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The diamond hoax of 1872 (sometimes called The Great Diamond Hoax of 1872) [1] [2] was a swindle in which a pair of prospectors sold a false American diamond deposit to prominent businessmen in San Francisco and New York City. It also triggered a brief diamond prospecting craze in the western United States, in Arizona, New Mexico, Utah, Wyoming, and Colorado.
In 1871, veteran prospectors and cousins Philip Arnold and John Slack traveled to San Francisco. They reported a diamond mine and produced a bag full of diamonds. They stored the diamonds in the vault of the Bank of California, founded by William Chapman Ralston.
Prominent financiers convinced the "reluctant" Arnold and Slack to speak out on their find. The cousins offered to lead investigators to their field. Investors hired a mining engineer to examine the field. They planted their diamonds on a remote location in northwest Colorado Territory. They then led the investors west from St. Louis, Missouri in June 1872. Arriving by train at the town of Rawlins, in the Wyoming Territory, they continued on horseback. But Arnold and Slack wanted to keep the exact location a secret, so they led the group on a confusing four-day journey through the countryside. The group finally reached a huge field with various gems on the ground. Tiffany's evaluated the stones as being worth $150,000.
When the engineer made his report, more businessmen expressed interest. They included banker Ralston, General George S. Dodge, Horace Greeley, Asbury Harpending, George McClellan, Baron von Rothschild, and Charles Tiffany of Tiffany and Co. The investors convinced the cousins to sell their interest for $660,000 ($16.1 million today) and formed the San Francisco and New York Mining and Commercial Company. [3] : 45 They selected New York attorney Samuel Latham Mitchill Barlow as legal representative. [3] : 26 Barlow convinced them to add U.S. Congressman Benjamin F. Butler to the legal staff. [3] : 28 Barlow set up a New York corporation known as the Golconda Mining Company with capital stock of $10,000,000, [3] : 28 while Butler was given one thousand shares for amending the General Mining Act of 1872 to include the terms “valuable mineral deposits” in order to allow legal mining claims in the diamond fields. [3] : 36–37 The U.S. Attorney General, George H. Williams issued an opinion on August 31, 1872, specifically stating that the terms “valuable mineral deposits” included diamonds. [4]
Financiers sent mining engineer Henry Janin, who bought stock in the company, to evaluate the find. Arnold and Slack led him and a group of investors to just north of what is now called Diamond Peak in the remote northwest corner of the Colorado Territory, where Janin and the investors found enough diamonds in the soil to satisfy themselves. Janin submitted a highly optimistic report, which found its way into the press.
Geologist Clarence King who had led a survey team that recently completed a Geological Exploration of the Fortieth Parallel had a chance meeting with Janin on a train. King and his team were alarmed at the reports of such a prominent diamond field which their survey had not noted. King sent geologist Samuel Franklin Emmons and cartographer A. D. Wilson ahead to investigate, with King joining them soon after. Upon locating the site, they quickly concluded that it had been salted (as a geologist, King was aware that the various stones formed under different conditions and would never be found together in a single deposit), and notified investors. [5]
Further investigation showed Arnold and Slack bought cheap cast-off diamonds, refuse of gem cutting, in London and Amsterdam for $35,000 and scattered them to "salt" the ground. Most of the gems were originally from South Africa.
Arnold returned to his home in Elizabethtown, Kentucky, and became a successful businessman and banker. Diamond-company investors sued him, and he settled the cases for an undisclosed sum. Years later he died of pneumonia after he was wounded in a shootout with a rival banker.
John Slack dropped from public view. He moved to St. Louis, where he owned a casket-making company. He later became a casket maker and undertaker in White Oaks, New Mexico, where he lived quietly and died in 1896 at the age of 76.
The story of the great hoax was featured in several television programs in the 1950s and 1960s. Marc Hamilton played investor Asbury Harpending (a colorful character known for numerous escapades) in the 1955 episode "A Killing in Diamonds" of the syndicated western television series Death Valley Days . Vaughn Taylor played Harpending in a 1965 episode of the same series, "Raid on the San Francisco Mint," which was hosted by Ronald Reagan, who was cast in the starring role of banker William Chapman Ralston. Death Valley Days aired a third story devoted to the hoax, the 1968 episode "The Great Diamond Mines", with Philip Arnold played by Gavin MacLeod, John Slack by John Fiedler and Ralston by Tod Andrews.
A first-season episode of Maverick (January 1958), "Diamond in the Rough", was based on the hoax.
The incident was also dramatized as "The Great Diamond Mountain" on the television series The Great Adventure in 1963. Arnold was played by John Fiedler, Slack by John McGiver, Ralston by Barry Sullivan, and con-breaking geologist Clarence King by J. D. Cannon.
A mystery, The Dangerous Angel Affair by Clarence Budington Kelland, revolves around the hoax.
Clarence Rivers King was an American geologist, mountaineer, and author. He was the first director of the United States Geological Survey from 1879 to 1881. Nominated by Republican President Rutherford B. Hayes, King was noted for his exploration of the Sierra Nevada mountain range.
Events from the year 1872 in the United States.
