World Clock
Hong Kong  22:36
New York  10:36
Mumbai  20:06
Jerusalem  16:36
Brussels  16:36
Moscow  18:36
Home > Israeli Diamond Industry > History > 1940s


The Israeli Diamond Industry in the 1940s

By Shira Ami

The establishment of the diamond industry and its rapid development at the time of the Second World War were unprecedented in Palestine. Within a short time, the town of Netanya became Diamond City, where the country’s largest diamond manufacturing center developed. A second diamond center, in Tel Aviv, was soon to follow


Zoltan Kluger -Courtesy of the Government Press Office


Ramat Gan in 1947

The small plants that had been set up in Palestine grew and prospered and soon became full-fledged factories. Thousand of workers rushed to the industry to learn the profession and find employment. The salaries paid to diamond workers were among the highest in Palestine. The factory owners had little trouble selling their entire output of polished diamonds, whatever the quantity. All factories received direct supply of rough diamonds from the CSO, and they all processed the whole range of diamonds, from the tiniest to the largest.

The London CSO supplied the rough at set prices, which had no relationship to the price of polished. In fact, at that time, Palestine was the only customer for rough diamonds.

A Change in Attitude

The British government demonstrated strong support for the diamond industry at the time, when the Palestinian lira was equal in value to the English pound. The factory owners enjoyed large profits, which were invested in land, groves and other industries. The diamond industry in Palestine became a tremendous economic lever, and the British coffers benefited.

However, in 1942, the colonies office in London issued an order severely encumbering the establishment of new factories. Nevertheless, the growing boom in trade and exports continued to encourage development. The diamond industry reorganized into large factories, employing 100-200 workers each. Each factory had a central administration that controlled all the departments. The owners at the time were entrepreneurs, and the factories were managed by professionals. When the British authorities imposed harsh controls and prohibited the opening of new factories, diamond workers began to process diamonds at home and on the roofs of their buildings, and had to hide from the police.

The First Crisis

With the end of the Second World War, in 1945, polished diamond exports from Israel had reached about 16 million dollars. The CSO began redirecting rough to the Belgian center, which resumed intensive operations in an effort to reclaim its place as world diamond leader. The Belgian diamond industry did revive, as expressed in their organization of the first world diamond congress in Antwerp (Israel was represented).


Zoltan Kluger -Courtesy of the Government Press Office


Ramat Gan in 1947

As a result of the transition in the US from a wartime economy to one of the era of peace, the price of polished in that country plummeted. Within a short time, the value of diamonds dropped by fifty percent. As the Belgian center recovered, diamond centers that had opened during the war – Cuba, Mexico and Brazil – were forced to close. The diamond industry in Palestine was also at risk. Almost all the diamantaires in Palestine suffered losses. Those who held large inventories were hit particularly hard.

The members of the IsDMA executive board and the diamond manufacturers were not really diamantaires, but entrepreneurs, investors and capitalists, who didn’t want to lose their money. The subsequent dismissal of employees led to closure in late 1946 of most of the factories. More than 4,000 workers who had become accustomed to two and three times the average salary in the market, found themselves unemployed. This marked the end of the first phase of the Israel diamond industry.


The diamond industry was revived mainly by workers, who had learned the profession, and foremen, who now ran the factories, in addition to a few entrepreneurs. They organized into small groups of 10-15 employees. The veteran factories requested that the CSO supply them with rough, and the new groups began purchasing rough on the free market.

By mid-1947, hundreds of diamond workers had organized into several factories. They got their rough from the IsDMA, but now it was distributed to the diamantaires themselves, and not divided by the IsDMA according to the number of employees or other formulas previously applied.

When the UN announced its decision to partition Palestine and end the British Mandate (November 2, 1947), most of the diamond workers had joined one of the underground movements dedicated to the national goal of establishing a Jewish state. Many of them were unable to work in the diamond industry on a daily basis. Thus on May 14, 1948, when the State of Israel was declared, some 1,200 of the 2,000 diamond workers were recruited to the IDF, the fledgling nation’s official army. Only about 800 remained in the diamond factories, through an arrangement with the defense authorities.

Source: HaYahalom - State of Israel Jubilee edition

By: Shira Ami
© Copyright 2014 Israel Diamond Institute. All rights reserved
Terms of Use Privacy Policy
Israel Diamond Institute ewave
Access the Israel diamond institute portal
registred members
Forgot your password?