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Clarence King (far right) – who later became head of the U.S. Geological Survey – and his men helped foil one of the boldest prospecting hoaxes in history.

The Great Diamond Hoax

The hoax fooled the city’s wealthiest men — and left them out of hundreds of thousands of dollars

Knowing that diamonds are an investor’s best friend, two prospecting cousins, Philip Arnold and John Slack, pulled off a sparkling con game and never looked back.

From grubby prospectors washing dirt in a thousand Western streams to bankers and speculators in San Francisco, New York and London, everyone, it seems, just embraced the idea that the West’s mountains and riverbeds held an abundance of mineral wealth there for the taking. An announcement in the Tucson Weekly Arizonian in April of 1870 catches the mood of the moment: “We have found it! The greatest treasures ever discovered on the continent, and doubtless, the greatest treasures ever witnessed by the eyes of man.” Located in the Pyramid Mountains of New Mexico, the “it” was a new mine dubbed the Mountains of Silver. Bankers hurried in, miners claimed stakes, investors sought capital in distant cities and surveyors laid out a town nearby but in the end, the much-touted venture did not yield enough of the stuff for a single belt buckle.

At about the same time came news of a diamond rush in South Africa, the third major diamond find known to the world after one near the city of Golconda, India, and an 18th -century site discovered by the Portuguese in Brazil. Stoked by the tall tales of early 19th -century trapper-guides like Jim Bridger and Kit Carson about diamonds, rubies and other gems that could be scooped right off the ground, many avaricious dreamers were soon looking for precious stones in Arizona and New Mexico, where the terrain was said to resemble South Africa’s.

An odd diamond or two had actually turned up during the gold rush, especially near Placerville, California. In a report on the phenomenon, a state geologist helpfully recommended that “though it may not pay to hunt for diamonds, yet it always pays to pick them up when you do happen to see them.”

And so the World Stage was just naturally set for The Great Diamond Hoax a brilliantly acted scam by two Kentucky drifters that would embroil, among others, some of California’s biggest bankers and businessmen, a former commander of the Union Army, a U.S. representative, leading lawyers on both coasts, and the founder of Tiffany & Co. Accurately described by the San Francisco Chronicle in 1872 as “the most gigantic and barefaced swindle of the age,” the scheme was also noteworthy for the manner of its unravelling and its colourful characters. Not only did it propel to prominence a geologist later befriended and admired by Theodore Roosevelt, it also gave a fed-up American public some hope that honest science could triumph, at least occasionally over hucksterism and greed.

Philip Arnold and John Slack used uncut diamonds like these to convince rich San Franciscans to invest in their mine.

Swelled by completion of the transcontinental railroad in 1869, the San Francisco of 1870 was a city of some 150,000 souls. One of them was Philip Arnold, a Kentuckian born in the same county as Abraham Lincoln. A very poorly educated former hatter’s apprentice, Mexican War veteran and gold rush forty- niner. Arnold had spent two decades working in mining operations in the West, making enough money to pay for periodic visits back to Kentucky where he bought a farm, married, started a family and perhaps stashed a little cash. In 1870, he was working as an assistant bookkeeper for the Diamond Drill Co., a San Francisco drill maker that used diamond-headed bits. For a bookkeeper, Arnold, then just past 40, showed a surprising interest in the industrial-grade diamonds that kept the drills running. He even ploughed through learned works on the subject.

By November of that year, Arnold had acquired a bag of uncut diamonds, most presumably taken from his employer, and mixed them with garnets, rubies and sapphires that he likely bought from Indians in Arizona. He also had acquired a partner, John Slack, an aptly named older cousin from Kentucky who, like Arnold, had fought in the Mexican War and had gone after gold in 1849. Indeed, in the months ahead, as the two men hatched their scheme, Slack played the listless, old taciturn foil to the voluble and cunning Arnold.

The first person the pair approached was George D. Roberts, the sort of businessman described in newspapers as prominent, but his was a prominence earned by moving fast and not asking too many questions. Arnold and Slack turned up one night at Roberts’ San Francisco office, looking weather-beaten and clutching a small leather bag. Inside was something of great value, they said, which they would have deposited in the Bank of California except for the late hour.

