ministry of finance, State Precious Metals and Gems Repository, Ministry of Internal Affairs, Ministry of state security, Committee of state security, Ministry of foreign trade, Kustexport, Soyuzpromexport, Amtorg, Ministry of foreign affairs, who directly co-operated with the representatives of De Beers and other global diamond market players. Some exceptions, probably, are the memoirs of V. V. Rudakov (Glavalmazzoloto), I. S. Alekseyev (Almazyuvelirexport) and E. M. Bychkov (Committee of the Russian Federation for Precious Metals and Precious Stones) published in the above mentioned ‘A diamond Book of Russia’, but this data is fragmentary and as for the rough diamond export-import operations, it refers to the late USSR period only. There also exist the memoirs left by Duke N. D. Lobanov-Rostovsky who represented the De Beers interests in the USSR since 1987, but this was an ‘outside point of view’ and also, unfortunately, rather superficial and fragmentary.

The situation with the materials of the Russian archives is similar to a great extent. Thousands documents are freely available related to the exploration and development of the Soviet diamond deposits, with the development of the national diamond cutting and polishing industry as well as the production of diamond tools, diamond synthesis and the application of diamond technologies. But the Gokhran documents (from 1927 on) on the export-import of rough and polished diamonds are completely confidential. And the ‘diamond’ documents of the Council of ministers of the USSR that can be the most serious source have one strange feature.   

The archive files comprising the regulations and executive orders issued by the USSR Council of Ministers were compiled as a three-layer ‘sandwich’, the text of a regulation itself (or of an executive order) was in the middle, it was preceded by a set of documents (normally, it was the correspondence of the agencies and institutions concerned) where the necessity of the respective decision taken by the Council of Ministers was justified, the decision’s drafts were discussed, additions and amendments were introduced and so on, and the final part consisted of the reports: how the decision was executed, if not – why it was not executed, etc. Often, the preliminary and final parts are more interesting to a researcher than the regulation itself as they have many details that allow imagine the situation fully and also form the further search tactics.

Here we have File No.288 “On handing over of 400 carats of small-size polished diamonds, 1,000 carats of cut emeralds and 3,000 emerald cabochons to the People's Commissariat of Foreign Trade for export” that is in Fund R5446 (the Council of ministers of the USSR) at the State Archive of the Russian Federation. This file contains extremely interesting executive order No.17681-RS by Mikoyan dated September 14, 1942 and authorizing the barter deal between Vneshtorg (Foreign trade) and State stockpiles division (UGRM) on the exchange of 400 carats of polished diamonds for 400 carats of rough diamonds of equal value. It’s worth mentioning that according to other archive documents, the Teplogorsky diamond mine at that time recovered exactly 400 carats (the minimal size was 0.5 ct). It is fair to assume that this document is an evidence of the preparation of the first export deal ever made in the USSR using the national rough diamonds and in view of this, the history of the Soviet rough diamond export has become 17 years older.

Regretfully, File No.288 consisted of … 1 sheet! The ‘filler’ - the content - remained from the ‘sandwich’ only, the text of the Mikoyan’s order itself. The document does not explain where these 400 rough diamonds equal to 400 carats of polished diamonds came from. And there is no data about who the buyer was. The document was sent out to the UGRM (where the Torgsin’s polished diamonds were sent to), People's Commissariat of Foreign Trade (trade operator), People's Commissariat of Non-Ferrous Metal Industry (Teplogorsky diamond mine), People's Commissariat of Finance (foreign currency accounts for export-import operations) and People's Commissariat for Internal Affairs (Gokhran and Guard Mail). As per the rules of compiling the archive files, the correspondence of all the above institutions had to precede the orders made by Mikoyan and the file had to be completed with the respective reports about fulfilling it. However, all this documentation was destroyed. And the buyer remained unknown.

