A diamond and two golden hearts: How the Jubilee once saved Tata Steel from bankruptcy

Had it not been for the large heartedness of Sir Dorabji Tata’s wife Lady Meherbai, who agreed to pledge all her jewellery including the precious Jubilee Diamond,

might have collapsed way back in 1924, reveals a new book.

After Dorabji, the elder son of Tata group founder Jamsetji Tata, succeeded his father as the chairman of the group, Tata Steel, which was still in its early years, ran into a host of difficulties, ranging from price inflation to labour issues. By 1923, the company faced a shortage of cash. The Tatas made valiant efforts to raise funds and get past the liquidity problem.

“In 1924, a telegram arrived from Jamshedpur bearing ill news. It simply said that there was not enough money left to pay wages to the employees of Tata Steel,” writes Harish Bhat, brand custodian at Tata Sons, in his book ‘#TataStories’. “Would the fledgling company survive or would it be forced to shut down? Would the dreams and visions that guided the establishment of India’s first integrated steel plant come tumbling down?”

At this point, Dorabji and his wife Meherbai decided to pledge their entire personal wealth, along with the diamond, so that the company could survive the downcycle. Imperial Bank provided the Tatas with a loan of Rs 1 crore against their personal pledge.

“Soon, the company’s expanded production facilities began delivering returns. The situation started to take a turn for the better. Not a single worker was retrenched during the period of intense struggle but shareholders were not paid dividends for the next several years. The company returned to profitability within a few years and the pledge was repaid. By the late 1930s, Tata Steel began to prosper again,” says the book.

The Jubilee diamond, which played a key role in saving Tata Steel from collapsing, was no ordinary one. Mined in South Africa, the magnificent stone was the sixth largest in the world and twice as large as the legendary Kohinoor. Often described as the most perfectly cut of all large diamonds, it was named as the Jubilee Diamond in 1897 to commemorate the diamond jubilee of Queen Victoria.

Dorabji had bought the diamond from London merchants for around 1 lakh pounds as a gift for his lady love. After the death of the couple, the diamond was sold to raise funds for Sir Dorabji Tata Charitable Trust. The trust used those funds to establish the Tata Memorial Hospital and other institutions.

“Indeed, this makes the Jubilee Diamond unique – it is perhaps the only diamond in the history of mankind that has saved a steel company from collapse, protecting many livelihoods, and has then gone on to birth a cancer hospital as well. No diamond has served worthier causes, and this was only possible because of two wonderful hearts of gold,” writes Bhat in the book.

Published by Penguin, the book narrates 40 such interesting tales from the illustrious 150-year-old history of the Tatas.