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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 2)

What finally led to the hoax’s collapse was a lucky encounter on an Oakland-bound train between Janin and members of a government survey team led by Clarence King, a Yale-educated geologist. One of a special breed of explorerscientists drawn to the trackless expanse west of the 100th meridian and east of the Sierra Nevada, King had come West in 1863 at the age of 21, traveling by wagon train with a friend and joining the California Geological Survey. He was the first man known to have ascended several of the highest Sierra Nevada peaks, and he gave Mount Whitney its name (after Josiah D. Whitney, leader of the California survey); another mountain in the southern Sierra would be named after him. At the age of 25, King convinced the U.S. Congress to fund and appoint him geologist in charge of his own federal survey, which would cover 80,000 square miles of mostly inhospitable land between the Rockies and the Sierra—an 800-mile-long rectangle that followed the route of the transcontinental railway in a swath 100 miles wide. By the early 1870s, King or the three dozen men under his command had surveyed, mapped and described the whole immense patch of the West within their domain, and the fieldwork for what was known as the Fortieth Parallel Survey was nearly done.

In his diary for October 6, 1872, one of King’s men, geologist Samuel F. Emmons, wrote that “suspicious looking characters on the train are returning diamond hunters. Henry [Janin] shows us some of the diamonds—pretty crystals.” King and his team had hardly been ignorant of the rising diamond fever, but most of the rumored discoveries had been in Arizona and New Mexico, outside the survey’s purview. Now Janin’s comments and other hints suggested that the spot was in the northwest corner of Colorado, not far from where Emmons had been working. The news was alarming. Amajor discovery of diamonds in the area by anyone other than King’s men would call into question the thoroughness of their work and give ammunition to those in Congress who fought the survey’s annual appropriations.

King and his men decided that they had better inspect the diamond fields as soon as possible. On October 21, 1872, Emmons and A. D. Wilson, a topographer on King’s team, got on a train from Oakland east to Fort Bridger, Wyoming, where they had boarded some mules for the winter. King followed the next day.

A week and a half later, having gathered supplies at the fort, King, Emmons, Wilson and two packers set off on what would become a bitterly cold 150-mile journey to the vicinity of Janin’s site, which they had deduced from their own fieldwork and other clues. After five days of hard travel, they set up camp and immediately began looking around. Before long they saw a claim notice posted by Janin. According to Emmons’ field notes, they followed other posted notices until they “came upon a bare iron-stained bit of coarse sandstone rock about a hundred feet long. . . . Throwing down our bridle reins we began examining the rock on our hands and knees, and in another instant I had found a small ruby. This was indeed the spot. The diamond fever had now attacked us with vigor, and while daylight lasted we continued in this position picking up precious stones. . . . And when a diamond was found it was quite a time before our benumbed fingers could succeed in grasping the tiny stone.” When they went to bed that night, they “dreamed,” Emmons wrote, “of the untold wealth that might be gathered.”

But the next day, King noticed that wherever he found a diamond, he also found a dozen rubies, too neat a scheme for a natural deposit. The men also realized that the stones were found only in disturbed ground. Rubies found in anthills, for instance, were not only surrounded by footprints but “beside the top hole by which the ants made their exit, there was visible in the side another small break in the crust.” Anthills lacking footprints or broken crusts invariably also lacked rubies. “Our explanation,” Emmons wrote, “was that some one must have pushed in a ruby or two on the end of a stick.” The men spent the next two days doing more tests, which included digging a trench ten feet deep in a gulch where diamonds should have been distributed well below the surface. But there were no diamonds in it.

On their fourth day at the site, King and his men were approached by a man on a horse, “a stout party, city dressed, and looking very much out of keeping with his surroundings.” “Have you found any carats around here?” the stranger asked. One of King’s men blurted out news of the fraud, which the man received with the response: “What a chance to sell short on the stock.” He introduced himself as J. F. Berry, a New York diamond dealer who had followed King’s party from FortBridger and had been watching them with a spyglass from the top of a nearby butte.

In camp that evening, King decided, as he later wrote to his boss in Washington, “to go at once to San Francisco, and find out the status of the Company, and prevent if possible further transactions in the stock.” King would also claim that he hurried off to prevent Berry from acting on the knowledge one of his men had blurted out. But it’s even more likely that the self-assured young geologist didn’t want this irritating interloper revealing the fraud before he could. In any event, King and Wilson left camp well before dawn, riding the 45 miles to Black Buttes Station “across a pathless reach of desert and mountain,” arriving in San Francisco on November 10. King went at once to Janin’s hotel. “Through nearly all the night I detailed to him the discovery,” King later wrote, “and at last convinced him of its correctness.”

The next morning King and Janin met the duped directors at Ralston’s office at the Bank of California. There, King read aloud a letter he had written for publication asserting that the diamond fields were “utterly valueless” and that the directors had been the victims of an “unparalleled fraud.” He spelled out the tests his men had made on the site. The investors “were astonished,” King would write, “and thrown into utter consternation.” Emmons later related that one of the directors, no doubt hoping to sell short himself, suggested that King might gain financially if he were to sit on the news for a few days. King supposedly responded: “There is not enough money in the Bank of California to make me delay the publication a single hour.” The board agreed to stop a planned sale of 100,000 shares of stock at $100 a share; the directors then persuaded King to lead another party, including Janin and other company representatives, back to the spot. The group set out the next day and, upon arrival, made its inspection in weather so cold that one man’s whiskey was said to have frozen in the bottle. On November 25, inspection party member Gen. David Colton, who had become general manager of the company just three weeks before, reported back to the directors that he had seen rubies scattered on a bare rock, where “it would have been as impossible for Nature to have deposited them as for a person standing in San Francisco to toss a marble in the air and have it fall on Bunker Hill monument.” Upon receiving this and other reports from the latest inspection, along with a lame attempt by Janin to explain his failure to unearth the fraud months before, the directors voted to publish King’s letter and dissolve the company.

The San Francisco Chronicle on November 26 stacked headlines that began with “UNMASKED!” followed by “The Great Diamond Fiasco,” “THE MAMMOTH FRAUD EXPOSED” and “Astounding Revelations.” Because Arnold and Slack had long departed from the scene, reporters focused on the company’s gullible principals. The Chronicle chortled at “how the millionaires were victimized.” Janin the mining engineer was criticized for being so easily duped. Harpending came under suspicion as a perpetrator of the fraud because he was reported to have been in London at the time of one of Arnold’s diamond-buying sprees. General Butler was discovered to have received a thousand shares of stock for shepherding a mining act through Congress that had enabled the company to buy the federal land that held the bogus diamond fields. William Lent claimed in a lawsuit that he lost some $350,000, and it was widely reported that Ralston lost $250,000.

John Slack was assumed to have either fled the country or died soon after leaving the diamond fields with Rubery. But in 1967, Bruce A. Woodard, an accountant who had become obsessed with the hoax, asserted in his book, Diamonds in the Salt, that Slack had taken a job building caskets in St. Louis. Eventually, according to Woodard, Slack moved to White Oaks, New Mexico, where he became an undertaker, living alone until his death at age 76 in 1896. He left behind an estate of $1,600.

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