One more example. File No.825 “On the development of the national diamond industry” stored in the same fund and containing a widely known Regulation by the Council of Ministers of the USSR No.1978-832ss dated 07.09.1946. The Regulation itself was on 5 pages, but there were 111 sheets in the file, voluminous correspondence, notes for the file, expert reviews, reports - the ‘sandwich’ principle seemed to be observed. Except one thing. Paragraph 20 of the regulation comprised the decision taken by the Ministry of Internal Affairs and Ministry of Geology to send the specialists to the South Africa to study the possibility of the diamond exploration and mining. What did the inclusion of such a point in the document signed by Stalin mean? Only one thing - the issue was thoroughly elaborated by the Ministry of Internal Affairs and Ministry of Geology and the receiving party, and the candidates, terms and the programme were co-ordinated and approved. In the USSR under Stalin, the performance discipline was extremely strict, especially taking into account that L. Mekhlis himself, the minister of state control, supervised the diamond industry, and this ‘bulldog’ had a zero tolerance policy for undiligent officials - without hesitation, he could strip not only of ones rank but take off the head if such a document was not executed. So, nobody could include an unsecured and uncoordinated point into such a regulation - one could pay a high price for this. That is why, the correspondence about this business trip, the programme, the candidates’ characteristics, the notes for the receiving party, reports should be in File No.825 … But there is nothing. As for all other paragraphs of the regulation, there are many documents, and as for para. 20 - nothing, everything was destroyed. It is really an unfathomable mystery - to whom the specialists in MIA’s uniform were going to, who mined diamonds in the South Africa in 1946?

From 1950 to 1953, Stalin signed about a dozen of orders on the purchase of industrial diamonds. The most interesting about these orders and accompanying documents were the code words to name the seller. The rough diamonds were purchased ‘abroad’, ‘in the capitalist counties’ (probably, in Portugal). And only once, there was a ‘blunder’ – in July 1952, S. Borisov, a deputy minister of foreign trade, mentioned London in his letter to Mikoyan as the place of the ’forthcoming significant purchases of industrial diamonds’. This Borisov’s letter was a rare exception, and in other ‘diamond’ archive files that are available to the public now, the documents specifying the main agent of the export-import operations were thoroughly withdrawn. Some signs show that they were destroyed during the declassification period and compiling these archive files from 1991 to 1995.

Why was such selective ‘weeding out’ of the Russian archives required and who needed this? Right answers to these questions are not possible without understanding the main reason of the monstrous secrecy level in the Soviet diamond industry. Look, for example, at the circumstances of the London deals in 1950-1953. The volume is huge – the purchases were by 3 to 5 times more than before the War. In the USSR, the deals were preceded by the order of the Chairman of the Council of ministers Stalin and the respective orders of the heads of the ministries and institutions concerned: Vneshtorg, Ministry of finance, Ministry of state security (Gohran). Physically, the deal was made in London, the rough diamonds were sorted and graded in the building of the Soviet Trade representation. The payment was effected via the bank accounts, the rough diamonds left England and were imported to the USSR with the appropriate customs clearance procedures, the parties paid all the due fees and charges and the results were recorded in the accounting documents. What could be secret here and from whom? Nevertheless, in the USSR, all the documents on these deals were top-secret, and the articles appeared in the English press about the Soviet smuggling from Africa, about the mysterious firms in Portugal, about the Lebanese traders and the suitcases full of rough diamonds for the Soviet diplomatic mail and so on.

The explanation of this paradox can be found in several CIA’s informant reports. Here is one of those dated June 7, 1950: «According to information of the Belgian Diamond Workers’ Association in Antwerp, the Soviet Union bought on the Antwerp market 8,000 to 9,000 carats of industrial diamonds per month up to the end of 1949. In January 1950, only 40 carats of industrial diamonds were purchased, while in February and March there were no Soviet purchases of diamonds at all. The following speculations are advanced in Antwerp diamond circles for the cessation of Soviet purchases of industrial diamonds: (1) shortage of foreign currency, (2) sufficient reserves, (3) discovery of diamond mines on Soviet territory, (4) manufacture of synthetic diamonds by the USSR, (5) another source of import which is more advantageous to the Soviet Union».

As for para. 5, the Belgian diamond dealers (they were also the De Beers sightholders) got it right. The USSR has shifted from Antwerp to London as the latter proposed the goods at a 17% lower price. Although, against the indebtedness that the Yakut deposits - about which London got to know, probably, earlier than Grigory Khaimovich Fainstein discovered them - would not be developed by the GULAG’s prisoners. Such friendly agreements should really be kept strictly confidential, and even better if their traces would be destroyed at the earliest opportunity. Otherwise, too many unpleasant questions would arise.

Summarizing this small historiographic review, I can suggest that ‘cleaning-up’ of the Russian archives on diamonds done purposefully, professionally and thoroughly, had also (may be, unexpectedly for those who initiated this process) some positive effect. If the documents are not found where they should be, we can hardly reconstruct many interesting details of the process, and it is a great pity. However, we obtain instead a methodologic vector that determines, with the mathematical precision, the place of the USSR in the world’s diamond history - the place of a manageable satellite of De Beers kept on a short leash.

Sergey Goryainov, Rough&Polished