LETTER TO THE EDITOR — History teaches us nothing

I am sure everyone has heard enough of Bre-X Minerals and Busang by now. As an investor who saw his small portfolio dwindle, even though I had no Indonesian investments, I know that I have.

There is an old adage: “One thing we learn for history is that we learn nothing from history.” I would like to relate a short story by Otis Young, professor of history at Arizona State University, from his book Western Mining, published in 1970.

“The most famous example of successful salting was surprisingly untypical of most cases. This was the great diamond hoax in which two confidence men, Philip Arnold and John B. Slack, in about 1870, salted a Colorado mesa with a large number of flawed, industrial-quality or otherwise inexpensive gem stones of all sorts. This geologic solecism alone should have been their immediate undoing, for different varieties of precious stones rarely occur in the same surroundings.

“Arnold and Slack had the tact, or the good fortune, to win ascendancy over the mind of Henry Janin, then considered one of the foremost diamond experts in the United States, even though he had no experience to speak of concerning gem stones.

“Apparently Janin so lusted for professional recognition that he swallowed the story whole after being conducted in theatrical secrecy to the site.

Using his report, Arnold and Slack coaxed large sums of money from the Rothschild interests and from William C. Ralston of the Bank of California.

Ultimately, Clarence W. King of the United States Geological Survey, grew suspicious, found the salted mesa and, in 1872, published a withering expos of the fraud. Although King’s report emphasized that rubies and diamonds are not found together in nature and that none of the stones was recovered from unimpeachably natural surroundings, his suspicions are said to have been confirmed by finding one diamond with a jeweler’s facet already polished upon it.”

The key points of this hoax and Busang are amazing. The author doesn’t mention whether a lawyer from smalltown Ontario kept insisting the find was real after the fact, or if the principals moved to the Caribbean, but I suspect the same thing that happened to these ne’er-do-wells will happen to the Busang gang — namely, nothing.

Wayne Dohr

Dryden, Ont.