Arnold and Slack made a show of not wanting to reveal what was in the bag but eventually told Roberts that it contained “rough diamonds” they’d found while prospecting on a mesa somewhere in the West. They wouldn’t say where the mesa was, but they did say it was the richest mineral deposit they’d ever seen in their lives: The site was rich not only in diamonds, but also in sapphires, emeralds, rubies, and other precious stones. The story sounded too good to be true, but when Arnold dumped the contents of the bag onto Robert’s desk, out spilt dozens of uncut diamonds and other gems. But Arnold and Slack were more circumspect about where they’d found the jewels, mumbling something about Indian Territory, an answer that carried a certain truth, but not in the way Roberts took it. If someone were to make such a claim today, they’d probably get laughed out of the room. But things were different in 1871.

The diamond investors kept the Colorado location a secret. By accident or design, popular rumour placed the diamond deposit somewhere in Arizona or New Mexico.

The bag of diamonds sank the hook deep. “Roberts was very much elated by our discovery,” Arnold told the Louisville Courier-Journal in December 1872, soon after their scheme had been exposed, “and promised Slack and myself to keep it a profound secret until we’d explore the country further and ascertain more fully the extent of our discoveries.” Like many able liars, Arnold had an intuitive sense of how others would react to his fictions. What better way to get Roberts to spread the word than to make him swear an oath of silence.

Almost before his office door banged shut behind the two miners, Roberts broke his promise. First he told the founder of the Bank of California, William C. Ralston, a legendary financier who built hotels and mills and invested in almost everything else, including the Comstock Lode and the completion of the transcontinental railroad when the so-called Big Four ——Collis Huntington, Leland Stanford, Mark Hopkins and Charles Crocker—— came up a little short. The banker had also put money into the Mountains of Silver venture, and in return, the nearby town of Grant had been courteously restyled Ralston, New Mexico. Soon all of San Francisco, the city built by the Gold Rush of 1849, was buzzing with the tale of the two miners and their discovery.

Then Roberts got word to the theatrically named Asbury Harpending, who was in London trying to float a stock offering for the Mountains of Silver. Harpending swallowed the bait as hungrily as Roberts had. As Harpending, an even shadier businessman than Roberts, recalled 45 years later in The Great Diamond Hoax and Other Stirring Incidents in the Life of Asbury Harpending, his colourful and mendaciously self-serving memoir, he knew that “they had got something that would astonish the world.” He made his way to San Francisco “as fast as steamships and railroads would carry us,” arriving back home in May 1871…

Asbury Harpending as an older man, aged 75 in 1915. Harpending was one of the diamond mine’s initial investors and wrote about the hoax in his memoirs.

Ralston didn’t know it, but he was being had. The uncut gems were real enough, but the story of the diamond field was a lie. Arnold and Slack had created a fake mining claim in Colorado by sprinkling, or “salting” it with diamonds and other gems where miners would be able to find them. It was a common trick designed to make otherwise worthless land appear valuable. What made this deception different was its scale and the calibre of people who were taken in by it. Ralston was a prominent and successful banker; he and his associates were supposed to be shrewd investors.

In the meantime, Arnold and Slack led Roberts to believe that they had made another visit to the diamond field and had returned with 6o pounds of diamonds and rubies said to be worth $600,000. More convinced than ever, Roberts drew even some others into the trap with this second, bigger bag of jewels, which he claimed a local jeweller had authenticated. Roberts, Ralston, Harpending and now San Francisco mining entrepreneurs William Lent and Gen. George S. Dodge wanted to get Arnold and Slack out of the picture as soon as possible by buying out their interests. At first, the two prospectors appeared to resist a quick payday. But then Slack asked for $100,000 for his share —–$50,000 now and $50,000 more after the two made what they claimed would be a third visit to the diamond field.

Once Slack got his first 50 grand, he and Arnold headed off to England to buy uncut gems. In July 1871, under assumed names –— Arnold was Arundel and Slack used his middle name, Burcham——- they bought $20,000 worth of rough diamonds and rubies, thousands of stones in all, from a large London diamond merchant named Leopold Keller “I asked them where they were going to have the diamonds cut,” Keller later testified in a London court, but of course they never intended to cut the stones. Some would go to San Francisco as further evidence of the richness of their find. Others would be planted in the still secret field for their investors to discover.

