The collapse of the Anglo-Indian
diamond trade 1765-1793
In the 1760s the Anglo-Indian diamond trade became involved in a crisis which lasted for 25 years and from which the trade never recovered, although a semblance of normality was reestablished in the last decade of the century. The crisis had two aspects: on the one hand the East India Company again limited the amounts which its presidencies in India were allowed to draw on it, thus partly closing an alternative channel by which the proceeds from coral sales could be returned to England and weakening the position of the European diamond merchants in India in their dealings with Indian sellers. On the other hand many more Englishmen in India were looking for ways of transferring home fortunes acquired in the East, and consequently the diamond trade was being constantly penetrated by non-commercial elements and the European market was flooded in an unprecedented manner.
We have seen earlier that during the crisis which followed the discovery of diamonds in Brazil in 1728, the East India Company agreed that the proceeds received in India for coral consigned from England could be remitted home by bills of exchange drawn on the Company by the presidencies in India, instead of being invested in diamonds. While the crisis lasted the agents in India made extensive use of this concession, but later the trade resumed its normal course, most of the proceeds being again invested in diamonds. After 1755, however, diamond imports were considerably reduced, 1 probably as a result of the general stagnation which afflicted British trade during the earlier stages of the Seven Years' War. Most of the Jewish diamond agents left Madras, and an increasing amount of bills of exchange from Fort St George began to arrive in India House, drawn to the order of the City's coral exporters. This in itself would probably not have caused difficulties, had it not coincided with a general increase in sums drawn on the Company by presidencies in India.