Part 42

Diamond Merchant Harry Winston had purchased the stone for $700,000. He had turned it over to Grasseley to divide, and the cutter’s first important move would be to split the giant stone with a blow on the blade of a knife. If the diamond split smoothly, then the rest of the job would be relatively simple.

For weeks, hour after hour, Grasseley studied the Vargas, searching for the “grain” of the diamond. He looked for a hidden flaw which might cause the stone to burst into fragments, but he could find none.

At last Adrian Grasseley knew what had to be done. He would cut a small V-shaped notch at the precise point at which he intended to split the stone. Into this notch he would place a dull-edged knife. If his calculations were correct, a blow on the knife would cleave the diamond as truly as a piece of fine wood splits along its grain. If the blow were too heavy, or if he had misread the diamond’s structure, then the Vargas might shatter and a fortune would be lost.

On the night before the blow was to be struck, Grasseley did not feel any undue nervousness. His hands were steady and he congratulated himself on being relaxed. But he could not sleep. He turned and twisted in his bed, and he listened to the grandfather clock in the hallway toll the quarter hours.

“What is the matter with me?” he muttered irritably. “I am not nervous and I have not been worrying about the Vargas.” It was almost dawn before he dropped off to sleep.

The diamond cutter slept for only two hours. Then he hurried to the small room at Rockefeller Center where the diamond waited. All morning he worked to cut the small notch. He had lunch. And at 2 P.M. he was ready.

Only Harry Winston and a diamond polisher were in the room with Grasseley when he placed the diamond on the table. He carefully inserted the edge of the knife into the notch and, holding his breath, he rapped the knife with an iron bar. The only sound was the ring of the bar on the knife.

The Vargas didn’t split. In that instant Adrian Grasseley felt only numbness. His calculations had been wrong.

Winston grabbed the stone and examined it under a magnifying glass. He saw at the point of the V-notch a small fracture in the stone. It wasn’t deep. But it was straight and true along the grain as Grasseley had planned.

Winston handed the stone back to Grasseley. “Strike it harder,” he said. “It’s all right.” It was a decision which could cost him a fortune but he had confidence in the gray-haired man beside him. Winston had seen Grasseley involuntarily soften the blow when he struck the knife with the iron bar and he could understand the fear that must have gripped him.

Again Grasseley placed the knife in the V and struck it with the rod. The fracture deepened. And when he struck the third blow, the Vargas split cleanly without even the loss of a fragment of the stone.

Winston heaved a sigh of relief, and when he looked at Adrian Grasseley he saw that the little diamond cutter was crying. The reaction to the weeks of strain had been too much.

The story of the Vargas diamond is only one among thousands of stories of suspense, excitement, glamor and intrigue in the world where diamonds fire the imagination of men and women and form the basis for a giant industry. And because the diamond trade is big business, it becomes the concern of the Customs Bureau.

The Vargas entered the country through one of the most unusual workshops in all the country, located in the nondescript, sprawling Customs building on Varick Street in lower Manhattan. The door to this room is never left unlocked. No one is permitted to enter the room unless he carries a pass or has special permission.

The reason for the extraordinary security is that the room is one of the most important clearing points for diamonds in all the world. It is the workshop of the Customs experts whose job it is to appraise the value--and determine the duty--on the diamonds, rubies, sapphires, and other precious and semi-precious stones which are brought into the United States.

Approximately $75 million worth of cut and polished diamonds enter the United States each year, along with $75 million to $100 million worth of rough diamonds and other precious stones. Each shipment of cut and polished diamonds--with few exceptions--must pass through the obscure little room presided over by Chief Examiner Leroy N. Pipino, a slender, dark-haired, young-looking man who maintains a remarkably detached view toward the treasures that are spread before him each week. In the past ten years, Pipino has appraised diamonds worth more than $1 billion.

Soon after joining the Customs Service in the mid-Thirties, Pipino was assigned as an under clerk to the diamond office. As he watched the flow of gems arrive from abroad and as he listened to the discussions of their good and bad points, he became fascinated with the trade in precious stones.

Pipino began to read all he could about gems in New York City’s libraries. He learned much from the Customs Bureau’s own experts and each day’s work was an education in itself. At night he attended Columbia University to take courses on gems and gemology, and often he talked to some of the country’s leading experts, learning from them.

Pipino advanced to the post of assistant appraiser during the war years, and then in 1949 he was appointed chief examiner. In the handling of so impressive a fortune in jewels, one might expect to find him in the elegant surroundings of a Tiffany showroom. But in Pipino’s rather drab-looking workshop, the gems are spread irreverently on a battered table for examination. Around the room are laboratory aids commonly used by gemologists--the diamondscope, a binocular microscope with a special attachment for controlling light source; a dichroscope which reveals color variances in stones; a refractometer for measuring light rays; equipment to test the hardness of stone; and the most-used instrument of all, a ten-power microscope.

Ninety-five per cent of all the diamonds coming into the United States pass through the port of New York and are brought to Pipino’s office for examination. Most of them come from Europe, South Africa, Israel or Brazil. They are weighed and their value is appraised. If there is no discrepancy between the weights and the values listed on the importer’s invoices, the gems are released to Customs brokers for delivery to the persons or firms to which they were shipped.

In this small room also are made the examinations of the modern gold and platinum jewelry and all the antique jewelry. The cut and polished diamonds are subject to a 10 per cent duty. Rough diamonds arrive duty-free. Diamonds which have been incorporated into industrial tools or processed for industrial use are dutiable at 15 per cent of their value. There is no duty required on antique jewelry.

Antwerp is the largest diamond-cutting center in the world, and has been for many years. Most of the cutting of small diamonds is done by the Antwerp craftsmen, although in recent years Israel has developed into an important diamond-cutting center.

The birth of the Israeli diamond industry was part of the chain reaction of the Nazi invasion of the Lowlands in World War II. Many of the best diamond cutters in Europe were Jews. When the invasion came, they fled from Belgium and from Holland. As Hitler’s persecution of the Jews became more and more oppressive, reaching further and further, they scattered across the world to places of asylum. Many of these wanderers later went to the new state of Israel and with their skills they founded an industry that has been growing steadily in importance.

Diamonds--like gold--are sensitive to economic and political instability. There is a constant shifting of these treasures about the world, seeking havens of safety or places of the greatest profits.

Leroy Pipino and his associates didn’t even have to read the newspaper headlines back in 1938–1939 to know that trouble was brewing in Europe. They could read the warnings in the increasing volume of diamonds and other precious stones which were being imported into the United States. The flight of jewelry from Europe was a measure of the fears of millions of people.

Most of the jewels arriving in New York at that time were carried by refugees fleeing before the threat of the Nazis. Families brought with them their treasured and often priceless heirlooms. Many had converted their property and life savings to the currency of diamonds.

As non-residents, the alien refugees were permitted by law to bring all of their personal jewelry into the country without paying a customs duty. But if they intended to sell any of the jewelry within a period of three years from the date of their arrival, then the jewelry had to be declared and duty paid on it.

There was, and still is, a provision in the law which allowed these people to manipulate their jewelry and to take advantage of the lowest customs rate in cases where they intended to sell the gems. They could do this by removing the stones from their settings.