Upon the pairs return to San Francisco in the summer of 1871, Arnold and Slack offered to make one more trip to the diamond field, promising to return with “a couple of million dollars’ worth of stones,” which they would allow the businessmen to hold as a guarantee of their investment. Off the pair went, to salt the fields rather than mine them, and when that was done, Harpending met their train at Lathrop, California, a junction east of San Francisco. Harpending would later write of the encounter: “Both were travel-stained and weather-beaten and had the general appearance of having gone through much hardship and privation.” Slack was asleep but “Arnold sat grimly erect like a vigilant old soldier with a rifle by his side, also a bulky looking buckskin package.” The two claimed that they had indeed happened upon a spot yielding the promised $2 million worth of diamonds, which, they said, they had divided into two packs. But while crossing a river in a raft they had built, one pack was lost, leaving only the one Harpending now observed.

At Oakland, the swindlers handed the pack to Harpending, who gave them a receipt for it and carried it onto the ferry to cross the bay. “Arrived at San Francisco, my carriage was waiting and drove me swiftly to my home,” where the other investors were waiting, he wrote. “We did not waste time on ceremonies. A sheet was spread on my billiard table; I cut the elaborate fastenings of the sack and, taking hold of the lower corners, dumped the contents. It seemed,” Harpending wrote like a dazzling, many-coloured cataract of light.”

A headline from the San Francisco Bulletin after the discovery of the Great Diamond Hoax of 1872.

The cataract was soon on public display, and potential stockholders bought in frantically. Roberts, Ralston, Lent and Harpending decided to hold on to three-quarters of the stock and offer shares to prominent and influential men of business. They hoped to assemble $10 million in capital and to locate and purchase the entire diamond field through what Harpending blandly described as legal chicanery—“a plan to facilitate the passage of a law whereby a great territory of mining land could be taken up so as to ensure to ourselves the entire field, no matter what the extent.” The partners offered a share to Maj. Gen. Benjamin Franklin Butler, a U.S. congressman from Massachusetts widely loathed for his toughness as military commander of New Orleans during the late Civil War but now a useful ally in keeping the great diamond field in as few hands as possible.

To the investor’s credit, they did take some precautions that they thought would protect them from fraud: Before any more money changed hands, they insisted on having a sample of the stones appraised by the most respected jeweller in the United States— none other than New York City’s Charles Tiffany. If the appraisal went well, they planned to send a mining engineer out to the diamond field to verify first, that it existed, and second, that it was as rich as Arnold and Slack claimed. These precautions should have been enough, but through a combination of poor judgment and bad luck, they both failed miserably.

Lent (the new president), Harpending (the general manager) and two other stockholders set off with prospectors Arnold and Slack for New York City on the transcontinental railroad.

The partners had retained New York attorney Samuel L.M. Barlow as general counsel. In October 1871 they met Tiffany at Barlow’s house in the presence of General Butler, Maj. Gen. George B. McClellan, Brevet Brig. Gen. George S. Dodge, newspaper editor Horace Greeley and notable bankers. Tiffany looked over the gems—diamonds, emeralds, rubies, sapphires —sorted them into little heaps and held them up to the light. “Gentlemen, these are beyond question precious stones of enormous value,” Tiffany said. “But before I give you the exact appraisement, I must submit them to my lapidary and will report to you further in two days.”

The diamond investors needed to change the federal mining law to allow them to claim the diamond deposit. To accomplish this, they gave shares to Congressman Benjamin Butler. Butler saw to it that the law was changed to their satisfaction.

San Francisco mine promoter and fellow Kentuckian Asbury Harpending was the main contact between the prospectors and the other investors. Harpending’s role in the affair has always been controversial.

Geologist Clarence King was studying western mineral deposits for the federal government. He and his team of geologists tracked down the mystery diamond fields, and after a few days of study decided that the diamonds had been planted. King’s exposure quickly stopped the swindle, but not before Philip Arnold hurried back to Kentucky with a sizeable pile of cash. The incident gave Clarence King an international reputation as a geologist of unquestioned astuteness and honesty. He later became head of the U.S. Geological Survey.

