In geology, diamonds are pieces of carbon crystals that were squeezed for eons, deep inside the earth's crust, and then pushed toward the surface by volcanic eruptions. But diamonds are more — they're symbols of devotion, fidelity and wealth. Diamonds used to be extremely rare. That's why they were the prized property of kings, queens and conquerors. But all that changed in the late 1800s when prospectors found huge diamond deposits in southern Africa.

This is the story of the most enduring cartel in modern history.

On a recent morning in New York City, Tiffany and Co. held a breakfast extravaganza at its premier emporium on 5th Avenue and 57th Street. Tuxedo-clad waiters carried platters of champagne, a jazz combo played cool, quiet sounds, all a backdrop for stunning models who glittered with mesh filigrees of diamonds. With price tags soaring to nearly half a million dollars, the jewelry was part of Tiffany's new collection, called "Lace."

Outrageously expensive diamonds like these are a Tiffany hallmark — but their full pedigree leads far away to the mines of southern Africa. Tiffany's icon, a 128-carat, canary-yellow diamond called simply The Tiffany, was discovered in the 1870s at the Kimberley mine in South Africa. The diamond-encrusted mines at Kimberly became known as kimberlites. And their discovery set in motion huge mining operations that continue to this day, offering the once-rare gem to millions upon millions of ordinary consumers.

"The first effect of discovering kimberlites was that it converted diamonds from a rare gem to an industrial product like copper or any other product that you can mine," said writer Edward Jay Epstein, whose 1982 book The Diamond Invention cast a sharp light on the diamond trade.

Epstein says the discovery of kimberlite mines touched off a frenzy that propelled thousands of prospectors into fierce competition. And when the kimberlite gems hit western markets in the late 1800s, diamond prices plummeted from 500 dollars to ten cents a carat.

At that stage, a young man named Cecil Rhodes, who would later help build British colonial Africa, saw an opportunity. "Rhodes saw that if all the miners put their shares together and formed one company there wouldn't be the kind of competition that was causing the leaks or the price falling," Epstein said.

With diamonds increasingly abundant, Cecil Rhodes founded the De Beers Mining Company as a group — or cartel — of diamond producers. The first aim of the cartel was to control production — if too many diamonds hit the market, prices would again plummet. By rewriting the equation between supply and demand, and calibrating that equation itself, De Beers became the most successful cartel of the 20th century.

By 1900, after knocking out competitors and buying up surplus, De Beers controlled an estimated 90 percent of the world's supply of uncut or rough diamonds. It was a fierce juggernaut.

"It was a ruthless, autocratic, dictatorial and in every way, a non free-trade kind of system," says Matthew Hart, a Canadian mining expert and author of Diamond: A Journey to the Heart of an Obsession. "But the actual material, the mystique, the gem let's say, thrived under the De Beers system. It did very well and held its value. And because De Beers controlled the supply, the illusion of the value of diamonds was sustained." Hart said that De Beers first courted colonial rulers and then their African successors. Gun-toting mercenaries defended its empire.