FOREIGN TRADE: Bargains in Tangier

For the better part of a century, London has been the world's diamond capital. There the British-dominated diamond cartel has held the famed "sights" at which it sells its uncut stones. Last year Britain re-exported £35 million ($98 million) worth of diamonds, more than half of them to the U.S. But due to currency controls, the diamond merchants had to resort to sharp practices to stay in business.

Many London merchants sold their gems not at the pegged pound rate, but for cheaper pounds in the free money market in Tangier, thereby losing Britain many dollars. But the dealers had little...

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