Englishman Alfred Rubery had been arrested with Harpending during the Civil War when the two joined in a plot to arm a warship in San Francisco to prey on Union shipping on the Pacific coast. In 1872, Rubery’s marital problems back in England prompted him to accept Harpending’s invitation to join in an expedition to the mystery diamond deposit.

In October 1871, Ralston brought a sample of the gems to New York so Tiffany could look them over. Ralston was already hard at work drumming up potential investors on the East Coast, and present at the appraisal were one U.S. Congressman and two former Civil War generals, including George McClellan, who’d run for president against Abraham Lincoln in 1864. Horace Greeley, the editor of the New York Times, was also there.

Tiffany’s expertise was actually in cut and polished diamonds— he knew almost nothing about uncut stones, and neither did his assistant. But he didn’t let anyone else in the room know that. Instead, he made a solemn show of studying the gems carefully through an eyepiece, and then announced to the assembled dignitaries, “Gentlemen, these are beyond question precious stones of enormous value.”

The investors accepted the claim at face value -the appraiser, after all, was Charles Tiffany. Two days later, Tiffany’s assistant pegged the value of the sample at $150,000, which, if true (it wasn’t), meant the total value of all the stones found so far was $1.5 million (in today’s money, $21 million) …or more.

Now that the gems had been verified as authentic, it was time to send an independent expert out to the diamond field to confirm that it was everything Arnold and Slack said it was. As he’d done when he brought the stones to Tiffany, Ralston went with the most qualified expert he could find. He hired a respected mining engineer named Henry Janin to do the job. Janin had inspected more than 600 mines and had never made a mistake. His first goof would prove to be a doozy.

Prospectors Arnold and Slack agreed to take an expert— albeit blindfolded on the last stage of the journey— to actually look over the diamond field. Janin, Arnold, Slack, and three of the investors travelled by train to Wyoming, just over the border from Colorado. Then they made a four-day trek by horseback into the wilderness, crossing back into Colorado. At Arnold and Slack’s insistence, Janin and the investors rode blindfolded to keep them from learning the location of the diamond field.

The men arrived at the mesa on June 4, 1872, and began looking in a location suggested by Arnold. “Everyone wanted to find the first diamond,” Harpending noted. A few minutes was all it took: One of the investors screamed out loud and held up a raw diamond that he’d discovered digging in some loose dirt. “For more than an hour, diamonds were found in profusion,” one of the investors later wrote, “together with occasional rubies, emeralds, and sapphires. Why a few pearls weren’t thrown in for good luck I have never yet been able to tell. Probably it was an oversight.”

Mr Janin was exultant that his name should be associated with the most momentous discovery of the age, to say nothing of the increased value of his 1,000 shares.…Two days’ work satisfied Janin of the absolute genuineness of the diamond fields. He was wildly enthusiastic.…Janin pointed out that this new field would certainly control the gem market of the world and that the all-essential part of the program was for one great corporation to have absolute control.”

Arnold and Slack had worked for Harpending at the mines near Ralston City, New Mexico, misleading some into thinking that the diamonds were found nearby. The town, since renamed Shakespeare, is open to tourists.

The investors staked out claims they hoped would hold up in court and left Rubery—despite his initial protests— to guard the diamond field along with prospector Slack. They telegraphed ahead and, perhaps through the work of bribed telegraphers, soon learned the entire financial world had heard about Janin’s confirmation of the diamond field. The Rothschild banking house, which had recently loaned Great Britain the money to buy the Suez Canal from France, was more than interested.

William Ralston was hard at work putting together a $10 million corporation called the San Francisco and New York Mining and Commercial Company. He’d already lined up 25 initial investors who contributed $80,000 apiece, and now he was preparing to raise another $8 million. New York newspaper publisher Horace Greeley had already bought into the company; so had British financier Baron Ferdinand Rothschild.

A Rothschild investing in a diamond field? The house of Rothschild was a world-renowned banking firm and experienced at spotting good investments. With Tiffany and Rothschild involved, the excitement surrounding the diamond field grew to a fever pitch. No one but Arnold and Slack knew where the mine was, but so what? When rumours began spreading that it was somewhere in Arizona Territory, fortune seekers by the hundreds began making their way there in hopes of finding strikes of their own.