The General Mining Act of 1872 is a United States federal law that authorizes and governs prospecting and mining for economic minerals, such as gold, platinum, and silver, on federal public lands. This law, approved on May 10, 1872, codified the informal system of acquiring and protecting mining claims on public land, formed by prospectors in California and Nevada from the late 1840s through the 1860s, such as during the California Gold Rush. All citizens of the United States of America 18 years or older have the right under the 1872 mining law to locate a lode or placer (gravel) mining claim on federal lands open to mineral entry. These claims may be located once a discovery of a locatable mineral is made. Locatable minerals include but are not limited to platinum, gold, silver, copper, lead, zinc, uranium and tungsten.
William "Billy" Chapman Ralston was a San Francisco businessman and financier, and the founder of the Bank of California.
The Bank of California was opened in San Francisco, California, on July 4, 1864, by William Chapman Ralston and Darius Ogden Mills. It was the first commercial bank in the Western United States, the second-richest bank in the nation, and considered instrumental in developing the American Old West.
Philip Arnold was a confidence trickster from Elizabethtown, Kentucky, and the brains behind the legendary diamond hoax of 1872, which fooled people into investing in a phony diamond mining operation. He managed to walk away from the hoax with more than half a million dollars.
Clarence Hungerford Mackay was an American financier. He was chairman of the board of the Postal Telegraph and Cable Corporation and president of the Mackay Radio and Telegraph Company.
The Sulphur Bank Mine is located near Clearlake Oaks and Clear Lake in Lake County, California. The 150-acre (0.61 km2) mine became one of the most noted mercury producers in the world.
Darius Ogden Mills was a prominent American banker and philanthropist. For a time, he was California's wealthiest citizen.
John William Mackay was an Irish-American industrialist. Mackay was one of the four Bonanza Kings, a partnership which capitalised on the wealth generated by the silver mines at the Comstock Lode. He also headed a telegraph business that laid transatlantic cables and he helped finance the New York, Texas and Mexican Railway Company.
The Pacific coast theater of the American Civil War consists of major military operations in the United States on the Pacific Ocean and in the states and Territories west of the Continental Divide. The theater was encompassed by the Department of the Pacific that included the states of California, Oregon, and Nevada, the territories of Washington, Utah, and later Idaho.
William Phipps Blake was an American geologist, mining consultant, and educator. Among his best known contributions include being the first college trained chemist to work full-time for a United States chemical manufacturer (1850), and serving as a geologist with the Pacific Railroad Survey of the Far West (1853–1856), where he observed and detailed a theory on erosion by wind-blown sand on the geologic formations of southern California, one of his many scientific contributions. He started several western mining enterprises that were premature, including a mining magazine in the 1850s and the first school of mines in the Far West in 1864.
The Geological Exploration of the Fortieth Parallel was a geological survey made by order of the Secretary of War according to acts of Congress of March 2, 1867, and March 3, 1869, under the direction of Brig. and Bvt. Major General A. A. Humphreys, Chief of Engineers, by Clarence King, U. S. geologist. More commonly known as the Fortieth Parallel Survey, the survey conducted field work from 1867 to 1872, exploring the area along the fortieth parallel north from northeastern California, through Nevada, to eastern Wyoming.
James Terry Gardiner was an American surveyor and engineer.
Franc Renault Joubin, was an American prospector and geologist best known for a huge uranium discovery in northeastern Ontario, Canada in 1953.
Samuel Franklin Emmons was an American geologist. He was born in Boston, Massachusetts. He graduated from Harvard University in 1861 and studied at the Ecole des Mines in Paris, France, from 1862 to 1864 and at the Freiberg (Saxony) mining school in 1865. In May 1867, he was appointed assistant geologist under Clarence King on the American geological exploration of the fortieth parallel, and in July 1879 became geologist in charge of the Colorado division of the United States Geological Survey. He traveled extensively throughout the United States in connection with his work, and in 1870 made a survey, along with A. D. Wilson, of Mount Rainier, the highest and most inaccessible peak in the Cascade Range. The largest glacier in the contiguous United States, Emmons Glacier, is located along their survey route and is named after Emmons.
Asbury Harpending was an adventurer and financier in San Francisco, California, Mexico, and New York City.
John P. Gaynor was an Irish American architect practicing in New York City and San Francisco during the nineteenth century.
Robert Craig Chambers was an American 19th-century businessman, minerals miner, banker, politician, sheriff, and silver mine supervisor. He had mining investments in many states, and was one of the best-known miners in the west. Chambers was a prominent figure in the formation of Butte, Montana, and Park City, Utah; and was named one of Utah's Bonanza Kings because he led the operation of the Ontario silver mine near Park City, from 1872 until 1891.
Charles Gregory Yale was a businessman and yachtman, Secretary of the San Francisco Yacht Club and cofounder of the Pacific Inter-Club Yacht Association. With William C. Ralston, founder of the Bank of California, he cofounded the San Francisco Miners' Association, renewing interest in hydraulic mining. He was a leading mineralogist and geologist who worked for the U.S. Geological Survey, and became statistician of the San Francisco Mint. He also wrote various articles and books on the mining and gold industry.