Diamond hoax of 1872
The diamond hoax of 1872 was a swindle in which a pair of prospectors sold a false American diamond deposit to prominent businessmen in San Francisco and New York. It also triggered a brief diamond prospecting craze in the western USA, 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 deposited the diamonds in the vault of the Bank of California.
Prominent financiers convinced the "reluctant" Arnold and Slack to speak out on their find. The cousins offered to lead investigators to the Wyoming field. Investors hired a mining engineer to examine the field. From a railroad stop in western Wyoming, Arnold and Slack led the inspection party to 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 General George S. Dodge, Horace Greeley, Asbury Harpending, George McClellan, William C. Ralston, Baron von Rothschild, and Charles Tiffany of Tiffany and Co. They convinced the cousins to sell their interest for $660,000 and formed their own mining company.
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 a field just north of what is now called Diamond Peak in the remote northwest corner of Colorado, and 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.
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 incident was dramatized as The Great Diamond Mountain on The Great Adventure on television in 1963. Philip Arnold was played by John Fiedler, John Slack by John McGiver, William Ralston by Barry Sullivan, an Clarence King by J. D. Cannon.
- King, Clarence. 1872. Copy of official letter, addressed November 11th, 1872, to the Board of Directors of the San Francisco and New York Mining and Commercial Company ... discovering the new diamond fields to be a fraud." San Francisco and New York Mining and Commercial Company. [San Francisco? 1872]. 12 pages. 24 cm.
- Robert Greene and Joost Elffers, "The 48 Laws of Power" ISBN 978-0-14-028019-7 (references this scam in Law 21 Play a Sucker to catch a Sucker - Seem Dumber than your Mark)
- King, Clarence. 1872. Copy of official letter, addressed November 11, 1872, to the Board of Directors of the San Francisco and New York Mining and Commercial Company ... discovering the new diamond fields to be a fraud." San Francisco and New York Mining and Commercial Company. [San Francisco? 1872]. 12 pages. 24 cm. USGS Library.
- Dan Plazak, A Hole in the Ground with a Liar at the Top ISBN 978-0-87480-840-7 (contains a chapter on the great diamond hoax)
- Harpending, Abury. "The Great Diamond Hoax and Other Stirring Episodes in the Life of Asbury Harpending - An Epic of Early California - Edited by James H. Wilkins". San Francisco: James H. Barry Press. 1913. Retrieved 18 April 2010.
- Voynick, Stephen M. (1985). Yogo The Great American Sapphire (March 1995 printing, 1987 ed.). Missoula, MT: Mountain Press Publishing. pp. 5–6. ISBN 0-87842-217-X.