Almost as an afterthought the managers dipped into the $2 million in cash already in hand and paid Arnold and Slack, the all-but-forgotten discoverers, $300,000 for all rights to the diamond field. With the diamond samples already sold off, Arnold and Slack cleared about $600,000. Arnold lost no time in heading home to retirement in Kentucky, while Slack seemingly vanished. Meanwhile, independent investors quickly organised three maverick mining companies to exploit any gems that might be found outside the Roberts-Ralston-Lent-Harpending claim staked out with the help of Arnold and Slack.

The stage was now set for the swindle to grow much bigger, which meant that a lot more people would have lost a lot more money. That it didn’t happen was due purely to chance: when Arnold and Slack picked the location of the “diamond field,” they unknowing chose an area where a team of government geologists had been conducting surveys for five years.

The leader of the geological team was a man named Clarence King a respected geologist and surveyor with almost a decade of federal employment. When he learned of the diamond strike, he couldn’t believe what he was hearing. He’d been all over the territory and had already filed a report stating that there were no deposits of precious gems of any kind anywhere in the area. If the story were true, he and his team of experts had missed a significant diamond field that two untrained miners had been able to find on their own. His professional reputation was on the line: If there really was a diamond field and word of it got back to Washington, D.C. he would be exposed as incompetent and funds for the survey would be cut off.

The sky caved in on November 11, 1872. Clarence King, sent a telegram from a small railroad station in Wyoming to the office of the San Francisco and New York Mining and Commercial Co. that the “diamond field” prospected by Arnold and Slack was “fraudulently and plainly salted.” Arnold and Slack had deliberately planted gems in the ground to dupe gullible investors. The whole thing was a hoax, according to King, who had been suspicious from the first.

King arranged to meet the engineer Henry Janin over dinner to get a firsthand account of the diamond field story. As he listened to Janin describe his trip to the site, he started to smell a rat. Janin reported finding diamonds, rubies, and sapphires next to each other, and as a geologist, King knew that was impossible. The natural process by which diamonds are created are so different from those that create rubies and sapphires that they are never founding the same deposits.

Because Janin had been blindfolded on the trip to the site, he couldn’t tell King where it was. But King was so familiar with the area that after quizzing Janin, he was able to figure out which mesa he was talking about. The next day he and some members of his team set out to visit the site themselves.

King held a doctorate in chemistry from Yale and knew, among other things, that emeralds, rubies and sapphires don’t usually turn up in proximity to diamonds. All precious stones are crystallised carbon formed under great pressure, and each group tends to stratify with gems of similar colour: rubies with rubies, emeralds with emeralds, diamonds with diamonds. King himself had cooled a federally sponsored geological survey (40th parallel) of the same general region and hadn’t seen anything that looked even vaguely like good diamond country. Diamonds are usually found in rock. The Colorado field looked like a dry potato patch. On his own initiative, King set out with a couple of sidekicks who also knew something about gold and silver prospecting to have a look for himself at what all the fuss was about. If there were actually diamonds in the lands King had surveyed, and he had overlooked them, his reputation would be damaged.

Harpending, who didn’t like King for obvious reasons, said that some of King’s travelogue adventures seemed hyperbolic and that the actual hero—as Harpending only learned later—was an anonymous German prospector King had dragged along with him. Two prospectors who knew about the Roberts-Ralston-LentHarpending claim showed King, the middle-aged German and the other field geologist to the claim. “Both [King and the German] began washing for diamonds and naturally enough found what they were looking for,” Harpending recorded. “In fact, the geologist [King] came very near being fooled as badly as anyone else —wanted to leave instantly and thought of going to San Francisco to have a talk with the directors of the company.” The fortuneless German disagreed and wanted to stay and pocket a few more diamonds, and a few more after that. But then, recalled Harpending, “he came on a stone that caught his eye and filled him with wonderment. It bore the plain marks of the lapidary’s art.”

“Look here, Mr King,” the German said. “This is the bulliest diamond field as never was. It not only produces diamonds but cuts them moreover also.” King grabbed the half-cut diamond from the sarcastic German, and the whole thing was as clear as day. The geologists rummaged around and found more evidence of salting: King had arrived on November 2, and by November 10 he was back at the railroad sending the telegram.

