The Great Diamond Hoax of 1872- page 2 | History | Smithsonian
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The Great Diamond Hoax of 1872

How a Kentucky grifter and his partner pulled off one of the era's most spectacular scams -- until a dedicated man of science exposed their scheme

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(Continued from page 1)

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 Aundel and Slack used his middle name, Burcham—they bought $20,000 worth of rough diamonds and rubies, thousands of stones in all, from a 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 pair’s 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. Asheet 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-colored cataract of light.”

As bedazzled as they may have been, Ralston and the others were not complete fools. Before risking more money, they decided to bring 10 percent of the latest bag of gems to jeweler Charles Lewis Tiffany in New York City for appraisal and to hire a mining engineer to check out the diamond field. They also allowed a generous sampling of the stones to go on display in the window of San Francisco jeweler William Willis, feeding the city’s diamond fever—and potentially increasing the value of their future investments.

In New York City, Harpending, Lent and Dodge hired a corporate lawyer, Samuel Barlow, a Ralston friend, to handle their interests in the East. Sometime in October 1871, the group met at Barlow’s house on the corner of 23rd Street and Madison Avenue for the appraisal. Joining them were Charles Lewis Tiffany and two Civil War generals: George B. McClellan, who had commanded the Union Army and run against Lincoln for president, and Benjamin F. Butler, nicknamed Beast for his treatment of civilians in New Orleans during the war. McClellan was recruited to the venture in the hope that his name might attract other investors, and Barlow recommended Butler—by then a U.S. representative—as someone to help resolve any legal issues in Congress if the diamond field was revealed to be on federal land. Also present was Horace Greeley, editor of the New York Tribune (who was about to run for president himself), though his exact role is unknown.

Imagine the theatrical flourish with which Harpending must have opened the bag of diamonds before this august assemblage. Tiffany fussily sorted the stones, which also included some rubies, emeralds and sapphires, “viewed them gravely,” Harpending writes, and “held them up to the light, looking every whit the part of a great connoisseur.” Once he finished his inspection, he delivered a preliminary verdict. “Gentlemen, these are beyond question precious stones of enormous value.” How valuable he could not say until he had taken them back to the shop and let his lapidary have a look. Two days later he reported that the stones—only a fraction of those that Arnold and Slack had bought in London for $20,000—were worth $150,000. Harpending did a little multiplication and concluded that Arnold’s million-dollar sack must be worth at least $1.5 million.

When word of the appraisal reached him, Arnold could not believe his luck. His little scheme now carried the imprimatur of the country’s most famous jeweler. (After the hoax had been revealed, it came out that neither Tiffany nor his lapidary had much experience with uncut stones.) Arnold quickly extracted another $100,000 from the investors and scurried back to London, where he spent $8,000 on more uncut gems from Leopold Keller, the better to further prepare the bogus diamond field for Henry Janin, a well-respected mining engineer selected by the San Francisco investors.

Because of cold weather, Janin did not visit the fields until June. Arnold and Slack, who by then had been paid his second $50,000, met Janin, Dodge, Harpending and an English crony of Harpending’s named Alfred Rubery in St. Louis, where the group boarded a Union Pacific train to Rawlins, Wyoming. Though the spot that Arnold had picked to salt was closer to the Black Buttes, Wyoming, station, the swindler wanted to keep the exact location secret, so he led them on a confusing four-day horseback journey, often pretending to be lost and climbing hills to get his bearings. Harpending noted that “the party became cross and quarrelsome.” The six men finally reached the salted mesa at about four o’clock on the afternoon of June 4, 1872, and began at once to look for diamonds. Like a mother at a backyard Easter egg hunt, Arnold was extraordinarily solicitous in suggesting where they might dig. “After a few minutes,” Harpending would write, “Rubery gave a yell. He held up something glittering in his hand. . . . For more than an hour, diamonds were being found in profusion, 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.”

Within two days, even the mining engineer Janin, who in addition to his $2,500 fee had been given the right to purchase 1,000 shares of stock in the new venture at $10 a share, was, as Harpending later recalled, “wildly enthusiastic.” On the chance that the surrounding land might also yield gems, Janin got busy staking out 3,000 acres, although the area salted with diamonds amounted to barely more than one acre. In his concluding report Janin wrote that the proposed 100,000 shares of stock were easily worth $40 each, and he would soon thereafter sell his shares at that price, netting $30,000 above his fee and becoming the only nonswindler to profit from the scam. When the rest of the party finished up at the mesa, they left Slack and Rubery behind to guard the site. But the two men did not like each other, and within a couple of days they took off.

Slack was never to be heard from again. Arnold collected another $150,000 that had been promised him after the Janin inspection and then quickly sold $300,000 more in stock to Harpending, making his total take $550,000, less expenses—about $8 million today. He had more shares coming to him, but he must have sensed that his luck would only take him so far. He had already moved his family back to Kentucky from San Francisco in the spring of 1872, and by the time the affair was exposed, he, too, had left town.

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