The seventh Nizam of Hyderabad was once called the richest man on earth. His most famous diamond spent years in a shoe, then years holding down his papers. Most of the rest of the treasure can still be traced
At Chowmahalla Palace in Hyderabad, some time after he became ruler, Mir Osman Ali Khan went through his late father’s belongings and found something in the toe of a shoe.
It was a diamond. Not a small one: 184.75 carats, the fifth largest polished diamond in the world, bought by his father from a jeweller named Alexander Malcolm Jacob in a deal that ended in a famous lawsuit and left the seller ruined. The family called it unlucky.
Osman Ali Khan kept it. For years, by several accounts, he used it as a paperweight on his desk.
A 185-carat diamond, kept in a shoe, then used to hold down paperwork.
That story has become shorthand for the wealth of the last Nizam of Hyderabad, who ruled the princely state from 1911 to 1948. In 1937 an American magazine put him on its cover as the richest man in the world.
The jewels alone were extraordinary: emeralds, Basra pearls, a seven-stranded pearl necklace with hundreds of pearls in it, diamonds from the old Golconda mines.
So when people ask where all of it went, they usually expect a story of theft or disappearance. Most of the answer is more mundane, and better documented.
In 1951, the Nizam put his jewellery into two trusts. The terms were strict: the jewels could be sold, but only after his death and the death of his eldest son, Azam Jah.
He died in 1967. Azam Jah died three years later.
In 1972, the family asked Prime Minister Indira Gandhi’s government to buy the collection and put it in a museum. Negotiations dragged on for years, with the family pushing to sell and the government unwilling to let the jewels go abroad. In 1979, a court order stopped an auction that would have opened the collection to foreign bidders.
The matter was settled only in 1995, when the central government bought 173 pieces for 218 crore rupees. On 12 January that year, they were moved into the vaults of the Reserve Bank of India.
That is where the Jacob Diamond is today: not lost, but locked up. The collection has been shown in public only occasionally, most recently at the National Museum in Delhi. Hyderabadis have asked for years that the jewels be brought back to the city and displayed there.
That is where the Jacob Diamond is today: not lost, but locked up.
The money in London
One part of the fortune did go missing for seventy years, in the most ordinary way imaginable: it sat in a London bank.
In September 1948, in the days around the Indian army’s takeover of Hyderabad, about one million pounds was transferred from the Hyderabad government’s account in London to the account of Pakistan’s High Commissioner in Britain, Habib Ibrahim Rahimtoola. The Nizam later tried to get it back. The bank, understandably nervous, froze it.
And there it sat, through the Nizam’s death, through the deaths of his sons, quietly earning interest, while Pakistan, India and the Nizam’s descendants each claimed it. By the time the case reached the High Court in London, the sum had grown to around thirty-five million pounds.
In 2019 the court ruled against Pakistan’s claim, in favour of India and the Nizam’s descendants.
There is one great piece that nobody can account for.
The Nizam Diamond, sometimes called the little Koh-i-Noor, was said to weigh about 340 carats, cut in an almond shape, and to have come from the Kollur mine in the Krishna valley, the same region that produced the Koh-i-Noor. It was described by European visitors in the nineteenth century.
Where it is now, nobody knows.
The answer
So where is the lost wealth of Mir Osman Ali Khan?
Most of it is not lost at all. It is in a vault in an Indian bank, or in the palaces and trusts and foundations of his descendants, or spent, or broken up in the ordinary way that great fortunes come apart: privy purses abolished, properties sold, families divided, cases fought for decades in courts.
What is genuinely missing is one diamond, and the habit of mind that let a man keep the fifth largest diamond in the world on his desk because it was the right weight to stop his papers blowing away.
If you think you have remembered everything about this topic take this QUIZ
Results
QUIZ START
#1. In 1937, which publication featured Mir Osman Ali Khan on its cover as the richest human being in the world?
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#2. What was the primary source of the Nizam of Hyderabad’s immense diamond wealth?
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#3. What was the weight of the famous Jacob Diamond, and how did the Nizam eccentrically use it?
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#4. What was the name of the military operation that led to the annexation of Hyderabad into the Indian Union in 1948?
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#5. Why did millions of pounds worth of paper cash stored in the Nizam’s palace basements eventually vanish?
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#6. How many pieces of the Nizam’s jewelry did the Government of India officially purchase in 1995?
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#7. How much solid gold did the Nizam donate to the National Defence Fund during the Indo-China war of 1962?
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#8. In which palace did Mir Osman Ali Khan spend his final years as a recluse?
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Finish
Who was Mir Osman Ali Khan?
He was the seventh and final Nizam of the princely state of Hyderabad, famously recognized by Time magazine in 1937 as the absolute richest man in the world.
It is a massive 184.75-carat diamond, originally mined in Africa, which the Nizam famously used as a simple paperweight on his office desk.
What happened to the Nizam’s immense wealth?
While a massive portion was stolen by courtiers, eaten by termites, or lost in complex international legal battles, a small fraction was officially purchased by the Government of India in 1995.
Where can you see the Nizam’s jewelry today?
The 173 pieces purchased by the Indian government are usually kept in the high-security vaults of the Reserve Bank of India and are occasionally exhibited at the National Museum in New Delhi.
Why was the wealth so difficult to distribute?
The Nizam had created dozens of complex trusts for his massive family, which included hundreds of heirs, leading to decades of incredibly bitter and deadlocked legal battles over the inheritance.
Sources & References
National Museum, New Delhi, “Jewels of India: The Nizam’s Jewellery Collection” (2019), and Press Information Bureau, Ministry of Culture — the 173-piece collection, its purchase by the Government of India in 1995 for ₹218 crore and its custody in Reserve Bank of India vaults; contemporary exhibition reporting records the Jacob Diamond’s well-known use as a paperweight.
Deccan Chronicle, “When Nizam wanted to shift his jewels outside of India” (4 June 2023) — the 1951 trusts and their terms, the 1972 approach to Indira Gandhi, the purchase of 173 items for Rs 218 crore, and the move to the RBI on 12 January 1995.
The News Minute, “Why are the jewels of Hyderabad’s last Nizam locked in an RBI vault in Delhi?” (2017) — the descendants’ demand that the jewels be displayed in Hyderabad.
National Herald, “The mysterious Mr Jacob and the diamond that ruined him” (2022) — the sale of the diamond to the sixth Nizam and the lawsuit that followed.
Paripurna Datta is the founder and editor of Curious Indian, an independent editorial publication focused on Indian history, culture, science, society, and the stories behind them. He oversees research, editorial standards, and the publication's long-term direction.
Paripurna Datta is the founder and editor of Curious Indian, an independent editorial publication focused on Indian history, culture, science, society, and the stories behind them. He oversees research, editorial standards, and the publication's long-term direction.