King stayed on-site until a party of the investors, including the mortified Henry Janin, arrived a few days later by train. With the field’s credibility compromised, the hoax became glaringly obvious. “Mention has been made of ant-hills sparkling with minute but a veritable diamond and ruby dust,” Harpending reflected. “Perhaps because they were so pretty, no one had ever disturbed them.…They weren’t anthills at all. They were fakes; the work of a sinful man, not of the moral insect. They were also works of art; no one would have suspected guile from looking at them.”

The investors found three small holes bored in the ground, each with a large gem nested inside. The Salters had forgotten to fill in these holes, as they had obviously closed the others, but as Harpending pointed out, “In such extensive operations a little reckless work was likely to slip in.” Harpending capped off the evidence: “Finally, on the top of a large flat rock, several rubies and diamonds were found pressed into crevices to hold them in place. This was so grotesquely raw that it seems incredible and led to a story that some of the diamonds were in the forks of trees. Unfortunately for the story, there weren’t any trees in the neighbourhood.”

The Associated Press wired the hoax story around the world, and the company principals—Janin having glumly confirmed the findings of King and the anonymous German— admitted they too had been fooled by Arnold and Slack. During the subsequent hearings in San Francisco, a man named James B. Cooper turned up and claimed credit for having given Arnold and Slack the idea. Arnold had served as bookkeeper Cooper’s assistant at a company that made diamond-tipped drill bits. The salting of gold claims, Cooper had explained to his two cronies, had been overdone. Prospectors who wanted to sell pay dirt to greenhorns sometimes blasted small nuggets into the earth from shotguns or smoothbore muskets and sold the claims to the gullible as soon as the smoke had drifted away. Diamond salting, he said, was a challenge, but he knew where he could find some small diamonds of the type used for drill tips. Arnold and Slack had slipped out of town and never gave Cooper his share of the money. Cooper was indignant.

Charles Tiffany can only have been embarrassed when word came back from London that the diamond specimens from his appraised lot of $150,000 were coarse, almost worthless, originally mined in South Africa and part of a lot sold to Arnold in London more than a year before. With the mystique of the diamond field dissipating, a new appraisal revealed that the total worth of all the stones in hand was about $30,000. Arnold and Slack, perhaps advised by Cooper, had obviously secured some cheap industrial diamonds used in drill tips or watches for their first visit to Roberts, then used the $50,000 grubstake generated by the disclosure to buy some better but still mediocre stones in London for the second salting—some still bearing the telltale marks of the diamond cutter’s chisel.

On November 27, 1872, the San Francisco and New York Mining Co. held its final meeting, confirmed that the diamond field was a hoax and refunded whatever money was still on hand. Asbury Harpending and William Lent chivalrously bought back the 1,000 shares from the hapless Henry Janin, whose consulting business probably suffered more than any of the bankers did. None of the conspirators, not even the talkative Cooper, was indicted.

Philip Arnold, who had returned to Elizabethtown, Ky., in late 1872 and bought a handsome farm, was there when the bubble burst. Lent soon filed a suit to recover $350,000. Arnold denied everything, said someone else must have salted the field and accused the “California scamps” of having sullied his reputation.

“Did Arnold suffer any in the estimation of his compatriots by reason of the grave accusations preferred against him?” Harpending asked dryly. “Rather the reverse. They gloried in what they were pleased to call his ‘spunk.’ The old [Confederate Brig. Gen. John Hunt] Morgan raiders and thousands of their way of thinking looked with pride, almost with reverence, on one of their kind with nerve and wit enough to make a foray into Yankeedom and bring away more than half a million in spoils. To tell the truth, Arnold was the very hero of the hour, for the old war feeling was still rampant.”

Lent and Harpending headed for Kentucky to negotiate a settlement. In March 1873 Arnold agreed to return $150,000 to them in exchange for immunity from further litigation. The unreconstructed residents of rural Kentucky perceived him as something of a hero, which in turn aroused envy among some of his peers. Slack, the lacklustre cousin, remained at large.

Arnold used most of his remaining spoils to open a bank in Elizabethtown that did a thriving business in Hardin County. He even loaned money to a struggling rival bank. But the rival refused to repay the interest on the loan, and in June 1878 Arnold’s bank filed suit. Soon after, one of that bank’s clerks, Harry Holdsworth, called into question Arnold’s banking practices. Arnold responded by cane-whipping the clerk on the public square. Running into one another again in town that August, the two men exchanged words, blows and then gunfire. Arnold had a six-shooter but missed with all of his shots.

