It's all about egos, and the feeling a woman gets about the ability of her partner to provide an expensive trinket, especially to show off to friends and display status.
It's a terrible misuse of funds at the beginning of a couple's journey, one that could prove far more productive as an investment somewhere.
Generations before us had a very different way of getting into relationships. Maybe our modern lifestyle made diamonds more important.
I am also not saying that diamonds are unavoidable.
Edit: somebody else posted a more educated comment. Prior to 1935, apparently women were entitled to compensation when an engagement was broken off - http://homes.chass.utoronto.ca/~siow/332/rings.pdf
This statement is logically inconsistent with reality. If "signalling of commitment" was a real need, why would only one party need to provide this signal? And not just one party (random), but a specific party (predetermined) - the man.
You're right, however, that in the broader context, diamonds are an honest signal of affluence - by buying expensive, but useless stuff (conspicuous consumption) we send a strong signal about how much we can afford and how rich(-er) we are.
In the past, women had to have a dowry to get married. There was probably a reason for that (economic or market reason, I guess). It probably wasn't a very good reason, and likely isn't very relevant today.
Probably, yes. But whatever "economic" reasons there are, the cultural reasons were probably much more powerful.
Maybe men were more scarce in the past than women. Wars might have accounted for that, but on the other hand, men have longer "expiration date" (when it comes to mating). Also, if men were so much rarer, why didn't polygamy develop?
You could claim that women are weaker, so they were less "useful" in the past (when most labor was manual) and hence less valuable. On the other hand, without a woman, there would be no next generation, so each man needed a woman to ensure his survival in old age.
These are the most obvious justifications I could come up with, and they don't sound very convincing. Let me know if you can think of any more.
As an extreme case, take a culture were arranged marriages are the norm. Then it seems obvious that you wouldn't need diamonds because you wouldn't have much of a choice to not commit to the relationship anyway.
I don't know enough about 1938 to make a proper comparison, though.
Edit: somebody else posted a more educated comment. Prior to 1935, apparently women were entitled to compensation when an engagement was broken off - http://homes.chass.utoronto.ca/~siow/332/rings.pdf
Though the best proof of commitment would be to invest in and provide for a common future. Buy a house, take care of kids, etc. That's real commitment, not just some hollow symbol at extravagant cost.
But if you do want extravagant expense as proof of your commitment, you could also spend it on the wedding itself. Why not go for a $10K wedding instead of a $10K ring?
You can not achieve the same effect by buying something useful instead, because then the money would be spent on something useful, not on proving commitment.
Not saying it is the only way to prove commitment, but "it's all just marketing" doesn't catch the whole story imo.