ODDS’N’SODS — The great diamond fraud of 1872 (2)

(The following is the second weekly instalment of a 3-part story.)

Philip Arnold and Edward Slack told everyone that they had had bad luck and had taken a new river route to reach the diamond fields and throw others off the scent. Their raft had been wrecked, spilling their tools into the water, and the stones, which once again covered Harpending’s billiard table, were the result of a mere 13 days’ work with one shovel.

The San Francisco investors were, by now, so convinced that they had a first-rate diamond mine on their hands that they decided to give some New York money-men a chance. For their own credibility, they arranged to have the latest bag of stones valued by Charles Tiffany, America’s premier jeweller. A common crook probably would have skipped town at this stage, but not so the uncommon, poker-faced Arnold. If anything, it was Tiffany who felt intimidated by the meeting. Surrounded by the investors, who were among the richest men in America, and influenced by offers of his own piece of the action, he put a value of US$150,000 on the stones then and there. It was hastily agreed that the investors should form a company and secure the grounds immediately. Concerns that they couldn’t hold the claims in the Sioux lands under current mining law led them to allocate money “for purposes of securing the necessary legislation.”

The 1872 U.S. Mining Bill was both tailored where necessary and passed into law before the next visit to the fields. It is not surprising that the lobbyists rewarded Gen. Ben Butler, a congressman and personal friend of President Ulysses Grant, with 1,000 shares in the new venture. An offer was made to buy Arnold out for US$1 million, part to be paid immediately and the balance after a geologist of their choosing confirmed the value of the prospect.

Arnold was furious and said that the offer was only a fraction of the value, that he could bring that much out in diamonds in a week with a dozen men and that there was nothing to prevent their geologist from falsifying a poor report and staking it for himself, once he knew the discovery location. He demanded US$100,000 cash before he did anything. When the dust finally settled, Arnold and Slack agreed to take mining engineer Henry Janin to the fields in the spring of 1872.

Arnold and Slack hurried off to prepare the next part of their elaborate scheme. Since the whole play was phoney anyway, they decided to move the “diamond fields” from Arizona to a more accessible location. They hit upon a point by Vermillion Creek, Colo., near the Utah-Wyoming-Colorado junction and north of the present-day Dinosaur National Monument. The site was not too far from the railway, on top of an imposing, flat-topped mesa. A more propitious spot for riches there never was.

With great care, the two salted the ground with a liberal quantity of rough stones, placing them in conspicuous cracks and crevices in the bedrock of the mesa and downslope in the gravels of the surrounding creeks. By June 20, everything was in place. The small party started for Cheyenne. After three days, the saddle-sore tenderfoots arrived at the diamond mesa almost ready to go home (in reality they had only come four hour’s ride from the railway). Janin’s report in the Engineering and Mining Journal (Sept. 3, 1872) says they were on the ground a mere seven days, in which one and a half tons of gravel were washed, primarily by Arnold and Slack, the only experienced panners in the party. The washing yielded 1,648 carats of diamonds and 7,200 carats of rubies.

Janin ended: “I do not doubt that further prospecting will result in finding diamonds over a greater area than is as yet proved to be diamond-bearing; and that I consider any investment at the rate of $4 million for the whole property a safe and attractive one.”

— The author, a consulting geologist who lives in Brampton, Ont., will conclude his story next week.