Holdsworth had a double-barrelled shotgun and blasted a charge of buckshot into Arnold’s shoulder. Local physicians despaired of his survival, and on February 8, 1879, Arnold, 49, died from complications of his wounds compounded by pneumonia. Holdsworth stood trial two months later and was found not guilty. Going over Arnold’s books, Lent and Harpending found that Slack had received about $30,000 of the ill-gotten gains, while most of the rest of the money remained in the safe at Arnold’s bank or secured in real estate. Everything beyond the $150,000 quit-claim purchase went to Arnold’s heirs, and Ralston, assisted by Roberts and Harpending, paid off the second tier of stockholders at 100 cents on the dollar. “Mr Ralston had the receipts in full of the various parties neatly framed,” Harpending wrote, “and I am told that it was one of the mural decorations of his private office in the Bank of California.”

Mortified by his unwitting role in the great diamond hoax of 1872, Harpending sold off all his property holdings and investments in San Francisco and along the Pacific coast, cleared well over a million dollars, returned to Kentucky and invested in farmland—none of it said to hold any gold, silver, or diamonds. While neighbours respected him, disenchanted investors continued to suggest the plot had been conceived “in the active brain of Asbury Harpending”—a charge, he said, easily disproved by a look at the paperwork.

In a story in The Times of London, British investors accused Harpending’s friend Alfred Rubery, the first to find a (salted) diamond at the Colorado diamond field, of complicity. The Englishman promptly sued for libel and won a judgment of 10,000 pounds (U.S. $45,000 at the time) from his detractors. Officially cleared, Rubery nevertheless bore the stain of the libellous accusation in Britain as Harpending had in the United States, and that stigma eventually drove him to immigrate to Australia, where friends lost track of him.

Banker Ralston, despite his integrity or perhaps because of it, was also a collateral casualty of the diamond hoax. He had reached deep into his pockets to cover the $2 million the second-tier stockholders had invested, and his reputation, while somewhat shaken, apparently survived. Ralston invested the bank’s capital in building the Palace Hotel, at the corner of New Montgomery Street and Market Street in San Francisco. The aptly named Palace cost $5 million, was designed by the renowned architect and engineer John Painter Gaynor and was among the first buildings to feature electric call buttons and “rising rooms” (elevators). Ralston failed, however, in an attempt to buy and then resell the Spring Valley Water Co. and was caught in the backdraft of the international financial Panic of 1873. These expanding ripples, likely augmented by the damage Ralston’s reputation suffered in the great diamond hoax of 1872, led to a plunge in the stock value of the Bank of California. On August 26, 1875, Ralston’s bank closed its doors during business hours, leaving what Harpending described as “a packed mass of pale-faced men anticipating ruin” wrapped around the block.

Ralston admitted the precarious state of the bank’s finances but pledged his own considerable holdings to make good any losses. On August 27 the bank’s board of directors called a meeting— but locked out Ralston. He left in a daze.

After heading home to change, Ralston, as was his custom, took a swim at North Beach. “His body did not sink, but he was floating face downward,” Harpending wrote after talking to witnesses. “A boatman was quickly at his side. This boatman declared that the banker was still living. Be that as it may, when he reached the shore with his burden, the once master spirit of the Pacific coast was dead.” Questions lingered over whether Ralston had committed suicide, but he was a regular swimmer who enjoyed exercise, and those who saw the body said his expression was stunned rather than tormented, suggesting a massive stroke. The Virtual Museum of the City of San Francisco [] says an autopsy showed signs of a stroke. About a third of San Francisco’s 150,000 citizens turned out to watch his funeral procession, and 8,000 turned out at a memorial ceremony in his honour two weeks later. Whether the notoriety of the diamond hoax caused his self-destruction or merely contaminated his fiscal reputation and brought on a stroke through nervous tension is conjectural.

John Slack, the nearly silent partner among the Kentucky prospector cousins, eventually turned up in St. Louis. Perhaps taken with the opportunities presented by planting expensive things in the ground, he operated a casket manufacturing company, first in St. Louis and later in White Oaks, New Mexico Territory, where he died in 1896, at age 76, solvent but not rich.

Even before the Diamond Hoax came to light, California had had more than its fair measure of frauds — from the routine salting of land with gold nuggets during the gold rush to faked reports of oil finds costing investors millions in the 1860s.

“I see the Diamond Hoax as one in a long line of scams made possible by the fact that the United States truly was a land of opportunity,” says Patricia O’Toole, author of Money and Morals in America. A History. “Many a legitimate fortune seemed to be made overnight,” she adds, “so it was particularly easy for a con artist to convince a gullible American that he too could wake up a millionaire.” Moreover, as Jackson Lears, a professor of history at Rutgers University and the author of Something for Nothing: Luck in America, observes, “The 1870s was the golden age of gambling, due to an expanding post-Civil War frontier economy.” He is hardly surprised that such supposedly sophisticated investors were taken in. “In an unregulated Laissez-faire economy,” he says, “licit and illicit risk were difficult to distinguish; only after it had turned out well did a speculation become an ‘investment.’ Playing the market could be just as shady an enterprise as running a three-card monte game on a steamboat or organising a diamond swindle.”

Clarence King was a hero rather than a villain of the diamond hoax, but in the end, he may have been the final victim of one of the West’s most spectacular frauds.

Many saw the unravelling of the hoax as a welcome case of government acting on behalf of the people. Clarence King, says Lears, “looked forward to the 20th century, when management rather than morality became the chief idiom and technique of control. He was the sort of man (or pretended to be) that we like to think our government regulators can be today—— expertly informed, incorruptible, calmly surveying the scuffle of self-interest from an Olympian perspective, one which protects him from the irrational exuberance of the clods who think they’ve struck it rich.”

King’s role in exploding the diamond hoax made him an international celebrity— the case was followed closely in newspapers in London and New York–— and he dined out on his deed for the rest of his days. Earlier in 1872, he had published a series of sketches from his time with the California survey, called Mountaineering in the Sierra Nevada. The book was a popular success on both sides of the Atlantic, and even today it is considered a classic of American nature writing He counted among his friends Henry Adams, John Hay and Henry James. In one chapter of The Education of Henry Adams, Adams wrote of King, “None of his contemporaries had done so much, single-handed, or were likely to leave so deep a trail.” Hay called him “the best and brightest man of his generation.”

Phil Arnold hurried back to his native Kentucky. He used his loot to buy a bank and died a few years later. John Slack, who had sold out early in the scheme to his cousin Phil Arnold, moved to White Oaks, New Mexico, where he lived quietly and worked as an undertaker until his death in 1896.

Upon completion of the fieldwork for his survey in 1872, King returned East where, for the next six years, he oversaw the publication of a multi-volume report of the survey’s findings, culminating in his own work, Systematic Geology, published in 1878, which one critic called “the most important single contribution made to the scientific knowledge of the continent.” But even as he was finishing the book and starting a two-year stint as the first director of the United States Geological Survey, King’s attention was turning from one Gilded Age secular religion, science, to the other, the pursuit of money

He tried ranching, mining and, like Philip Arnold, banking, but he didn’t have the knack for any of them. He lost more money than he made, and he lost the money of many of his friends as well, though both Henry Adams and John Hay remained loyal. And when, deep in debt, King died of tuberculosis in a small brick house in Phoenix in 1901, just shy of his 60th birthday, his old friend Theodore Roosevelt sent a wire of condolence from the White House.

Great Diamond Hoax of 1871 has lingering mystery – SFGate

The Great Diamond Hoax of 1872 | HistoryNet

The Great Diamond Hoax is exposed – Nov 26, 1872 –

The Great Diamond Hoax of 1872 | History | Smithsonian

The Great Diamond Hoax of 1872 – Neatorama

Far-Out Friday: The Great Diamond Hoax of 1872 | Digging History

The mystery of the Great Diamond Hoax of 1871

Great Diamond Hoax

The Great Diamond Hoax – William Goldberg

Diamond hoax of 1872 – Wikipedia

The Great Diamond Hoax Crime Magazine

The Great Diamond Hoax | See the Southwest

Diamonds – Mining Swindles

Diamonds | Colorado Geological Survey


The Great Diamond Value Hoax | In The Loupe – Diamond Envy

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